Judges reining in Israel Tax Authority

Israel Tax Authority
Israel Tax Authority

Recent court rulings indicate that the taxpayer need no longer feel helpless in the face of the Tax Authority's power.

A battle between the individual taxpayer and the mighty and threatening Israel Tax Authority often looks like a lost cause. The statistics show that most disputes with taxpayers end in victory for the Tax Authority, with costs awarded against the citizen who dared challenge the state. It’s no wonder that the general feeling among the public is that the Tax Authority can do whatever it wants, and the citizen had better shut up and pay up.

Recently, however, cracks have started appearing in the Tax Authority’s seemingly impregnable wall. More and more judges, all over the country, are prepared to batter it, voicing criticism of the Authority, setting clear boundaries for its conduct, and even awarding costs in the tens of thousands of shekels in favor of the taxpayer.

Not long ago, Beersheva District Court judge Yael Yitav sharply criticized the Tax Authority, after a tax inspector paid a surprise visit to a person’s home and forced him to answer questions about a civil case between this person and the Authority. The judge held that conducting a "field interrogation" of a taxpayer at his home with no justification was out of bounds. The message was brought home by the imposition of NIS 100,000 costs on the Authority.

In another case, last month, Tel Aviv Magistrates Court judge Hadas Peled ruled against the Tax Authority after it collected customs duties from a company that was exempt from duties, and was not prepared to give grounds for its action in writing. The Tax Authority argued that it was sufficient to explain its action in a telephone conversation, because it had too great a workload to be able to answer every enquiry in writing. The judge made clear that workload was not an excuse for failing to abide by the law, and awarded NIS 20,000 costs against the Tax Authority.

Lod District Court judge Avi Gorman has also criticized the behavior of the Tax Authority in recent years, in several rulings, among them one in which he canceled a 26 year-old tax debt that had swollen to about half a million shekels, because of the Authority’s negligence.

The spearhead of judicial criticism of the Israel Tax Authority, however, is undoubtedly Haifa District Court judge Orit Weinstein, who in the past few years has built up an battery of rulings ending in defeat for the Authority and sharp criticism of its conduct. Weinstein has several times stood the Authority in a corner and described its conduct as problematic and unlawful.

So while it’s true that the Tax Authority wins in most cases, and this is even more clear cut in the Supreme Court, it seems that the message from the courts is changing. The idea that the Tax Authority is always right and every citizen is a potential tax evader no longer dominates judicial discourse, and court rulings are no longer a foregone conclusion. Sometimes it’s the Tax Authority that is in breach of the law, and fighting it is not necessarily pointless.

Published by Globes, Israel business news - en.globes.co.il - on July 20, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Israel Tax Authority
Israel Tax Authority
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018