Skip To Content
JEWISH. INDEPENDENT. NONPROFIT.
Breaking News

U.S., Israel Reach Tax Information-Sharing Agreement to Combat Tax Dodging

Israel has become the latest country to reach a tax information-sharing agreement with the United States under a new law meant to combat offshore tax dodging by Americans, a U.S. Treasury Department spokesperson said on Thursday.

Set to take effect on July 1, the Foreign Account Tax Compliance Act of 2010 (FATCA) will require foreign banks, investment funds and insurers to hand over information about Americans’ accounts that have more than $50,000 to the U.S. Internal Revenue Service.

After four years of preparation and two delays, U.S. Treasury officials are racing to negotiate as many FATCA pacts as possible with foreign governments to avoid a messy start to the law, which has steep enforcement penalties.

The Treasury has reached 57 FATCA deals to date with areas ranging from India to the Isle of Man.

Foreign firms that do not comply with FATCA face a 30 percent withholding tax on their U.S. investment income and could effectively be frozen out of U.S. capital markets.

Like most of the other FATCA deals, the Israeli agreement will allow Israeli firms to report U.S. account-holder information to their local tax authority, which will send it along to the IRS. The Israeli deal was agreed “in substance” and must be finalized by the end of the year.

Financial firms in countries that have not reached a FATCA pact, known as an intergovernmental agreement, must report directly to the IRS and risk violating local privacy laws.

FATCA was enacted after a scandal involving Americans hiding money in Swiss bank accounts. The law’s start date was delayed twice by the Obama administration as banks complained they needed more time to prepare.

Separately, U.S. authorities on Wednesday charged a former senior vice president of an unnamed bank headquartered in Tel Aviv, Israel, with conspiracy for allegedly helping Americans dodge taxes, the U.S. Justice Department said.

Shokrollah Baravarian of California allegedly set up secret accounts for U.S. clients to keep money hidden from the IRS, the Justice Department said.

Republish This Story

Please read before republishing

We’re happy to make this story available to republish for free, unless it originated with JTA, Haaretz or another publication (as indicated on the article) and as long as you follow our guidelines. You must credit the Forward, retain our pixel and preserve our canonical link in Google search.  See our full guidelines for more information, and this guide for detail about canonical URLs.

To republish, copy the HTML by clicking on the yellow button to the right; it includes our tracking pixel, all paragraph styles and hyperlinks, the author byline and credit to the Forward. It does not include images; to avoid copyright violations, you must add them manually, following our guidelines. Please email us at [email protected], subject line “republish,” with any questions or to let us know what stories you’re picking up.

We don't support Internet Explorer

Please use Chrome, Safari, Firefox, or Edge to view this site.