Several thousand American customers who had undisclosed accounts with Swiss banking giant UBS have begun receiving letters that would strike fear in most hearts: notification that their names and account information is being turned over to the Internal Revenue Service.

Last August, Switzerland agreed to turn over the names of 4,450 UBS account holders, down from the 52,000 customer names the IRS had originally sought. The agreement called for UBS to officially inform its clients of the fact that their names were being turned over and give them a chance to appeal that decision.

“It’s been bedlam here,” says Martin Price, a tax lawyer in Ft. Lauderdale, Florida. “We’ve had a rash of people come forward who have received letters from UBS and want to get into the voluntary-disclosure program.”

The IRS has given account holders at foreign banks until October 15 to voluntarily disclose their ownership of foreign accounts. By coming forward, they will probably bypass criminal prosecution, but will be subject to hefty civil penalties of up to 50 percent of the account’s value for every year it was open.

The UBS case is just one strand in an ongoing international campaign by the G-20 nations to force tax havens like Switzerland to disclose information about former secret accounts to the proper tax authorities. The Organization of Economic Cooperation and Development (OECD) has published a “grey list” of offending countries in an effort to shame them into complying with international standards.

There are 22 nations remaining on the OECD’s grey list. Switzerland was taken off the list last week after signing agreements on sharing tax information with 12 different countries.

At the G-20 summit meeting in Pittsburgh a week ago, leaders of the countries in attendance said they would begin using countermeasures against tax havens if they don’t cooperate by March 2010. The final G-20 communiqué didn’t disclose what steps were being contemplated.

“What is probably creating a wide spread of real deterrence has been the fallout from the UBS case,” says Sarah Lewis, head of the Washington, D.C.-based Tax Justice Network USA. “The veneer of secrecy and the illusion that it is unbreakable and sacrosanct has been damaged.”

The IRS has been pursuing customers of UBS relentlessly for the last year, starting with a multimillionaire California investor named Igor M. Olenicoff, who pled guilty to hiding $200 million in UBS accounts. He paid a fine of $52 million.