The US tax authority, the Internal Revenue Service, said today it is to get information on 4,450 US holders of accounts with UBS, the embattled Swiss wealth management giant.

In what appears to be a significant erosion of Switzerland’s bank secrecy laws, the IRS said it had obtained "substantially all of the accounts” it sought from UBS. A statement from UBS, meanwhile, said the US warned that it could leave open its demand for data if information is not passed over by 24 August next year.

The IRS statement said: "Under the agreement, the IRS will submit a treaty request to the Swiss government describing the accounts for which it is requesting information.”

"The Swiss government will then direct UBS to initiate procedures to turn over information on thousands of accounts to the IRS," the agency said. The agreement will take immediate effect.

A prominent tax lawyer in London told WealthBriefing that the agreement, while it left out some details on the extent of the data to be handed over, represented a large blow for Swiss banking secrecy.

“This is a significant victory for the IRS in this particular battle, if not in the whole war against Swiss banking secrecy,” the lawyer, who asked not to be named, said.

Though the IRS doesn't specify how many accounts are covered in the accord, the Swiss government did so.

"Switzerland has undertaken to process the new treaty request, concerning approximately 4,450 accounts, within a year," the Swiss government said in a press release. "These are the terms of the agreement between Switzerland and the US to settle the looming conflict between the two nations' legal systems," it said. 

Originally, US authorities sought information on 52,000 account holders - a number given in press reports and today confirmed by the Swiss government. Subsequent reports suggested that an agreement would be for disclosure on a much lower number - 5,000 by some recent accounts, 4,000 by others.

Last February the IRS asked the US federal court in Miami to order UBS to provide it with information on thousands of US taxpayers with Swiss bank accounts.

The Swiss government got involved shortly afterward because it viewed the fulfillment of such a request as a violation of the traditions and laws of Swiss banking - and a potential shock to its economy. About 12 per cent of Swiss GDP is generated by its banks.

"The privacy of all of the persons concerned remains protected under the law, and they may contest the [Swiss Federal Tax Administration's] final decisions before the Federal Administrative Court," the Swiss government said.

UBS said the agreement did not require it to pay any money over, and resolved all issues relating to the alleged breaches of UBS’s Qualified Intermediary Agreement with the IRS. UBS said it will tell any affected US persons encouraging them to voluntarily disclose any information to the IRS.

The Swiss bank said the US authorities will withdraw its “John Doe summons with prejudice” demand for data on “remaining accounts” – the number of which are not specified in UBS’ statement – no later than 24 August next year. UBS was not able, when asked by WealthBriefing, to specify in numbers what the term “remaining accounts” meant.

The UBS statement continued: “The summons will be withdrawn with prejudice as to those remaining accounts if at any time on or after 1 January 2010 the IRS has received information relating to at least 10,000 accounts of US persons maintained at UBS in Switzerland.”

A UBS spokesperson told this publication that the 10,000 figure was “the number of accounts with respect to which information is required for the IRS to be obliged to withdraw the JDS with prejudice in its entirety”.

The comment appeared to leave open the prospect that the IRS could go after further client data. The Swiss government has insisted that foreign governments are not entitled to use tax information sharing agreements to go on “fishing expeditions” for possible tax evaders. Tax evasion is not a crime in Switzerland – unlike in the UK and US – but fraud is treated as a crime.