Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 9 Comments

A couple of initial completely unscientific nuggets of information I found on this subject.

1. There are a lot of US Citizens living is Israel some of which arrived many years ago and in other cases arrived as recently as a year or two ago. On a per capita basis numbers as high or higher than Canada

2. There is definitely real unhappiness around US citizenship tax policies in Israel. A lot of people don’t want to talk about it for fear of upsetting the apple cart of US Israel relations, US relatives etc. From what I found there was a lot of concern during the time when Obamacare was being passed that some type of levy would have been imposed on US citizens worldwide.

3. Some people I found though definitely are starting to talk more about it with all the news about FBAR and FATCA.

4. There are probably more US tax lawyers and preparers in Israel than in Canada including some who deal with expatriation/renounciation issues similar to what Phil Hodgen does. I don’t know of anyone located in Canada who does the same.

5. Very minimal past FBAR compliance more compliance in terms of filing returns.

6. Lots of what in my opinion sounds like very bad information was floating around in the past. Like telling US citizens in Israel to file a 1040 but not report any Israeli source income(To me: Sounds very very bad).

7. The Jerusalem Post just a few weeks ago published in an interview with a US tax lawyer telling ANY US Israeli dual citizen behind in filing to enter OVDI 2012. Again we have discussed this a lot.

8. Several US citizens bloggers I found in Israel indicated that the FEIE is a big issue to them and people they know. They seemed to indicate if the FEIE is eliminated they will renounce.

9. Unlike Canada there has been some past history of “whales” renouncing to become Israeli. One example I found was Ted Arison whose family owns Carnival Cruise Lines and the Miami Heat basketball team.

10. To those of you politically inclined Obama does not appear to be popular among more right leaning Likud party supporters in Israel on both foreign policy and economic policy issues. This could be factoring into some dislike among US Israel duals who support Likud.

11. Canada and Stephen Harper are becoming very popular in Israel especially among the right/Likud far more than many Canadians or Americans realize.

12. A lot of US Israeli duals vote absentee in the US and their vote tends to be concentrated in certain congressional districts in New York, Florida, California much more than with Canada. On otherhand I don’t get the feeling overseas voters in Israel are really listened to anymore than anywhere else. There could be some very close races though in some of these districts in the fall.

Again these are just my initial impression on the issue. Post is subject to change without notice. Hoping for comments from anyone effected in Israel.

9 thoughts on “US "Persons" in Israel and tax issues”

  1. Helpful information. How are Canada and Harper popular in Israel? Do you mean among Israeli’s from Canada or Israeli’s in general?

  3. I’m far from being knowledgable about Israel, but only know that according to the most recent figures ACA has obtained from the IRS, on the number of individual tax returns reporing foreign earned income, Form 2555 for claiming the limited Foreign Earned Income Exclusion; the number submitterd from Israel for tax year 2006 was 8,986. This compares with 30,067 from Canada, 12,430 from China, 6,112 from Mexico, 23,559 from Japan and 6,109 from Saudi Arabia. The total filed for the whole world with foriegn addresses was 354,831. The total foreign earned income, before deductions, was $18.3 billion. This does not include passive (non-earned) income for which there is no exclusion from US tax.

  4. @bubblebustin

    Increasingly among Israeli’s in general and especially the political elite. Just recently Prime Minister Benjamin Netanyahu and his wife stopped in Canada prior to their visit to the US and stayed several days including over a weekend as guest of the Harper’s at Harrington Lake(Canada’s equivalent of Camp David). When did you ever see that happen before. Many Israelis notice Netanyahu isn’t getting the same hospitality from Obama. John Baird and Jim Flaherty also made a very well received visit to Israel recently and other high level Israeli delegations to Washington are being ordered to stop in Ottawa beforehand on their travels

    Link to picture below of Harper and Netanyahu at Harrington Lake
    http://3.bp.blogspot.com/_mlyPv7FzInk/TNl4jXpyleI/AAAAAAAADHY/pQw-OvZVFqs/s1600/PM+SH+PM+BM.JPG

    I actually found a couple of Israeli bloggers complaining that Israeli high tech companies should be moving their operations from Silicon Valley and Boston to the Kanata tech belt outside of Ottawa to thank Canada and Stephen Harper for their strong support of Israel.

  5. All US-citizens abroad want is to only be held accountable to one “taxmaster” and leave the US out of it, especially if you’re a dual citizen.

    Even with FATCA, FBARs, and all the other threats from the US, the fact of the matter is collecting money off ex-pats is a expensive, time consuming, and a troublesome game which the IRS has to play by completely different rules abroad. The IRS can’t put liens on your overseas property etc and has to use enormous resources to collect very little tax revenue proportionally.

    If a US citizen abroad has all their assets outside of the US and very few links with the US, the fear of the IRS is just not quite the same.

    Sen Carl Levin likes to say that Americans who don’t pay tax abroad are making domestic Americans shoulder a greater burden…well…. it works the other way as well…

    When the IRS wastes time and resources checking high numbers of tax returns and chasing people abroad that result in zero tax revenue that allows domestic Americans to hide income that doesn’t show up on W2s or 1099s more easily because the IRS is misusing its valuable time and resources on a wild goose chase abroad.

    IRS – push the US Congress to pass laws so you can work on 100% compliance of “collectable” taxes than chasing ex-pats abroad with very little to show for it.

    The fact of the matter if an ex-pat has no financial ties with the US and doesn’t care about visitng the US again, the IRS has very little power indeed.

  6. The only thing I don’t like about the “area between Egypt and Syria” is the treatment of people of Palestine and Lebanon.

    ** Israel is a state!! **

    I’m tired of typing “stateless” into Google and seeing links to Palestinian or Lebanese links…. I would definitely recommend that the Israeli gov. remedy this ASAP. I kind of think this brings SHAME to Israel, which I would prefer not to see. Fix ASAP.

  8. @Everyone

    The following link to a page written by a former US Justice Department tax attorney living in Israel now:

    Key notes:

    She states emphatically OVDI is not an “amnesty” and has significant monetary penalties and as such advises US citizens in Israel not to jump in without a through review of their options. This is first time I have heard someone state this view anywhere outside of IBS.

    http://www.nbn.org.il/aliyahpedia/finances/paying-taxes-in-israel-and-overseas/1230-us-income-tax-and-fbar-obligations-of-us-olim.html

    She has her own website called http://www.fbaradvice.com/FBAR_Advice.html specifically geared only towards US citizens outside of the US with FBAR, OVDI, etc issues. Note: I am not making an endorsement of a professional I just thought it was an interesting reference.

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