Within 10 days, all the financial information about Israelis with a green card or a financial association with the US and US citizens with bank accounts in Israel will be delivered to the Israel Tax Authority. In the next stage, the Tax Authority will give the information to the US Internal Revenue Service (IRS). These measures are part of the Foreign Account Tax Compliant Act (FATCA) agreement. Owners of accounts notified by the financial institutions of their intention to disclose the financial information about them to the US authorities now have a very short window of opportunity to object to that decision by arguing that they are not obligated to report their assets to the IRS.
The Tax Authority today announced that it was giving financial institutions an extension until September 30 (instead of the previous September 20 deadline for delivering the information) in order to enable them to discuss the objections filed by the account owners whose information is to be transferred.
The extension followed a High Court of Justice (HCJ) ruling last week dismissing petitions against the FATCA agreement and the transfer of information to the US. The agreement , signed two years ago by the Israeli and US governments and ratified in legislation early this month, requires banks and other financial institutions on all the signatory countries, including Israel, to give the IRS information about accounts, financial assets, and income of US citizens in those countries.
The information will be transferred to the IRS by the Tax Authority after receiving it from the financial entities in Israel. Under the income tax regulations (implementation of the FATCA agreement), financial institutions were obligated to provide the required information through a computer system on the Tax Authority website by September 20, 2016. The information must include data about accounts owned by US residents and/or citizens identified as such by the financial institutions in 2014 and 2015, and information about Israelis about whom there are indications that they hold a US account, such as a US mailing address, a US telephone number, etc.
A petition was recent filed at the HCJ against the FATCA agreement and the legislation enforcing it, but the Supreme Court dismissed it last week, thereby paving the way for the transfer of the information to the US authorities. At the same time, in the framework of the HCJ proceeding, it was ruled that information would not be disclosed to the US authorities about a person whose account was classified as requiring reporting, but who was notified about this less than 30 days previously, or about a person who had been notified, but who had made objections, until his object is answered.
In other words, the next 10 days are a window of opportunity for submitting objections to a decision by a financial institution to deliver information to the Tax Authority, and if a person has already filed an objection after being contacted by a financial institution and informed about the transfer of information about him to the US authorities, in which case the financial institution must answer him before transferring the information. The Tax Authority accordingly announced the granting of an extension until September 2016 for submitting reports by financial institutions.
Published by Globes [online], Israel business news - www.globes-online.com - on September 18, 2016
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