* Source says outlines of deal reached, talks continue
* Swiss giant UBS already paid $780 mln fine in 2009
By Katharina Bart and Kim Dixon
ZURICH/WASHINGTON, April 17 (Reuters) - The Swiss and U.S. governments were considering on Wednesday a possible solution to end their dispute over Swiss banks accused of helping wealthy Americans evade billions of dollars in taxes.
In a struggle that has unfolded amid a global crackdown on tax evasion by cash-strapped governments, a source familiar with the long-running and complex talks has told Reuters that the two countries have agreed on an outline for a deal.
To determine how they should be dealt with, the source said, more than 300 Swiss banks would be divided into groups based on the extent to which they had helped U.S. clients hide money.
Bank secrecy, which has helped Switzerland become the world’s largest offshore center with $2 trillion in assets, has come under fire since the 2007-2009 financial crisis.
Tax evasion has dominated European headlines in recent weeks, following the admission by a disgraced former French minister that he held a Swiss account and the recent leak of thousands of holders of secret bank accounts worldwide.
A pact to end the long-running Swiss-U.S. dispute “would be an extraordinary event,” said Scott Michel, a lawyer with clients trying to resolve tax issues with U.S. authorities.
A Swiss government spokesman said on Wednesday the cabinet had been informed about a solution to the dispute. He declined to give further details as the negotiations were ongoing.
The Swiss finance minister, Eveline Widmer-Schlumpf, was expected to discuss a possible deal with U.S. officials on her trip to Washington for a meeting of Group of 20 finance officials on Thursday.
A senior U.S. government source involved in Swiss banking cases confirmed that a proposed deal was being circulated.
The Swiss government has been in protracted talks to end U.S. investigations into Swiss banks, including Credit Suisse and Julius Baer, in return for expected heavy fines and a transfer of client names.
On Tuesday, U.S. authorities charged a Swiss banker and a Swiss attorney with helping American clients hide millions of dollars in offshore accounts to evade taxes.
Zurich-based Bank Frey confirmed on Wednesday that it was named in the indictment, along with its head of private banking Stefan Buck, who was charged with one count of conspiracy.
“Bank Frey emphasizes that the defendant is presumed innocent unless and until proven guilty,” it said in a statement.
Attorney Edgar Paltzer of Swiss law firm Niederer Kraft & Frey was also charged with conspiracy in the indictment.
“All I can say at this point in time is that I have always tried to do my best. I take the opportunity to thank all those who support me in these difficult times,” Paltzer said in an email to Reuters. He declined further comment.
Niederer Kraft partner Andreas Casutt said in a statement that Paltzer was leaving the firm, but declined to comment further.
According to the indictment, defendants helped U.S. clients skirt taxes, working with other Swiss banks, including Wegelin & Co., the country’s oldest private bank. Wegelin was forced to close earlier this year after it pleaded guilty to helping Americans evade U.S. taxes through secret accounts.
Swiss giant UBS was forced to pay $780 million in 2009 and hand over the names of more than 4,000 clients, information that allowed U.S. authorities to pursue other banks.
The Department of Justice declined to comment. Assistant Attorney General Kathryn Keneally said last week that Justice was looking at banks and individuals beyond Switzerland for tax cheats.
“If there is one message I want to get out there on the offshore bank account issue, it is that time is running out and anyone who is still waiting to come forward,” she said.
German prosecutors said on Wednesday they were investigating employees of Credit Suisse, another titan of Swiss banking, and its units Clariden Leu and Neue Aargauer Bank on suspicion of helping Germans evade taxes.
Several leading European Union countries have announced a joint push against tax evasion, a message they will take to the meeting of G20 finance officials in Washington this week.
The Organisation for Economic Cooperation and Development has scheduled the release of a new report on “tax evasion through offshore centers” for Friday during the G20 meeting.
Widmer-Schlumpf said all countries should be treated equally in the drive for bank transparency. “We consider it very important that rules must apply to all and are engaging ourselves for a level playing field in multilateral forums,” she told Reuters in written responses to questions.
Switzerland often complains it is unfairly targeted compared to other financial centers and sees the “offshore leaks” affair as helping redress the balance since most of the accounts leaked were in other tax havens, such as the British Virgin Islands.
Swiss-U.S. negotiations toward settling their dispute have stalled in the past because Washington had demanded client data going back to 2002. Berne said it could not deliver this due to strict Swiss bank secrecy laws.
U.S. authorities have also wanted to keep up pressure on tax evaders to come clean under an amnesty launched last year.
The deal now under consideration would involve banks handing over data only back to 2009, when Switzerland and the United States signed a new double-taxation pact that allows transfer of information on more clients, the Swiss source said.
In return, Swiss negotiators were working on a plan to deliver codified data detailing the money trail for those who withdrew money before 2009 and placed it in other tax havens instead, the source said.
Such a deal would not shield U.S. taxpayers with accounts offshore from prosecution or audit, Michel said, since “the IRS could easily open an examination or investigation for years prior to 2009, and seek to obtain records of unreported accounts through subpoenas or through requests for administrative assistance under the old treaty language.”
The agreement would mean banks already under investigation should settle with individual deferred prosecution agreements, while a second group of banks that had U.S. clients but have not yet been targeted by investigators would also have to agree to pay fines and hand over data on their customers.
Credit Suisse, which has already made a 295 million Swiss franc ($318.35 million) provision toward settling the investigation, declined to comment. The Swiss Bankers Association also declined to comment.