YERUSHALAYIM - The Tax Authority announced on Tuesday that it has received information about an additional 30,000 Israelis who have accounts in American financial institutions. The data supplied by the U.S. Treasury relates to accounts that were held in American banks by Israeli nationals in 2014. That data is the second batch released by the Treasury Department, which last month gave the Tax Authority the names of 35,000 Israelis who had accounts in the U.S. in 2015.
FATCA, the Foreign Account Tax Compliance Act, went into effect January 1st, and it works both ways. The United States uses the law to track down American citizens who may be hiding their money in foreign bank accounts, but under the law, foreign governments — like Israel — can get information from U.S. authorities on their own citizens who have accounts in the U.S.
Countries that refuse to submit the names of American citizens who have accounts in their banks are subject to a 30-percent tax on all transactions they conduct with American banks, and will be subject to other sanctions, such as being banned from the SWIFT foreign banking exchange system — thus the strong motivation for Israel, and other countries, to join the FATCA program.
But an unanticipated bonus for Israeli tax collectors has been receiving information about Israelis who have been hiding their money in the United States. In addition to the information about American accounts, Washington’s FATCA arrangement with other countries has yielded information about Israelis who have accounts outside the U.S. as well. According to the Authority, there are more than 8,000 Israelis who have accounts in Swiss branches of HSBC.
It is not illegal for Israelis to have financial holdings abroad, but they are required to report them. Penalties for failing to report can include fines, and if the Authority can prove that the Israeli deliberately attempted to evade taxes, heavier penalties can be imposed.