web analytics
January 31, 2015 / 11 Shevat, 5775
 
At a Glance
Blogs
Sponsored Post


Surviving an IRS Audit in Israel

irs_tax_button[1]

Almost every American living in Israel is aware of the legendary “additional child tax credit” (ACTC) “tax credit/refund” of $1000 per child.

Over the years I’ve written about it on the blog; The IRS Taxman comethThe Apocalypse: Feds arrive in Israel, With Liberty and Passports for all, as well as the importance of filing the FBAR (Foreign Bank Account Report) — disclosure of all Financial Holdings and Bank accounts outside the United States that belong to American citizens that are in excess of $10,000.

Therefore, almost any American who has moved to Israel and has a pension fund or keren hishtalmut– is required to file the US FBAR.H

However….because there exists an entire underground “industry” of return preparers who have filed fraudulent returns, fabricating earned income in order for their clients to claim child credits, and have retroactively filed for tax credit refunds after children have been naturalized (not American by birth, but by being brought to the USA and made citizens there) — many tax practitioners in Israel have stated that the IRS has begun scrutinizing (read: AUDITING) all returns of Americans in Israel claiming the ACTC.Thankfully I have not (yet?) been audited, but with the IRS targeting everyone  — I am putting together this list on how to proactively prepare for an audit.

Step 1: Take a deep breathe, count to ten, and don’t panic. 

Assuming you used a reputable tax-preparer, didn’t count a kollel stipend as income,  and you didn’t retroactively try to claim the refund after bringing your kids to the US for naturalization — you should be able to survive the audit unscathed.

Step 2: The key for surviving the audit is to prepare now, even if you aren’t being audited.  Proactivity is the key.

You should prepare and gather the following information:

A letter from the comptroller of your company stating -

- Duration of your employment

- For the previous 3 years, your salary, income tax, health tax, and national insurance (ביטוח לאומי) payments

- The bank name, branch number, and acct. no. into which your salary was paid.

Your original form 106’s and authorized English translations** for the previous 3 years.

A letter from your family physician listing the names and date of births of all your kids, and a statement that s/he has been treating them for the previous how many years and that they reside with you and your spouse. The letter should be on Kupat Cholim stationary, preferably with an English letterhead.

A letter from each of the schools your kids attended during at least the previous 3 years indicating their names, date of births, the grade they’re currently studying in (if relevant), and a statement that you and your spouse are their primary care providers and that they reside with you. The letter should also indicate your address, that you paid their school fees, and that you attend parent-teacher meetings faithfully.

A copy of your marriage certificate. If married in the USA – your marriage license. If married in Israel, the registration form provided by the Minister of Religious Affairs when you got married, (not your Ketuba), and an authorized English translation.**

Copies of US passports for each member of the family.

Copies of IL passports for each member of the family.

Copies of Social Security cards for each child.

Copies of IL birth certificates for each child.

Copies of US Consular Report of Birth Abroad for each child.

**Authorized English Translation means you need an authorized translator (not yourself)  and it must be approved by a notary.   This may actually be cheaper in the US than in Israel because notary services in the US cost a fraction of notarization services in Israel (which are outrageous).

Step 3: Don’t try to deal with the audit by yourself. Pay a CPA in Israel — they have far more experience, and even if you get all the documentation above by yourself (which will save you much time and hassle), its still best to pay the CPA and let them be the interface to the IRS.

For more information on the IRS targeting American tax filers in Israel, see this article, “Americans in Israel Under IRS Scrutiny for Child Credit Claims” by Eric Kroh. Yihiyeh Biseder!

PS: Kudos to the underground “industry” of return preparer and services who caused this massive Chilul Hashem.  You know who you are, and you will be audited a thousand times over in hell.

If you need the name of reputable CPAs in Israel, you can contact me by email.

About the Author: Jameel blogs at the Muqata: http://www.muqata.com, but these days extensively posts on Facebook. Follow Jameel at https://www.facebook.com/Muqata Wherever I am, my blog turns towards Eretz Yisrael טובה הארץ מאד מאד The views expressed in this blog are solely those of the author and do not represent the views of The Jewish Press.


If you don't see your comment after publishing it, refresh the page.

Our comments section is intended for meaningful responses and debates in a civilized manner. We ask that you respect the fact that we are a religious Jewish website and avoid inappropriate language at all cost.

If you promote any foreign religions, gods or messiahs, lies about Israel, anti-Semitism, or advocate violence (except against terrorists), your permission to comment may be revoked.

2 Responses to “Surviving an IRS Audit in Israel”

  1. I just wonder WHEN our IRS service will begin to be dilligent with the fraud right here in the us. With hispanics claiming children that don'e live in the US much less with them and the prisoners that file for dependants named for Disney characters. It disturbs me that people don't just pay what they owe and get on with life. But to go to Israel to audit is rediculous when they have so much to recover right here.

