25 thoughts on “Has the IRS opened an Israeli branch office to process audits?”

1. I’m not sure we want to hitch our wagon to people in Israel who were actually filing fraudulent tax returns in the US. These audits seem to be triggered by the false claims of child tax credits not FATCA. The IRS will definitely make the most of it now that they’re auditing these people.

2. Can the IRS just go and set up shop in a foreign country?

3. Bring it on. I think it’s only going to be a good thing the more the IRS/US gov push this. So far the IRS has managed to punish a few selected people with terrible penalties and horrible taxation (PFIC). We know it likely affects huge numbers of people. Attacking them will have a chilling effect on people who would want to work in the US (H1B and eventual green card holders). The numbers will be big enough to get more and more people attacking these policies. Renunciation will climb ever higher.
   Of course they might even catch 1 or 2 actual tax cheats.

4. @bubblebustin

   If foreign gov’t allows them. Israel will do whatever it wants to help their friends.. except they don’t realize… some of those are citizens of Israel… no thought at all… just following directives. Everyone is scared of the 30% so they are all scrambling… toss everyone left & right…

   @omgheesstillanamerican

   Why not… we can use whatever means we can get… they are saying fraud.. but what is the real truth… because if u believe everything u read… then we are real tax evaders like they are painting all of us & hiding our fortune…

5. @omg

   I agree that these are likely cases of false claims which the IRS can legitimately pursue if those people are knowingly committing fraud. Some probably are, but others seem to have foolishly entrusted their tax affairs to so-called tax professionals. To me, the takeaway from this is that expats everywhere should be extremely careful about who they approach for tax advice. Fly-by-night tax preparers claiming false child tax credits is not terribly different than tax preparers herding expats into OVDI and OVDP – both should be strung up for their incompetence and greed. Caveat emptor!

   Meanwhile, the other interesting aspect of this story is how the IRS seems to have suddenly found the financial resources to establish a beachhead in Israel when they apparently can’t even afford a toll-free international help number for expats. Always more to the story than meets the eye.

6. Does Israel collect for IRS from its dual citizens?

7. USA and Israel = Now we have the head AND asshole of the beast:
   http://earthhopenetwork.net/obama-geddon_666.jpg

8. Pardon me Barry, this one is more flattering
   http://images.sodahead.com/profiles/0/0/1/2/0/6/6/2/8/Obama-666-27546994301.jpeg

9. It is in Israel’s interest to collect money for the US Treasury. The Israeli government wants to keep that annual USD 3 billion of US foreign aid.

10. The IRS already has an office in Canada – it’s called the CRA.

11. Consider the following post:

    http://irstargetsexpats.wordpress.com/2014/03/14/israel-moving-forward-will-exchange-bank-account-date-with-irs/

    and then read the following about the author:

    http://irstargetsexpats.wordpress.com/about-the-author/

    which includes:

    I am an expat who has lived in Israel for 20 years. One day, back on the 29th of April 2011, while out for an evening stroll with my wife, Nurit, we stopped off at out mailbox and found a letter from the IRS “inviting” me to participate in a “random compliance research examination” for my tax return from 2008. This is what accountants call an audit from hell. I immediately telephoned the IRS agent listed as the writer of this form letter and spent an hour hitting my head against the wall. They sent this letter with a six page form listing just about every possible document that they wanted to substantiate just about every line on my tax return. This intimidation included the demand for “certified translations” of each and every document. I went into a deep depression, even including suicidal ideations. Three days later is was in the emergency room of my local hospital with an attack of acute appendicitis requiring surgical treatment. To this day, I maintain that my appendicitis was causally related to the attack on my by the IRS. The other result of the audit was my beginning to write this blog, trying to bring to light an unfair and exaggerated attack by the U.S. government on honest, law-abiding expats.

12. Isreal has been standing with their cap in hand in front of the US for decades, what else would you expect?

13. Sorry if this is a bit OT but:
    “Now! What should we do with Russian Canadians?
    Should we chase them on the streets and stab them, like that Russian diplomat was in Ottawa? What happened to that story? Why was it shoved under the carpet by all media outlets? As it appears to me, no one was drunk there about 8:00 in the morning when the stubbing took place. While that matter is totally ignored, Chrystia Freeland [Liberal MP for Toronto Center] shows up on CBC pushing something she should be rather quiet about. Before showing up on CBC with nationalist agenda of any kind, she should keep in mind that: firstly, Canada is a Nation promoting Multiculturalism; secondly, neither Jewish Community in Ukraine nor anywhere in the world for that matter, is hardly impressed with neo-Nazis running the show in Kiev; and thirdly, she should have known that close to 75% of people both in Ukraine and Russia are intermarried. Any pro or contra arguments between these peoples better be resolved in their bedrooms and not by those in the White House, Berlin, or by YOU, madam, in broad daylight on CBC.

    PC2

    Read more at http://www.stockhouse.com/companies/bullboard/t.bb/blackberry#BJWLz7fiL71lib9Q.99

14. As far as I have heard, the IRS has an office in Frankfurt too.
    It would all be understandable if this was about homelanders who have hidden cash in another country.
    It ceases to be understandable when it is about treating expats as tax cheats, and CBT is to blame.
    @Deckard
    Sure they have the money for an office there if they are expecting to collect it! They would not have an office there if it did not bring in the funds for it …..with a profit.

