The U.S. Justice Department denied a published report today that it may drop a civil lawsuit that seeks to force UBS AG, the largest Swiss bank by assets, to disclose the identities of 52,000 U.S. account holders.

The New York Times cited an “unidentified U.S. official briefed on the matter” in reporting a “reversal” after a “fierce lobbying campaign” by UBS and the Swiss government to persuade the Justice Department to drop the case.

“There is no basis for the report in the New York Times,” the Justice Department said in an e-mailed statement. “While the department is always willing to consider settlement in any case, the suggestion that the department is planning to drop this suit is simply untrue. The department is continuing with the case against UBS.”

The government sued UBS Feb. 19 in federal court in Miami, a day after the bank avoided U.S. prosecution for helping wealthy Americans evade taxes. UBS agreed to pay $780 million in penalties, admitted it helped taxpayers hide money in Swiss accounts and gave the IRS more than 250 clients’ names.

Two UBS clients in the U.S. have since been prosecuted for tax crimes, and the IRS is encouraging others to avoid criminal charges by disclosing offshore accounts voluntarily.

The Justice Department will make its next court filing on June 30, according to the e-mailed statement. U.S. District Judge Alan Gold has scheduled a hearing for July 13 on the case.

Treaty Imperiled

The U.S. needs to resolve the lawsuit before Swiss voters are likely to approve a loosening of bank secrecy rules, Finance Minister Hans-Rudolf Merz said today.

“I can’t imagine that we in Switzerland agree to a double- taxation agreement in a popular vote if this problem isn’t solved before,” Merz told reporters in Berlin today, according to a recording on the Web site of Swiss radio DRS.

The two countries last week signed a draft accord to improve the exchange of information on suspected tax evaders.

In court filings and a diplomatic note, the Swiss government has said the lawsuit would “seriously jeopardize” efforts to revise a 1996 tax treaty.

Under that treaty, Switzerland can turn over account data only on a reasonable suspicion of “tax fraud or the like,” according to a UBS court filing. Unlike the U.S., the Swiss don’t view tax evasion as a crime.

‘Direct Challenge’

In an April 29 note to the U.S. government, the Swiss government said the lawsuit is a “direct challenge” to its sovereignty. The action threatens negotiations to revise the treaty to share information with the U.S. on “not only tax fraud, but also tax evasion,” according to the note.

An IRS voluntary-disclosure program, which requires taxpayers to pay taxes and interest for six years on offshore accounts, will better serve the agency’s goals, UBS wrote in a court filing.

UBS has offered to provide clients with documentation for voluntary disclosures and “many thousands of clients have requested the necessary documentation or transferred their assets” to the U.S., according to the filing.

As part of its deferred-prosecution agreement, UBS admitted Feb. 18 that from 2000 to 2007 its Swiss private bankers helped Americans evade U.S. taxes through sham offshore companies in tax havens including Panama, Hong Kong and the British Virgin Islands. UBS said it created misleading forms saying those companies, not taxpayers, were the beneficial account owners.

UBS also admitted that its private bankers marketed securities and banking services in the U.S., even though it didn’t have the required license from the Securities and Exchange Commission. Those bankers, UBS admitted, met with clients in the U.S. and communicated with them regularly as they traded securities in their accounts or transferred assets.

The case is U.S. v. UBS AG, 09-cv-20423, U.S. District Court, Southern District of Florida (Miami).