Globes cites sources claiming that the Ministry of Finance is working to sign an agreement with the U.S. Department of the Treasury on the transfer of information regarding bank accounts belonging to foreign nationals in both countries.
According to Globes, Israel Tax Authority director general Doron Arbeli last week met Internal Revenue Service (IRS) acting commissioner Steven Miller to advance this effort. Should an agreement be signed, Israel will establish an organization to monitor and enable the transfer of the necessary information to the U.S., and the IRS will send to Israel details of bank accounts belonging to Israeli residents in the U.S.
The initiative was born by an effort of the Ministry of Finance to help Israeli banks deal with draconian U.S. regulations under the Foreign Account Tax Compliance Act (FATCA), which applies to US citizens residing overseas.
Under FATCA, banks in foreign countries—including Israeli banks—must provide the IRS with lists and details of accounts belonging to U.S. citizens, including declarations from said citizens that they have paid the required taxes back in America.
The IRS has been known to impose sanctions against a bank which knowingly permitted customers to violate FACTA rules.
According to Globes, banks around the world have sharply criticized FACTA’s hard nosed policies, but one way of dealing with the law’s requirements is signing an agreement of cooperation between the foreign country and the U.S. the agreement allows local banks to send bank account details to their own government, which then passes them on to U.S. authorities.
Banking secrecy? We don’t need no stinking banking secrecy…
Globes cited a U.S. Department of the Treasury document published in November, which states that the U.S. administration was in talks with Israel’s Ministry of Finance to draw up an agreement, under which the US authorities would also provide the Israeli authorities with information about the bank accounts of Israeli citizens residing in the U.S.
Uncle Sam is in similar talks with Argentina, Hungary, New Zealand, and South Korea.
The agreement will not be symmetrical. The U.S. will be required to transfer less information than the Israelis will be doing, but Globes suggests that even partial information could help the Israeli government fight tax evasion by Israelis in the U.S.