15. I have run across articles in Jewish papers on the internet saying that American Jews like to keep money in Israel partly as a way of supporting the country, so the IRS may see Israel as a good target for digging up undisclosed accounts. I have also read that the IRS was cracking down on Israel partly in the belief that a substantial amount of the money that fled Switzerland ended up in Israel.

    Israel is not the only foreign country being targeted and they seem to be looking at countries to which fairly wealthy groups in the U.S. have strong ties, particularly some high-performing immigrant groups that have come to the U.S. since the 1960s. For example, they are also going after accounts in India. Americans from India are one of the wealthiest ethnic groups and some of them have returned to India as it has become more free-market oriented. I have also noticed that articles have started appearing in Korean (which google translate doesn’t really translate), which is again a fairly wealthy country. In the late 1980s, many of the Korean PhD students at my university had children while in the U.S. and went back to Korea soon after I doubt that any of them realized the implications of this.

16. @Publius, Some of the money that was in Swizerland was Holocaust money. Literally, Obama is going after the money that got away from Hitler.

17. Make sure that you point out in as many places how much money is being sucked out of USA by child credit fraud, which is fully enabled by citizenship-based (personhood-based) taxation.

    BECAUSE US persons MUST fill out taxes, tax fraud on these credits is enabled.

    The amount of money LEAVING USA via these credits far exceeds the amount of money coming in from outside USA by CBT.

18. @Publius

    Not just the indians from india… all asians will be slammed. Culture for asians is to send home money to take care of the family… joint accounts which is their version of inheritance for the older generation.. co-signer on that account has no clue how much is there. Or they plan to go back to the home country so they save for place to live… retirement etc… like canadians… if u don’t save for your retirement… cat food on crackers is possible

19. @Mark Twain et al

    Using the child tax credit is not fraud. If you read the article you will see they are talking about auditing people who are NOT wealthy and have NO individual evidence of cheating – just a perception that “this group” tends to hide income. Sound familiar?

    Sure there are some cheats – there are some all over. But I would expect Brockers of all people to see behind the “foreign tax cheat” stereotype. Just because they’re in Israel and not in Switzerland or India doesn’t mean you have to assume they’re committing fraud.

    And if you think an audit in Canada is hell wait till you’re dealing with a situation where all your important documents are in another language.

    @Petros – exactly. When I was working for an Israeli bank we had old people who had escaped the Nazis over 60 years ago and had no clue about the crazy US tax system.

    I know many families who (not fraudulently) were prompted to ‘get around to’ registering their Israeli-born children because of the tax credit. (Mine were born many years before this development and I registered them proudly as US citizens, more fool me.) At the time it seemed strange that the IRS was giving a refund to people who had no US income. Now I’m wondering if it wasn’t all part of the grand plan.

20. acknowledged. There are 2 angles on this. One is that fraud exists simply because of the extra territorial tax system. The other is that a legitimate credit is taken which is not advantageous to USA (which is not a friendly argument to US citizens overseas)

21. @Mark Twain

    If you or anyone else has a clue as to why they did it this way I’d be interested in hearing it.

    1. US initiates citizenship-based taxation to punish people leaving who don’t want to fund the Civil War. (Isn’t that over?)
    2. US ‘forgets’ about US citizens overseas for 100+ years.
    3. US gives child tax credit / refunds to US citizens overseas who have no US source income. Hooray, free money from Uncle Sam!
    4. US stuffs up the economy big time and runs out of money, and goes after US citizens abroad with the vengeance of the FATCA/FBAR neutron bomb. Fringe benefit is demonizing expats wherever they may be as “tax cheats” “not paying their fair share”.

    Can you say anything but WTF?

22. @Petros: “Some of the money that was in Switzerland was Holocaust money. Literally, Obama is going after the money that got away from Hitler.”

    Even Kathryn Keneally, Asst Attorney General, acknowledged that there were legitimate reasons for maintaining foreign accounts: “And in a February 2010 New York Law Journal article, “The Taxman Cometh,” (p. 21 of the pdf) the very first justification Keneally offered for the maintenance of “foreign bank accounts” is that “[i]n many cases, the accounts were set up in safe havens, such as Switzerland, at a time when horrific events were occurring in other countries, such as Nazi Germany.” ”

    I have not been able to locate the article mentioned but would expect that another legitimate reason for a foreign bank account is to be able to bank where you reside.

    Excerpted from this rather unflattering article on Kathryn Keneally’s confirmation hearing:
    http://truth-out.org/news/item/8155-another-fox-guarding-the-henhouse-obamas-doj-tax-division-assistant-attorney-general-nominee

23. From the Times of Israel

    Taxed into renouncing their US citizenship?
    Drowning in a sea of new financial regulations, and with IRS audits on the rise, some American citizens in Israel say they are weighing expatriation. That won’t work

    Read more: Taxed into renouncing their US citizenship? | The Times of Israel http://www.timesofisrael.com/taxed-into-renouncing-their-us-citizenship/#ixzz2xF8xtPxl
    Follow us: @timesofisrael on Twitter | timesofisrael on Facebook

24. This was posted on the Ask your question Thread, but might add it here, for any Israeli that stumbles upon this post…

    http://esseragaroth.blogspot.co.il/search/label/Renunciation

25. @Just Me –

    Thanks for that..

    By the way, the “IRS Branch Office in Israel” rumour seems to be, at least at the moment, just that – a rumour. From the IRS website –

    U.S. taxpayers in Israel that need assistance can contact either the tax assistance office in Philadelphia or our office in Paris. Taxpayers that have Internet access can also go to the main IRS page at http://www.irs.gov/.