web analytics
October 21, 2016 / 19 Tishri, 5777

Posts Tagged ‘IRS’

Knesset Committee Approves Submission to US IRS Tax Compliance Act

Tuesday, July 12th, 2016

After weeks of debates, on Monday the Knesset Finance Committee approved a bill to apply the Foreign Account Tax Compliance Act (FATCA), which the US has already signed with 113 countries. The 2010 federal law enforces the requirement for US citizens living abroad to file yearly reports on their non-US financial accounts to the Financial Crimes Enforcement Network (FINCEN). The law also requires all foreign financial institutions (FFIs) to search their records and to report the assets of US citizens living abroad to the US Department of the Treasury.

Finance Committee Chairman MK Moshe Gafni (United Torah Judaism) was able, after lengthy negotiations with the Israeli Finance Ministry, to increase the protection of Israeli citizens whose information will be handed over to the US, and reduce in half (from about $27 thousand to about $13 thousand) the sanctions against financial institutions that fail to comply with new law for technical reasons. Gafni also managed to change the definition of charity organizations in the Haredi community (Gmachim), changing their definition from “financial institutions” to “organizations that benefit the public,” thus removing them from the FATCA zone.

The committee also succeeded in repelling the Israeli tax authority, which wanted initially to be able to use information gathered by Israeli banks for FATCA to their own local tax collection ends. As Gafni put it, “This is a bad law, and to come now and use it for other purposes that have nothing to do with its essence would be unthinkable.”

The issue of forcing foreign financial institutions and foreign governments to collect data on US citizens at their own expense and transmit it to the IRS has been attacked outside Israel as well. Former Canadian Finance Minister Jim Flaherty objected to the law’s “far-reaching and extraterritorial implications” which require Canadian banks to become extensions of the IRS and could jeopardize Canadians’ privacy rights.

There have also been reports of many foreign banks refusing to open accounts for Americans, making it harder for Americans to live and work abroad.


Enough With the Gratuitous Israel-Bashing – Some Profs are Fighting Back

Wednesday, April 20th, 2016

Imagine this:  an organization called the American Studies Association, which was chartered by the Congress of the United States of America, and which is based in Washington, D.C., and which is composed of American scholars at American universities teaching American students about America, decided in 2013, that it should declare that it would – and all other U.S. academic institutions should – cease to deal with any Israeli academic institutions.

Got that?  Don’t you think a boycott of Israeli academics is what professors of American history, American culture, American literature should have as their organization’s mission? No?

If not, it turns out that four distinguished members of the ASA agree with you. And so does the organisation’s actual mission statement. That’s why those four members announced today that they are suing the ASA, charging that the blatant politicization of their academic association violates District of Columbia (D.C.) law governing nonprofit organizations.

“Until a handful of zealots hijacked our learned society, the ASA was the leading organization for the study of American culture,” stated Professor Simon Bronner, one of the plaintiffs. “Yet in 2013, in marched a handful of anti-Israel Boycott, Divestment and Sanctions (BDS) activists and suddenly ASA is an organization of social change pushing a narrow political agenda.”

According to the plaintiffs – all four of whom are professors who teach American Studies – the boycott adopted by ASA in December 2013 was a concerted effort by a small number of BDS activists, including founding members of the U.S. Campaign for the Academic and Cultural Boycott of Israel (USACBI), who used their leadership positions in ASA to make anti-Israel activism the central focus of the Association.

ASA’s stated mission – obviously and literally – has nothing to do with boycotting a foreign nation and thus the suit alleges its adoption violates the law that governs nonprofit corporations. These laws prevent organizations from engaging in activity that ignores its raison d’être, according to its own incorporating documents. An example: an organization created expressly as a charity to benefit the disabled cannot, because of these laws, take its donors’ money and decide it wants to instead promote fracking or protest animal cruelty.

The Complaint was brought against the people who are, or recently were, officers of the ASA, and who have used their positions to redirect the erstwhile scholarly organization.

In the allegations filed Wednesday, April 20, the plaintiffs explain:  “The Individual Defendants’ goals have nothing to do with the promotion of scholarship and everything to do with the advancement of their own political views, and their goal in hijacking the ASA is to use it to advance those views, not to advance the study of American culture.“

When the boycott was initiated, ASA’s constitution stated that “[t]he object of the association [is] the promotion of the study of American culture through the encouragement of research, teaching, publication…about American culture in all its diversity and complexity.”

The lawsuit charges that a boycott of another country is outside the scope of ASA’s charter and is the antithesis of promoting knowledge. ASA’s constitution goes on to say that ASA’s goal is “the strengthening of relations among persons and institutions in this country and abroad devoted to such studies.” According to the Complaint, the boycott does the exact opposite:  it affirmatively excludes an entire country and its academics.

In addition, as a tax-exempt nonprofit, ASA reports annually to the Internal Revenue Service. In its IRS documents, the Association continues to describe its mission as “the nation’s oldest and largest association devoted to the interdisciplinary study of American culture and history,” with its “exempt purpose – advancing the Study of American Culture.”  Plaintiffs allege that the academic boycott of Israel is clearly outside of this stated mission and purpose. Sounds right, doesn’t it?

Lori Lowenthal Marcus

First Step Taken to Impeach IRS Commissioner John Koskinen

Wednesday, October 28th, 2015

Republicans in the U.S. House of Representatives moved on a pledge first made during the summer and introduced a resolution to impeach Internal Revenue Services Commissioner John Koskinen.

The resolution accused Koskinen of making false statements under oath and with failing to properly respond to congressionally-issued subpoenas for evidence. Koskinen did not become commissioner until late in 2013, and he was not charged with any wrongdoing prior to that date, but with actions taken once he assumed his position.

The charges both have to do with how Koskinen responded to congressional inquiries and requests for emails belonging to Lois Lerner.

Lerner was the head of the exempt organizations division of the IRS during the time the service was charged with having targeted conservative and pro-Israel organizations in their applications for tax-exempt status.

A subpoena was issued to the IRS on Aug. 2, 2013, seeking all of Lerner’s communications during the relevant time period. On Feb. 14 that subpoena was reissued to Koskinen, after he was confirmed as IRS Commissioner.

On March 4, 2014, an IRS employee destroyed as many as 24,000 of Lerner’s emails. The destruction of those emails took place after the congressional subpoena was issued for Lerner’s emails.

On March 26, Koskinen swore that all of Lois Lerner’s emails would be produced to the committee. Koskinen also testified to the investigating committee on June 20, 2014, that “since the start of this investigation every email has been preserved. Nothing has been lost. Nothing has been destroyed.”

The resolution charges Koskinen with high crimes and misdemeanors for failing to preserve IRS records in accordance with the subpoena and for making false and misleading statements to Congress. He also was charged with withholding the information about the destruction of Lerner’s emails and for general incompetence for failing to uncover emails that were recoverable and for overseeing a lackluster investigation.

The impeachment resolution was introduced by House Investigative Committee chair Rep. Jason Chaffetz (R-UT) and co-sponsored by 18 other committee members.

Lori Lowenthal Marcus

Israel Follows US Lead on Hunting Citizens’ Foreign Assets

Friday, June 26th, 2015

Israelis who have not filled out forms for declaring their assets to the Israel Tax Authority and have unreported overseas bank accounts are being targeted, Globes reports, in ways mirroring the methods of the IRS and U.S. Treasury.

In an agreement reached between Israel’s Finance Ministry and the United States more than a year ago, the Israel Tax Authority agreed to report the accounts of U.S. citizens in Israel to the IRS. In exchange, the IRS agreed it “may” report on income in the accounts of Israelis in the United States.

The U.S. Foreign Account Tax Compliance Act (FATCA) for “improving global tax enforcement” requires banks in dozens of foreign countries to collect and share private financial information about millions of Americans living and working outside the U.S.

Tens of thousands of Americans who came on aliyah fall into this category, and have since been warned by their banks they must fill out an annual IRS W-9 and “FBAR” (Foreign Bank Account Report.)

“The U.S. sent a delegation here, which examined our systems and information security and was very impressed,” said Israel Tax Authority head Moshe Asher in a speech this week to the Society of Trust and Estate Practitioners (STEP.)

Asher told participants at a business conference this week to expect more arrests of Israelis with unreported overseas assets.

According to the Tax Authority, there are Israelis who are holding an estimated NIS 50 billion in concealed capital in unreported accounts around the world. And after starting a war on illegal capital, Asher commented that the Tax Authority has already raised income tax revenue by NIS 3.5 billion over projected forecasts since the beginning of the year.

“Switzerland was once the world’s safe deposit box from which no information could be extracted,” Asher said.

But, “they have been forthcoming recently, even if in contravention of Swiss law… Inroads have been made in Swiss banking confidentiality – it’s like any other country now, subject to conventions and obligated to provide information.

“Secrecy is over: the world has become more transparent and much smaller… This is the time to come and make an arrangement for unreported capital, because the tax authorities will find it.”

