The U.S. and Swiss governments have requested a stay on the court hearings that were set to begin Monday on whether UBS could be forced to divulge the names and bank holdings of 52,000 U.S. taxpayers.
The IRS and the Justice Department have been demanding that the Swiss bank turn over the information in response to thousands of John Doe summonses. However, UBS has argued that doing so would violate Swiss banking secrecy laws. The Swiss government has threatened to seize the information rather than let UBS expose it to the U.S. government (see Switzerland Threatens to Seize UBS Client Info). Back in February, the bank signed a deferred prosecution agreement with the Justice Department, agreeing to pay $787 million and provide the names of 250 U.S. clients who had been accused of tax fraud, but the IRS has continued to demand that UBS turn over information on the 52,000 other account holders.
The three parties are now apparently trying to negotiate a deal and have asked for a rescheduled hearing date of Aug. 3. The stay was requested in order to provide the parties additional time to discuss a possible alternative resolution of the matter, said a statement from the Justice Department on Sunday. The parties have agreed that any alternative resolution reached would necessarily include a provision requiring UBS to provide the Internal Revenue Service information on a significant number of individuals with UBS accounts. If an alternative resolution is not reached, the Department of Justice will continue to vigorously pursue enforcement of the summons through the court.
UBS said it welcomed the announcement that the U.S. and Swiss governments have agreed to the negotiations. This agreement has resulted in a joint motion by the U.S. government and UBS, with the support of the Swiss government, for a stay of the litigation in Miami for a duration of 15 days in order to achieve a settlement, said a statement from the bank. The parties and the Swiss government will present this motion for the courts approval on Monday morning.
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