The Republicans Overseas in Israel (ROI) has appealed to the High Court here to nullify mandatory information sharing by Israeli banks with U.S. authorities about bank account holders with dual-citizenship, The Jerusalem Post reported.
Under the Foreign Account Tax Compliance Act (FATCA), the Internal Revenue Service is seeking to recover an estimated $800 million in revenue from the undeclared income of U.S. citizens living abroad. In 2014, the Israeli supervisor of banks directed that such information should be forwarded to the IRS, and the banks have been complying.
The argument of the ROI, though, is that in lieu of Knesset legislation, information-sharing such as this, without consent of the account holder, constitutes a violation of privacy law.
Lawyer Marc Zell, who filed the petition on behalf of ROI American citizen and Israeli resident Rinat Schreiber, explained that “we are not saying the Israeli tax authorities are prohibited from transferring information to the IRS or other foreign tax authority…where there is a reasonable basis to suspect tax evasion.”
He said that Israel can already do this under existing conventions and that the problem is to “collect and transfer such data to foreign governments without a showing of cause and without allowing the affected taxpayers an opportunity to be heard before the information is transferred.”
Although the U.S. Republican party could not contest FATCA in an Israeli court, an Israeli citizen can petition the High Court on the matter. Roughly 85% of dual-citizens who voted Republican in the last U.S. presidential election will have a keen interest in it.
Ultimately, the outcome of the case could affect finances of some 9 million Americans worldwide and hundreds of thousands living in Israel.
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