Hana Levi Julian

IRS $50M Cyber Security Scandal Stretches to Russia

Thursday, May 28th, 2015

A major attack this year by cyber security criminals on the computer network at the U.S. Internal Revenue Service originated in Russia, sources confirmed to Fox News late Wednesday.

The Associated Press has also cited two anonymous sources who reported the IRS believes the hackers are part of a sophisticated criminal operation in Russia. Neither report connected the attack to the Russian government.

But both pointed out that this is not the first time that the IRS has been successfully breached by cyber thieves. Taxpayers whose accounts were accessed will be notified and provided with credit monitoring services, the IRS said.

The IRS inspector-general reported in 2012 hackers managed to manipulate the IRS system into sending 655 tax refunds to a single address in Lithuania. Another 343 tax refunds were sent to another address, this one in Shanghai. Following these attacks, system administrators tweaked the network safeguards to block other hackers.

This year’s attack began sometime in February, according to the report, and continued until mid-May. So far, the thieves have stolen at least $50 million in fraudulent tax refunds. That figure does not include the cost of tracking the breach, nor the expense involved in fixing it and preventing future attempts.

They used a software called “Get Transcript” to access the data. But in order to get into the records, the thieves first had to clear a security screen that required the use of taxpayer information such as a Social Security number, birth date, street address and tax filing number.

According to IRS Commissioner John Koskinen, the hackers used stolen Social Security numbers and other information to gain their access to taxpayers’ accounts. Then they used information from prior tax returns to file current fake returns seeking refunds.

“We’re confident these are not amateurs,” Koskinen told Fox News. “These actually are organized crime syndicates that not only we, but everybody in the financial industry are dealing with.” The IRS estimates that it paid out some %5.8 billion in 2013 to identity thieves, both foreign and domestic.

At least 104,000 taxpayer records dating back up to five years and perhaps more were stolen in the cyber heist, officials said.

The IRS notified the Department of Homeland Security following the breach, a federal law enforcement source said. The Senate Finance Committee has scheduled a June 2 hearing to question Koskinen and Treasury Inspector-General for Tax Administration J. Russell George on the issue.

“When the federal government fails to protect private and confidential taxpayer information, Congress must act,” Senate Finance Committee Chairman Orrin Hatch (R-UT) said Wednesday in setting the hearing.

Hana Levi Julian

IRS Pummeled by Court for Suggesting OK to Discriminate Against Pro-Israel Group

Thursday, May 7th, 2015

In a highly unusual public thrashing of a government lawyer for the Internal Revenue Service by the second highest U.S. court, the D.C. Circuit Court of Appeals, asked: “You don’t really mean that the IRS is free to discriminate against its citizens, do you?”

The judges asked this question several times in several different ways of the Department of Justice lawyer Teresa McLaughlin who had the misfortune of representing the IRS in a case filed against it by Z STREET*, a staunchly pro-Israel non-profit organization in a hearing on Monday morning, May 4.

Since August of 2010, the Z STREET case has been languishing in the U.S. court system. Z STREET sued the IRS because it learned from the IRS agent to whom its tax exempt application had been assigned, that its application would take some time to process because “the IRS had to give “special scrutiny to organizations connected to Israel,” and that the applications of such organizations “were sent to a special unit in Washington, D.C. to determine whether its activities contradicted the policies of this Administration,” according to its Complaint.

Z STREET sued the IRS for “viewpoint discrimination,” a violation of the U.S. Constitution. The claim is that the IRS did not provide Z STREET with a fair process, which is what it is now seeking, through this lawsuit.

Z STREET has made clear from the first document filed in this case and in every document filed over the past nearly five years of litigation that it was not seeking that the courts grant it a tax exemption (501(c)(3)), only that its application be afforded a Constitutionally fair process.

The IRS, in turn, has insisted in every one of its legal documents that Z STREET’s case should be dismissed because there is a statute, Sec. 7428 of the Internal Revenue Code, that allows it to bring a lawsuit seeking the tax exemption, which can be pursued 270 days after an application is filed if the IRS has not yet acted.

Last May the D.C. federal district court denied the IRS’s efforts to throw out Z STREET’s lawsuit, clearing the path for the critical phase of the lawsuit to begin: discovery, the portion of a lawsuit in which the parties have to truthfully answer questions under oath and must provide requested critical documents. At the 11th hour, the IRS filed a special kind of appeal, which the D.C. Circuit Appellate Court granted.

This Monday morning, the IRS’s lawyer had not gotten two sentences out of her mouth when Judges David Sentelle and David Tatel cut off the effort to once again mischaracterize the Z STREET claim and suggest that it should have pursued the Sec. 7428 option.

“That is an over broad characterization” of the claim, Judge Sentelle shot out, forcing the government lawyer to narrow the scope of the aperture, so that the goal of seeking a Constitutionally fair process was briefly acknowledged by McLaughlin. “Bingo!” Judge Sentelle exclaimed.

As the judges drew out McLaughlin’s grilling to more than twice the normally allotted time, the judges began to lose patience. Judge Tatel had to reassert the proper focus of the lawsuit: “Their [Z STREET’s] argument is this ‘Israel Special Process’ subjected them to a different standard, based on their viewpoint, subjecting them to a delay in the process. If they sue [later] for a [tax] refund that cannot remedy the delay.” In fact, he pointed out, “neither a refund nor a 7428 action could address that” discriminatory delay.

There was lots more pummeling of the government lawyer, as the Wall Street Journal pointed out repeatedly in its May 7 editorial, “The IRS Goes to Court” and subheadlined, “The Agency suggests it can discriminate for 270 days. Judges Gasp.”

Lori Lowenthal Marcus

V15 Campaign’s Defense is Wrong: Its Positions More Radical than PA

Sunday, February 8th, 2015

Opponents in Israel of the American tax-exempt organization-funded V15 campaign effort have laid several complaints against it: one, the foreign funding (including U.S. government funding) of an Israeli campaign violates Israeli election law, and two, an American tax-exempt entity funding a political campaign violates American law.

But even V15’s defenses to those charges make it ripe for lethal criticism.

V15 and its funder, OneVoice, claim to empower the “majority of Israelis” to change Israeli leadership (that’s what their posters say: “We’re Changing the Leadership”) to reflect that majority’s views. In fact, the goals of OneVoice represent neither the majority of Israelis, nor even the stated political views of the Palestinian Authority.

Let’s start with the complaints already on record.

In this corner, we have V15, the community organizing-style political campaign effort which imported the skills and funding of American leftists to Israel. OneVoice has received, under the Obama administration, large grants from the U.S. State Department and various foreign political parties and efforts. Also, the fact that the son of Mahmoud Abbas – the acting leader of the Palestinian Authority, is on its Advisory Council, is difficult to ignore.

The most problematic issue already raised, because it is hardest to explain away, is how an American entity which is tax-exempt can be funding a political campaign at all, let alone one in Israel.


The politicization of American tax-exempt organizations was what triggered the Internal Revenue Service’s ugly Lois Lerner scandal. A significant number of politically conservative organizations which applied for tax exempt status were subject to extraordinary scrutiny and other alleged inappropriate behavior, because the claim was, because they were politically engaged, which is prohibited under the IRS regulations.

But the flat-footed targeting and punishment of organizations deemed “conservative” by the IRS was itself a politicization of the IRS process. It led to a huge outcry, congressional investigations, internal governmental investigations and lawsuits, most of which remain unresolved.

In fact, at least one pro-Israel organization which applied for tax-exempt status was given special scrutiny by the IRS which placed it in a Be on the Look Out (BOLO) category created by the IRS for “occupied territory advocacy.”

Just advocating for Israel with respect to the disputed territories triggered intensive IRS scrutiny, without the organization funding or participating in either an American or an Israeli political campaign. That’s hard to square with OneVoice having tax-exempt status, given its focus on “occupied territory advocacy.” The difference between the two entities is that OneVoice unabashedly seeks to turn over the disputed territory to the Arabs.

Young Likud party activists posted on their Facebook page instructions for filing complaints with the IRS against V15, in an effort to encourage the Service to undertake an investigation of the entity, and members of Congress are seeking an investigation by the State Department.

In addition, a complaint was filed with Israeli police against V15 and the Labor-Livni and Meretz parties, alleging violations of Israeli election law which bars campaign funding from sources outside of Israel.


The response by V15 to the criticisms lodged against it have been inconsistent. It was able to diffuse the State Dept. funding issue by claiming the grants ran out at the end of November, 2014. V15 was not launched until January, 2015, so, they claim, there were no State Department funds in its coffers by then.

The entity’s response to the IRS violations have been less categorical. Although it rigorously denied it is involved in the prohibited “campaigning for or against any political candidate,” statements by its alleged leadership, and the plain letter of their own posters reveal otherwise.

Lori Lowenthal Marcus

Printed from: http://www.jewishpress.com/news/breaking-news/v15-campaigns-defense-is-wrong-its-positions-more-radical-than-pa/2015/02/08/

Scan this QR code to visit this page online: