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Israeli Banks Beginning to Disclose U.S. Account Holder Information

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    Some Israeli banks are already notifying American account holders that they will be disclosing their account information to the U.S. Department of Justice, which could result in criminal prosecution if these foreign accounts have not been disclosed to the Internal Revenue Service.

    U.S. taxpayers are required by law to file FBARs (Report of Foreign Bank and Financial Accounts) for all foreign financial accounts exceeding $10,000 at any time during the calendar year. The penalties for failing to report foreign accounts include fines of up to fifty percent of the account balance for each year of the violation, and potential jail time for tax evasion.

    Foreign banks are disclosing U.S. account holder’s information to the Department of Justice in order to avoid criminal prosecution themselves. The banks are accomplishing this by participating in FATCA (the Foreign Account Tax Compliance Act), which requires foreign banks to report to the Internal Revenue Service all assets surpassing $50,000 that belong to United States citizens, regardless of whether they are living in America or abroad, in order for the banks to avoid criminal prosecution. Israeli banks have signed on to FACTA and will be turning over information as early as July 2014. Charles Ruchelman of Caplin & Drysdale, a Washington D.C. law firm, was quoted as saying: “Israel wants to stay on the good side of the U.S. and to be a friend and an ally, so the banks are going to cooperate with the Internal Revenue Service and the U.S. government.”

    As part of the participation in FATCA, the Israeli banks must reveal to the U.S. Department of Justice certified details about American taxpayer held accounts, including the number of persons affiliated with the account, the highest value of the account since 2008, and details about the transfer of funds out of or into the account. This information could trigger an IRS examination and a criminal investigation into the account.

    Six U.S. taxpayers with foreign accounts in Israel were prosecuted for having undisclosed bank accounts in 2013. One of these individuals, David Raminfard, who resides in Los Angeles, pleaded guilty on November 4, 2013 in federal court to conspiracy to defraud the United States. Raminfard failed to report approximately $521,000 in income and the highest balance in one of his undeclared accounts was around $3 million. Raminfard now faces up to five years in prison and a fine of up to $250,000 in addition to a civil penalty in the amount of fifty percent of the highest balance of his undisclosed accounts, for failing to file FBARs. This civil penalty will be nearly $1.5 million dollars.

    If you have an undisclosed account in an Israeli bank, you have to make a voluntary disclosure to the IRS before that bank hands your account information over. Don’t end up in prison like David Raminfard! We can help keep you out of jail…

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