  2. Elli Fischer says:

    The translations need not be notarized at all, and the translator need not be "certified". Here is the relevant language from the IRS code:

    (c) Standards for acceptability of submissions of documents in a language other than English and certified English translations of laws in a language other than English. The taxpayer must submit with the request an accurate and complete certified English translation of the relevant parts of all contracts, wills, deeds, agreements, instruments, trust documents, proposed disclaimers, and other documents pertinent to the transaction that are in a language other than English. If the taxpayer chooses to submit certified English translations of foreign laws, those translations must be based on an official publication of the foreign government or another widely available and generally accepted publication. In either case, the translation must be that of a qualified translator and must be attested to by the translator. The attestation must contain: (i) a statement that the translation submitted is a true and accurate translation of the foreign language document or law; (ii) a statement as to the attestant’s qualifications as a translator and as to that attestant’s qualifications and knowledge regarding tax matters or foreign law if the law is not a tax law; and (iii) the attestant’s name and address.

    This is something I've done for several clients, and there have been no problems with the translations.
    Contact me – fischer.tirgum at gmail – if you need a translator.

Comments are closed.

SocialTwist Tell-a-Friend

muqata logo 486x300
Current Top Story
Jeremy Bird, working for Israeli campaign outfit V15, shown at Ted Talk, May 20, 2014.
V15 US Political Operative Marinated in Hate-Israel Activism
Latest Blogs Stories
Ultra Orthodox Jewish youths studying religious texts at a Yeshiva in Jerusalem

In the Hareidi world, Torah study is worshipped to the exclusion of all else. Nothing else matters

IDF vehicles attacked by Hezbollah with anti-tank missiles at northern border.

Chances are, like in the South, terrorists are building a sophisticated network of tunnels in North.

Hezbollah shooting at Har Dov

9:31pm The Mt. Hermon ski resort on the Golan Heights will be open for business tomorrow morning — having receiving permission from the IDF. 8:03pm Channel 2 reports that Hezbollah terror cell was located 5 kilometers from Israel, and not within Israel as originally thought.Soldiers in 2nd vehicle were saved after they jumped out of […]

Jordana Brown: Ready, willing, and able!

I need a job, my friends. A real life, full-time, pay-the-bills, up at 7, home-after-nightfall JOB!

Ha’aretz claiming Glick is “far from a household name to non-English speaking Israelis” is erroneous

Distinguishing between manipulating and influencing people + 3 steps towards positive communication

Despite “excuses” about not wanting to influence Israel’s election Netanyahu’s views should be heard

Israeli leaders deny reality: Nothing we can do will make the Arabs accept a viable Jewish state

How do we make sure the Holocaust is relevant to new generations?

In 2006, Amona kids saw their teachers and rabbis being thrown from windows as if they were garbage

No money should go to terrorists or their families; anyone involved in terror must pay the price

Responsible Jewish outreach encourages BTs to retain and to enhance their relationship with parents

Israelis will vote for Likud because of Caroline Glick, but she’ll just be Right window dressing.

What are the dynamics of running a family business and what are its impact on family relationships?

The Hareidi paper HaMevaser wanted to have their cake and eat it too: use the photo; lose the women

Producer Chuck Wang explains how you can learn from mistakes and move on towards success.

More Articles from Jameel@Muqata
Hezbollah shooting at Har Dov

9:31pm The Mt. Hermon ski resort on the Golan Heights will be open for business tomorrow morning — having receiving permission from the IDF. 8:03pm Channel 2 reports that Hezbollah terror cell was located 5 kilometers from Israel, and not within Israel as originally thought.Soldiers in 2nd vehicle were saved after they jumped out of […]

Tel Aviv police at the scene of the stabbing attack in Tel Aviv Wednesday morning.

Status of the wounded from this morning’s terror attack.

Oron Shaul’s dead body was stolen and being held by Hamas in Gaza.

Defense Minister Yaalon told Ruth Shapira that the terrorists were caught last night by IDF forces.

A firebomb attack has left a father and daughter injured near Maaleh Shomron.

Who was this Minister of Rage, Ziad abu Ein, and what did he do to qualify for his position as a senior minister in the PA?

As the mud slinging continues…I guess the Yesh Atid party line is to brand everyone “an extremist.”

Channel 10 TV published on Sunday a poll they commissioned asking Israeli Arabs a rather straightforward but important question:

Printed from: http://www.jewishpress.com/blogs/muqata/surviving-an-irs-audit-in-israel/2012/08/09/

Scan this QR code to visit this page online: