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September 27, 2016 / 24 Elul, 5776

Posts Tagged ‘tax’

Knesset Considering Tax Breaks for Judea and Samaria Communities Facing Security Threats

Thursday, July 28th, 2016

The Knesset plenum on Wednesday approved in a preliminary reading a bill that would make communities in Judea and Samaria eligible for tax breaks based on the security threats they face.

The so-called “benefits map” approved by the Knesset in 2015 fixed standard criteria for awarding the benefits based on socio-economic criteria. The bill, sponsored by MK Bezalel Smotrich (Habayit Hayehudi) would add security risks to the criteria entitling Judea and Samaria communities to benefits.

The criteria would be based on Defense Ministry assessments of the security risks communities face in a manner similar to the way benefits are awarded to Israel’s border communities.

The explanatory notes accompanying the bill state that the tax breaks are meant to “encourage strong populations to reside in areas the state views as serving a national interest” and “add to the benefits map those communities in Judea and Samaria facing security threats.”

“Settlements in Judea and Samaria have for years stood up heroically against continuous terror inside the communities and on the roads. We need to encourage them with, among other things, tax benefits,” the bill’s preface reads.

Prior to the vote, MK Smotrich said, “This law will enable thousands of families living in Judea and Samaria, who suffer from security threats, to receive what they deserve and to be equal in rights to the rest of Israel’s residents. The national government is returning Judea and Samara to the settlement map. There’s a long way to go, but this is a step in the right direction.”

Meretz MK Esawi Frej said, “Have you heard of the Yotvata dairy farm? It should [learn from] Smotrich how to milk the state. You are milking the state using all kinds of improper methods. You [have the nerve] to take an additional 150 million shekel (about $40 million) for a few outposts.”

42 MKs supported the bill in its preliminary reading, and 36 opposed. The bill will now be sent to the House Committee, which will determine which committee will prepare it for its first reading.

David Israel

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.

JNi.Media

Haredi Party Spearheading Effort to Protect Israeli Religious Charities from US Tax Authorities

Tuesday, June 7th, 2016

The heads of charity organizations in the ultra-Orthodox society, commonly known as Gemachim, received at least a temporary measure of relief from the Knesset Finance Committee, chaired by MK Moshe Gafni (UTJ), ahead of a new amendment of the Income Tax Act that takes effect in September and compels Israeli financial institutions to report through the local tax authorities on the Israeli financial affairs of US citizens. The amendment is the result of the Foreign Account Tax Compliance (FATCA) agreement between Israel and the US, which was a prerequisite for continued cooperation between Israeli and American financial institutions.

It’s not much, but MK Gafni demanded that the Finance Ministry and the Bank of Israel order the banks to give the Gemachim time until the end of June to resolve their status as public institutions, which he hopes would allow them to exclude themselves from the FATCA rules. Gafni envisions a tweaking of the amendment to exclude groups with deposits of less than $50 thousand, or holdings worth less than $50 million.

According to Chairman Gafni, the new regulations could bring the collapse of the Gemachim. “The Israeli government signed an agreement with the US government without considering the disastrous consequences for one of the most important enterprises of the Jewish people that has existed for millennia — the charity and mutual aid societies,” Gafni said, explaining that the Gemachim are “the only means at the disposal of a person under financial duress to receive an interest-free loan to get back on his feet.”

MK Israel Eichler (UTJ), Chairman of the Public Petitions, summoned Dr. Ilan Steiner, Director of the Bank of Israel Currency Department, to his committee hearing, to warn him against another aspect of the US attack on these charity institutions. According to Eichler, banks are being forced under pressure from foreign governments to close the accounts of Gemachim accounts, “in the name of ‘fighting terrorism’ and stopping money laundering, the IRS and the American government have become supervisors of all bank accounts around the world including in Israel. Everyone has to go through their inspection, so the Gemachim have received a letter that they will not be able to keep their bank accounts anymore.”

MK Eichler told Dr. Steiner: “I hope that the Bank of Israel find a way to abide by the agreements with the US while not mixing up the Gemachim with the war on terror. The banks must not become a burden and a restriction on associations and charity organizations who want to help people and do not engage in terrorism. There are limits to the madness of the banking system. We must not allow the charity organizations and Gemachim to be paralyzed by American pressures.”

The issues of compliance regarding money laundering and the war on terror stem from the side benefits of an IRS act that was intended to make sure US citizens who make money abroad share some of it with Uncle Sam. According to the IRS, FATCA targets tax non-compliance by US taxpayers with foreign accounts, focusing on individuals’ reporting about foreign financial accounts and offshore assets, as well as by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest.

Using the US’ enormous economic clout, FATCA bullies the world’s financial institutions into reporting on their American clients to Uncle Sam. Under FATCA, to avoid being withheld upon, foreign financial institutions must register with the IRS and agree to report to the IRS about their US accounts, including accounts of foreign entities with a substantial US ownership. Foreign institutions that enter into an agreement with the IRS to report on their account holders may be required to withhold 30% on certain payments to foreign payees if such payees do not comply with FATCA.

Talk about working for the Yankee dollar.

According to The Marker, Gemachim stand to suffer three different ways from the new law: instead of permitting a Gemach to transfer money into their accounts, they could now be questioned regarding the source of the funds and whether or not tax was paid on them in the US; each deposit could be subject to harassment by the bank, in order to verify that it is not part of a money laundering scheme; and the Gemach could be saddled with a new definition as a financial institution, and as such would be compelled to report on its fund sources to the IRS or face criminal sanctions.

JNi.Media

How Tax Laws Can Help in the Fight Against Terrorism

Monday, June 6th, 2016

American tax laws originally enacted to combat money laundering and terrorism adversely affect the millions of American citizens living abroad.

Colleen Graffy, a former United States Deputy Assistant Secretary of State for Public Diplomacy and Professor of International Law at Pepperdine University, explains why FATCA (Foreign Account Tax Compliance Act) restrictions are unfair to law-abiding U.S. expats. Did FATCA lower the value of U.S. citizenship?

Whether FATCA applies to you or not, you need to prepare for retirement. Consider whether dividend-paying stocks are appropriate for retirement savings. Find out more, and also how to download a free copy of The Retirement Planning Book, written by Douglas Goldstein CFP®, by listening to today’s show.

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Doug Goldstein, CFP®

Netanyahu, Kahlon Cut Taxes to Spur Sluggish Economy

Thursday, September 3rd, 2015

Prime Minister Binyamin Netanyahu and Finance Minister Moshe Kahlon announced Thursday they will cut the sales tax (VAT) by one percent and do the same with the corporate tax.

Beginning October 1, the VAT will drop from 18 percent to 17 percent.

The corporate tax will drop from 26.5 percent to 25 percent, starting in January 2016.

It is estimated that the two benefits to consumers will cost the state approximately NIS 6.5 billion ($1.6 billion).

Bank of Israel Governor Karnit Flug, who is not in favor of the plan, immediately announced her criticism of the move.

But in a joint news conference Thursday afternoon, Netanyahu and Kahlon told reporters the move was designed to act as a “growth engine” on an economy that is slowing down.

“We believe in you, we believe in the free market, we believe in freedom,” the prime minister said. “I think this will help growth. I think this will give the economy the boost it needs. At a time when we are hearing about global slowdown, and here too, we want a growth engine and lowering taxes is one of them.”

Hana Levi Julian

Gaza Area Israeli Farmers Meeting to Protest Immigration Authority Raids

Monday, July 20th, 2015

(JNi.media) Farmers in the “Gaza envelope,” a string of agricultural communities alongside the Gaza border, on Thursday (July 23) will hold a conference to protest increased raids by the Department of Immigration on their farms, and the increase in investigations of farmers.

The Conference to be held in Eshkol Regional Council, will formulate ways to engage the public in their plight while conducting legal battles against harassment by Immigration inspectors.

The farmer’s anger focuses mainly on increases of fines for any deviation from the terms of employment of foreign workers by hundreds of percentage points, reaching thousands of dollars per employee. The cumulative amount has reached hundreds of thousands of dollars per farmers who employ several workers, which could destroy their farms.

“Hamas rockets have failed to eliminate our farms, but the state’s fines may do it,” say the farmers.

Attorney Hagit Weinstock, representing the farmers, said that any investigation conducted by the authorities checks dozens of parameters relating to wages and conditions, and the fines of $10,000 is levied separately, so that a farmer employing several employees is exposed to paying a fortune in fines.

In addition to the increased fines, the state has undermines the right of Farmers to defend themselves. In the past, farmers could choose to make their case in court for hiring irregularities, but today the only avenue open to them is an appeal to an appellate committee at the Economy Ministry.

The conference will address ways in which farmers can cope with stricter enforcement, farmers’ rights against the investigators, the appeal process over fines, and how to prepare for inspectors’ visits with proper employment contracts and salary slips, to avoid penalties.

JNi.Media

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

Printed from: http://www.jewishpress.com/news/breaking-news/irs-50-m-cyber-security-scandal-stretches-to-russia/2015/05/28/

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