US authorities have stepped up a probe into allegations that offshore accounts were set up at Swiss bank UBS to help wealthy clients avoid tax.

The Justice Department is seeking court approval for the Internal Revenue Service (IRS) to issue a civil summons against UBS to obtain key information.

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UBS said it took the matter "very seriously" and was co-operating fully.

'Diligence'

UBS said it was "aware" of the summons request, made to the Federal District Court in the Southern District of Florida.

"UBS takes this matter very seriously and is working diligently with both Swiss and US government authorities, consistent with Swiss law and the legal frameworks for intergovernmental co-operation and assistance," it said in a statement.

Swiss officials held talks with their US counterparts about the allegations last week.

This followed the admission by Bradley Birkenfeld, a former director of UBS private banking division, that he helped US clients avoid paying more than $7m in tax by hiding more $200m in an elaborate web of fraud.

According to the Justice Department, Mr Birkenfeld claimed more than $20bn was sitting in "undeclared" accounts at the Swiss bank controlled by US taxpayers.

Media reports have suggested that up to 20,000 US citizens may be involved.

The IRS said its probe would enable it to "detect wealthy individuals who don't pay their taxes as well as provide details about how advisers facilitate this abuse".

The Swiss bank's reputation for financial prudence has been recently damaged by the sub-prime crisis which has seen it make losses of more than $37bn.

The firm made an $11bn loss in the first quarter of 2008 and is cutting 5,500 jobs.

(BBC)

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