Following our previous client update "Israeli Tax Authority Intelligence Division Sends More Than 95,000 Forms Requesting Information" issued on July 16, 2014 (see link below), we would like to inform you of a couple of new developments regarding the information request forms being sent to individuals by the Israel Tax Authority (the "Forms" and the "ITA", respectively ).
First, the ITA has issued an additional 15,000 Forms requesting information from individuals. This brings the total number of Forms sent by the ITA to around 110,000.
In addition, we have held a number of discussions with senior ITA officials regarding the impact of the Forms on submitting a Voluntary Disclosure Application. The senior officials have ensured us that receipt of a Form itself does not preclude an individual's eligibility for the Voluntary Disclosure Procedure. This means that the receipt of the Form will not be considered as an initiation of an investigation against the taxpayer.
However, it is important to note that receipt of the form could be due to information held by the ITA regarding the assets that have generated unreported income. Such assets could include, for example, multiple apartments for which rent is collected but not reported. Under such circumstances, it is foreseeable that the relevant individual will not be entitled to a voluntary disclosure procedure.
Notwithstanding, it was further clarified that the ITA will not necessarily commence criminal proceedings against individuals who seek to arrange their affairs with the ITA and pay the applicable tax liability, even if such individuals are not technically eligible for the voluntary disclosure procedure.