By: Eli Doron, Adv; Yaron Tikotzky, Adv, (C.P.A); Dr.Slomo Nass, Adv, (C.P.A)
Voluntary Disclosure proceedings and neutralizing criminal exposure in Israel and the U.S:
Israelis that have unreported income whether in Israel or outside it may be exposed to criminal proceedings for alleged tax offences.
Voluntary Disclosure is a term relating to self initiated report to the IRS for income originated outside the country or any other income not automatically reported to the tax authorities in Israel. In a situation in which there are such unreported incomes it is advisable to operate in this manner and using this procedure after consulting a tax lawyer expert.
Why Voluntary Disclosure proceedings are advisable?
Those who choose this route of direct and voluntary approach to the tax authorities receive privileged treatment to by the tax authorities and in case the procedure is approved and due taxes are paid the assessee will be immune from criminal proceedings taken against him in this respect.
The Israeli tax authorities encourage rectification of wrong reports and declaring income not earlier reported and thus boosts the assessee to operate in clear and transparent manner in front of it . Therefore it undertakes , when approving the Voluntary Disclosure Procedure and upon payment of the ensuing tax , to refrain from criminal proceedings against the assessee.
FACTA – Foreign Account Tax Compliance Act
In 2010 the FACTA - Foreign Account Tax Compliance Act- was approved in the US thus imposing on banks and other financial institutes that are based outside the US to report regarding accounts of US citizens held by them.
This law imposes heavy sanctions on refusing and non cooperative bodies. The law imposes on banks world wide to identify to accounts of their clients who hold American citizenship and thus have them sign certain documents to a degree sufficient to make reports to the US tax authorities regarding these accounts. The law also provides that US citizens refusing to cooperate with the banks may risk action by the bank closing their accounts and even withholding 30 % of specific income generated in these accounts.
It should be mentioned that non reporting such accounts is regarded as severe criminal offence bearing heavy sanctions including incarceration and fines.
In the light of this threat, banks in Israel also had to issue new directives indicating the transfer of information to the US tax authorities regarding US citizens running such accounts.
How we can help you ?
In order to submit to request for Voluntary Disclosure , whether referring to incomes in Israel or abroad , it is necessary to be assisted by a legal tax expert.
Our office, consisting of lawyers and chartered accountants veterans of the Israeli tax authorities, possesses unique expertise and familiarity in representing Israelis asking to neutralize their criminal exposure originated form tax offences committed in Israel or elsewhere, either deliberately , negligently or otherwise, including , but not limited to, the following offences : not reporting the existence of bank account and its yields whether in Israel or abroad, not reporting the existence of income generating business whether in Israel or abroad, not reporting "Black" money generated in Israel or abroad, the usage of false invoices, applying for tax benefits or exemptions based on false facts etc.
Our office will know how to represent you in full loyalty and total discretion vis a vis the tax authorities either in Israel and / or the US, with "top notch" professional representation.
The procedure will entail removing the fault in front of the relevant tax authority and concluding the matter without criminal proceedings.