U.S., Swiss Ask for Delay in UBS Tax Case

The UBS case has persuaded hundreds of taxpayers with offshore accounts to come clean with the IRS under a voluntary disclosure program. The program allows most people to pay a fine and back taxes without facing criminal prosecution, said tax attorney Robert McKenzie with the Arnstein & Lehr firm.

"The IRS would like to continue the specter of fear that this UBS case has created," McKenzie said. "This strategy is working. The level of calls I'm receiving is picking up, not going down."

UBS, which previously admitted wrongdoing in a more limited U.S. tax case, is resisting turning over the names that have been protected by centuries-old Swiss bank secrecy laws.

"Honoring the IRS summons would require UBS to violate Swiss criminal law, and we simply cannot comply," said Oswald Gruebel, UBS chief executive officer, in a letter to bank offices worldwide. "This matter should be resolved between governments according to established frameworks."

The Swiss government escalated the dispute last week by threatening to block release of the UBS account names if Gold rules for the IRS.

One of Europe's biggest banks, UBS has about 34,000 permanent and contract employees at 381 locations in the U.S., according to the company.

The IRS in February filed what are called a "John Doe summonses" seeking U.S. taxpayer identities from UBS, shortly after the Zurich-based bank reached a deferred prosecution agreement with the Justice Department over its tax evasion practices. UBS agreed then to identify 300 people -- some of whom are now facing criminal charges -- and admitted it wrongly used sham offshore entities, false paperwork and questionable client recruitment.