web analytics
September 26, 2016 / 23 Elul, 5776

Posts Tagged ‘FATCA’

Israel Supreme Court Temporarily Blocks State From Transferring FATCA Info to IRS

Sunday, September 4th, 2016

Israel’s highest court has temporarily blocked the government from transferring the financial information of every American citizen to the U.S. Treasury in accordance with FATCA regulations, pending a September 12 hearing contending the regulation is unfair.

The Foreign Account Tax Compliance Act (FATCA) requires American taxpayers to report to the U.S. Treasury their financial information, including their bank information, if they have foreign accounts overseas. Foreign banks are also required to report information about the accounts of their American clients to the United States Treasury if the total balance equals or exceeds $50,000.

Likewise, the United States has Tax Information Exchange Agreement (TIEA) with various countries, including Israel, to ensure foreign banks report that information to the U.S. Treasury, that is required under FATCA. Dual U.S. citizens holding $10,000 or more in their accounts must report those assets by filing FBAR report.

This financial policing has made many banks and brokerage firms in Israel somewhat reluctant to open accounts with American citizens, according to an article by Kenneth H. Ryesky posted on September 4th on the American Thinker website. Ryesky is an attorney who formerly worked for the IRS and who now is a senior advisor with the U.S. desk at Ernst & Young in Tel Aviv.

He writes that thousands of Israelis who never had any intention of coming under the regulations of the United States have suddenly found themselves affected by these laws, to their detriment. It has come as an unpleasant shock and has caused major disruptions to their lives in some cases.

Due to aliyah and the subsequent descendants through the generations, numerous Israelis hold dual U.S. citizenship, thus becoming “accidental Americans.” (The same holds true in the United States with Israeli citizenship as well, of course.) Those who have tried to renounce their citizenship have also found that process is not as simple as it seems, because they are faced with an “expatriation tax” — a case of “damned if you do, damned if you don’t.”

Ryesky writes that Israel is now giving “serious consideration” to the interest of those and other dual citizens: the Supreme Court has enjoined the state to cease and desist in its planned transfer of FATCA information to the IRS pending a September 12, 2016 hearing.

The action was brought before the Supreme Court by “Republicans Overseas Israel.” On August 8, the PAC  filed an amended petition with the High Court of Justice against the new FATCA law adopted by the Knesset on July 12, according to a statement by ROI.

In accordance with the law, the Israeli Tax Authority would have begun the transfer of all personal and private financial information of U.S. citizens and residents to the IRS, but the Supreme Court issued an interim order preventing the state from transferring the information, which would have begun on September 1.

The September 12 hearing is intended to determine the next step.

Hana Levi Julian

Israel, U.S. Reach Agreement on IRS Regs for Dual Citizens

Thursday, May 15th, 2014

Americans living in Israel, watch out for this year’s June 30 tax deadline.

The Israel Tax Authority has formally reached an agreement with the U.S. regarding the Model 1 FATCA agreement with the IRS, according to attorney Dave Wolf, of the firm Hacohen and Wolf.

The full details of the FATCA Agreement are yet to be published upon the signing of the FATCA Agreement, but according to the Israel Tax Authority’s spokesman, the agreement contains certain restrictions on the use of information passed to the IRS and relief of reporting for certain institutions.

According to U.S. law, all U.S. citizens — regardless where they live — have an obligation to pay taxes on their worldwide income. In addition, in cases where the aggregate value of all foreign accounts exceeds $10,000 at any time during the calendar year, they also have to report this information on a special form commonly known as the FBAR.

Since July 1, 2013, the FBAR needs to be e-filed before June 30 of the following tax year.

Under FATCA, foreign financial institutions (banks, hedge funds, pension funds, insurance companies etc.) are required to report information to the U.S. tax authorities (the IRS) information about foreign accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

This means the Israeli financial institutions will have to report to the U.S. government all their clients who are U.S. citizens and/or green card holders, disclosing all these accounts.

This has huge implications for any American living in Israel or abroad who has never reported his foreign accounts or paid taxes on its income to the IRS, and also to some states if applicable (such as NY and NJ).

Individuals have four options with which to comply, according to Wolf, who can be reached at this link for more information.

Jewish Press Staff Reporter

US Customers Withdraw $4 Billion from Israeli Banks

Tuesday, July 2nd, 2013

Tighter American tax laws have encouraged U.S. citizens to withdraw approximately $2 billion from Israeli banks in less than two years.

“The blow is not just in the drop in assets, but also in the drop in investments. Some of these customers, especially the wealthy ones, use the money to make investments and acquisitions in Israel. There is now little chance that they will make these investments, after they moved the money back to the US,” a banking source told Globes business newspaper.

In some cases, Americans used the money to buy property in Israel, but most of the money was sent overseas.

The Foreign Account Tax Compliance Act (FATCA) at the end of this year will require financial institutions in foreign countries to report bank accounts and assets held for American citizens, who must pay taxes regardless of where they are living. Approximately 100,000  first-generation American citizens live in Israel.

With the absence of a tax advantage by leaving assets in Israel, many Americans began withdrawing their money from local banks

Managed accounts of Americans in Israel are estimated to be valued at billions of shekels.

Jewish Press News Briefs

Printed from: http://www.jewishpress.com/news/breaking-news/us-customers-withdraw-4-billion-from-israeli-banks/2013/07/02/

Scan this QR code to visit this page online: