As part of its over expanding crackdown on people-both Israelis holding green cards and US citizens- the all powerful Israel Tax Authority has started to send data gleaned from Israeli bank accounts to the United States Internal Revenue Service (IRS).
This information exchange between Israel and United States came after the former consented to follow the rules and regulations as per the US's 2010 made Foreign Accounts Tax Compliance Act or what is colloquially known as FATCA. The latter needs foreign financial institutions for supplying much needed information to American tax authorities. It was known that Israel consented to comply with the FATCA in 2014 and the said agreement became valid in 2016.
No details were disclosed by Israel Tax Authority. It did not say how many accounts were involved. It admitted that the IRS has provided information concerning in excess of 35,000 bank accounts. These accounts were held by Israelis. The accounts were spread over multiple financial institutions and US banks. The tax authority of Israel is now said to be minutely examining the information to find out crucial details concerning tax cheats.
Cracking the whip
This information exchange between the IRS and its Israeli counterpart is the start of a bigger crackdown on individuals and companies which are masters at evading taxes. The information will tighten its grip on the tax evasion procedures as laid down by Organization for Economic Cooperation and Development (OECD). The entity is the cluster of the most developed economies in the world. The OECD has a Common Reporting Standard. The latter sets a standard of information being automatically exchanged among the national tax authorities. This procedure is now being adapted by Israel as well.
According to its statement, Israel Tax Authority said that it will analyze the data and sort it too. It will then be compared with the reports which the Israelis made to local tax authorizes. The communication further went on to add that it will identify which banks have regularly reported to authorities concerning their accounts. It will also see which accounts have taken the advantage of tax amnesty. This is vital as although citizens of Israel have no restrictions when it comes to holding foreign investment and bank accounts, they must file yearly statements concerning their asset size. They must also disclose income generated from capital gains, interest or dividends.