End of September 2016, the Israel Tax Authorities were to first start forwarding financial data regarding U.S. citizens and green card holders from Israel to the U.S. Internal Revenue Service under the U.S. Foreign Account Tax Compliance Act of 2010.
The High Court of Justice of Israel decided on September 12, in the matter of a petition - arguing that any attempt by the Israeli government to share and release the details of financial accounts with the IRS would constitute a "violation of privacy, property and equal treatment, lacking a compelling public purpose" – filed with it early January 2016.
Following an initial temporary injunction, prohibiting the Israeli government from transferring financial information of American citizens to the U.S, Israel's High Court of Justice in fact rejected the petition on September 12 and cancelled its temporary injunction explaining that exchange of FATCA information does not constitute such violations. However, the court did stress that prior notice must be given to persons of whom details of their accounts will be reported to the US tax authorities and that 30 days shall be granted to respond. In case an objection is received regarding a decision to release information, the financial institution must first respond before account information may actually be released.
The Israeli authorities, after the Courts decision granted an extension to financial institutions for filing their reports until September 30, in order to enable objections to be filed and for banks to relate to any objections already filed by the account owners. Under the income tax regulations (implementation of the FATCA agreement), financial institutions were originally obligated to provide information by September 20, 2016, through a dedicated website of the Israel tax authorities.
Further to the delays following the dealings surrounding the above petition to the Supreme Court in Israel, the Israel tax authorities have – after approaching the US authorities and after having received their agreement – published a postponement of the first release data from the date originally planned in September to November 30, 2016.
This postponement leaves open a larger window of time for US tax payer accountholders to file objection against the intention of an Israel based financial institution to release information regarding their accounts than was first expected.