updated 7/13/2009 10:52:31 AM ET 2009-07-13T14:52:31

Negotiations aimed at settling the Internal Revenue Service’s tax evasion lawsuit against Swiss bank UBS AG gained traction Monday when a federal judge agreed to postpone the case until early August or possibly longer.

“I urge that type of communication. I am not unwilling to give further extensions upon request. Quite the contrary,” said U.S. District Judge Alan S. Gold after agreeing to postpone high-stakes hearings that had been scheduled to begin Monday.

The judge acted after a motion seeking delay was filed Sunday by the Swiss and U.S. governments and the bank, one of the largest in Europe.

UBS attorney Eugene Stearns said discussions are taking place at high levels between the two governments, which are at odds over the Swiss claim that its centuries-old bank secrecy laws prevent UBS from disclosing to the IRS the identities of some 52,000 suspected wealthy American tax dodgers.

“Steering through this minefield, if they need two weeks or longer to do it, we welcome their discussions,” Stearns said.

The IRS wants Gold to enforce what are called “John Doe summonses” seeking the U.S. taxpayer information. The IRS has estimated the accounts hold some $15 billion in assets, costing the U.S. hundreds of millions of dollars in lost taxes.

Hearings on enforcing the IRS summonses were rescheduled for Aug. 3 to allow time for settlement negotiations. Gold also set a status hearing for July 29.

The Justice Department indicated that any deal would have to include disclosure of some taxpayer names and would likely include a large penalty against UBS, which has some 34,000 employees and contract workers in the U.S.

If there is no deal and UBS refuses to release names under a court order, the Justice Department said it would consider asking Gold to hold UBS in contempt and “impose monetary sanctions sufficient to bring UBS into compliance.”

UBS previously admitted assisting U.S. citizens in evading taxes as part of a deferred prosecution agreement with the Justice Department. UBS agreed to disclose the names of about 300 American clients and pay a $780 million penalty. The IRS subsequently filed its casing seeking the 52,000 additional names.

Hundreds of people with offshore bank accounts have since decided to take advantage of an IRS voluntary disclosure program in which they agree to pay back taxes and penalties but usually avoid criminal prosecution. Some foreign banks have also asked U.S. clients to close out their accounts, tax experts say.

Federal prosecutors have also brought several UBS-related tax evasion cases against individuals in South Florida, including a fraud conspiracy indictment against former UBS senior banker Raoul Weil. Weil’s attorney has proclaimed his innocence but he remains in Switzerland and is considered a fugitive by the U.S.

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