A settlement does not appear imminent in the U.S. attempt to obtain names of thousands of suspected tax dodgers from Swiss bank UBS AG, although both sides said Wednesday they would keep trying.
A settlement does not appear imminent in the U.S. attempt to obtain names of thousands of suspected tax dodgers from Swiss bank UBS AG, although both sides said Wednesday they would keep trying.
U.S. District Judge Alan S. Gold told attorneys he would set one more status hearing Friday morning. If there's no deal by then, Gold said he would go forward with what amounts to a mini-trial in the case on Monday as currently scheduled.
The Internal Revenue Service wants Gold to order UBS to turn over names of about 52,000 wealthy Americans suspected of hiding assets at the bank and evading U.S. taxes. UBS and the Swiss government say such a disclosure would violate centuries-old Swiss bank secrecy laws and expose the bank to criminal charges.
Central to the dispute is the U.S. insistence that a settlement require UBS to reveal at least some names. Gold agreed to delay the original court proceedings in July to allow time for a negotiated deal.
Lawyers for the U.S. Justice Department and UBS said in a telephone conference Wednesday with Gold that the settlement talks have hit a "stumbling block," but they said confidentiality rules prevent disclosure of its exact nature.
Still, UBS attorney Eugene Stearns said an agreement could be "minutes away," insisting that the major sticking points did not seem insurmountable.
"The issues here, as we see them, don't appear to be the kind that should bring a stalemate," Stearns said.
But Justice Department tax attorney Stuart Gibson said he did not share Stearns' optimism that a deal was near.
"I don't believe that's the case," Gibson said. "We believe delay does not serve any of the parties' interest at this point."
Even if Gold orders UBS to turn over the names, the Swiss government has said it would block their release. The U.S. could then go after UBS assets in this country — the Zurich-based bank has 381 offices and some 34,000 employees and contractors here — to force the Swiss to comply with a court order.
Switzerland's foreign minister is due in Washington later this week for talks on the UBS issue with Secretary of State Hillary Clinton.
UBS in February reached a deferred prosecution agreement with the Justice Department over its practices, agreeing to turn over about 300 names of U.S. account holders and admitting it illegally used sham offshore entities, false paperwork and questionable client recruitment. UBS also paid a $780 million fine.
The 300 names were released under an exception to Swiss banking secrecy law that does not shield clients who deliberately defraud tax authorities, as opposed to failing to declare all assets.
The day after that agreement was announced, the IRS filed court papers seeking the full list of 52,000 names.
Three American clients of UBS have pleaded guilty to U.S. taxes charges, including a New York businessman who admitted Tuesday to hiding some $8 million in UBS accounts. That client, Jeffrey P. Chernick, said in court papers he was told his UBS account would be protected because the bank had paid a $45,000 bribe to an unnamed Swiss government official.
Hundreds of clients of UBS and other offshore banks have voluntarily come forward under an IRS amnesty program that requires payment of back taxes and penalties but generally does not mean prison time. That program ends Sept. 23.
