Swiss banking secrecy is no sure bet anymore.

The U.S. and Swiss governments have agreed in principle to settle a high-profile clash over Swiss bank secrecy and the Internal Revenue Service's right to pursue tax cheats at Zurich-based UBS.

The parties didn't disclose terms of the settlement, details of which must still be finalized. But an individual close to the matter said the IRS will wind up with thousands of UBS customer names as a result of the accord.

``The days of Swiss banking secrecy are over,'' said William M. Sharp, a Tampa attorney who represents numerous U.S. taxpayers making voluntary disclosures.

The U.S. and Swiss governments unveiled the agreement Friday as Secretary of State Hillary Clinton met in Washington, D.C., with Swiss foreign minister Micheline Calmy-Rey. Both women said they were pleased their nations could settle the contentious issue.

The IRS, in a move viewed as heavy-handed by many outside the United States, has been seeking to enforce a so-called ``John Doe summons,'' demanding the names of 52,000 UBS customers with $14.8 billion in secret offshore accounts. The IRS based the demand on evidence that those customers likely broke U.S. tax laws.

SWISS LAW

Both UBS, which is the largest bank in Switzerland, and the Swiss government have asserted that turning over the names would violate Swiss law.

Stuart Gibson, an attorney with the Justice Department's tax division in Washington, D.C., told U.S. District Judge Alan Gold in Miami that the two governments reached an agreement in principle on the major issues. The judge set a status conference call for Aug. 7.

The Justice Department said in July it would demand that any settlement provide ``information on a significant number'' of customers of UBS, which has admitted to soliciting wealthy Americans to hide money offshore.

Karina Byrne, a spokeswoman for UBS, sponsor of the annual Art Basel Miami Beach event, said the bank is on the sidelines in the negotiations. ``The governments announced the agreement in principle,'' Byrne said. ``We're in a position of we'll do what we're told.''

The Justice Department said in July it would insist on ``information on a significant number'' of UBS customers in any settlement.

NAMES PROVIDED

UBS, which gained a major U.S. presence with its acquisition in 2000 of PaineWebber, has already provided the names of about 250 to 300 clients with secret Swiss accounts -- part of an agreement aimed at avoiding criminal prosecution for the bank's role in helping U.S. taxpayers dodge taxes.

The Swiss government had approved the release of those names because it determined those clients appeared to have committed tax fraud under Swiss standards. UBS also paid a $780 million fine as part of that deferred prosecution agreement.

The current dispute relates to whether UBS must hand over the additional names of clients who weren't part of that agreement.

The U.S. and Swiss governments haven't disclosed the basis for deciding which UBS clients' names will be released. But some say the U.S. government is zeroing in on those taxpayers with the biggest accounts.

TREMORS SENT

In any case, the piercing of Swiss bank secrecy is sending tremors far and wide. In recent months, numerous customers of UBS and other foreign banks have been beating a path to the IRS to make voluntary disclosures under a special program that allows them to pay back taxes, interest, and penalties before a Sept. 23 deadline.

In addition, a variety of other Swiss banks, including Credit Suisse, have begun exiting their cross-border business that provides banking services to U.S. clients.

Meanwhile, federal prosecutors are pursuing a trail of information gained from UBS clients as the probe widens beyond that bank. Documents filed Tuesday in federal court in Fort Lauderdale in connection with a guilty plea by a UBS client referred to a second ``Swiss bank,'' a ``Swiss bank executive'' and a ``Swiss attorney'' who allegedly helped hide money from the IRS. Jeffrey Sloman, acting U.S. attorney for Miami, said the investigation is continuing.

INDICTMENT UNSEALED

The veil on UBS private banking began to lift in May 2008 when federal prosecutors in Fort Lauderdale unsealed an indictment against former UBS banker Bradley Birkenfeld. He pleaded guilty and has assisted the government extensively. His sentencing is set for Aug. 21.

While the Swiss regard confidentiality as a sacrosanct principle of their thriving financial-services sector, the United States has justified its aggressive stance by spotlighting some of the seamier aspects of private banking.

Birkenfeld, for example, acknowledged smuggling diamonds into the United States for a client by stuffing them inside a toothpaste tube. And prosecutors said that UBS bankers visiting the United States to meet U.S. customers with secret accounts routinely told U.S. immigration officials they were on vacation and moved from hotel to hotel to avoid detection.

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