Americans with Israeli bank or other financial accounts could face a tough tax season in 2014 if they do not come forward and disclose their assets to the IRS. Recently, Israeli banks have come under increased scrutiny by the IRS in regards to disclosing the accounts of their American clients. In particular, three Israeli banks- Bank Hapoalim, Bank Leumi and Mizrahi Tefahot- are under investigation by the Department of Justice. To avoid prosecution, many other Israeli banks will begin turning over information as early as July 2014.
The prompt release of U.S. accountholder information by Israeli banks is a result of the IRS’s efforts to fully implement the 2010 Foreign Account Tax Compliance Act (“FATCA”) which requires foreign banks and financial institutions to report the assets of their American account holders. FATCA was passed as part of the U.S. government’s effort to crack down on U.S. tax evaders. Initially, the IRS concentrated its efforts on Swiss Banks. However, in the past year, the IRS has been expanding its reach to other countries, particularly Israel.
As a result of this crackdown, some Israeli banks have been urging their American account holders to come forward and disclose their assets under the Offshore Voluntary Disclosure Initiative (OVDI). In December 2013, Bank Leumi, the largest commercial Bank in Israel, sent out a letter to their American clients to come forward under the program.
U.S. taxpayers with account holdings should seriously consider coming forward and disclosing their assets to the IRS. If you have never reported your foreign investments on your U.S. Tax Returns, the IRS has established the Offshore Voluntary Disclosure Initiative (OVDI) which allows taxpayers to come forward to avoid criminal prosecution and not have to bear the full amount of penalties normally imposed by IRS.
Despite the recent scrutiny by IRS on the Israeli bank, the attorneys with Law Offices Of Jeffrey B. Kahn, P.C. are still qualifying taxpayers with Israeli bank accounts for OVDI. With our expertise in Offshore Account Voluntary Disclosures, taxpayers should result in avoiding any pitfalls and gaining the maximum benefits conferred by this program.
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