Thursday, August 06, 2009

The Apocalypse: Feds arrive in Israel

This particular issue has the potential to put the recent money laundering arrests in NJ in its back pocket.

The Mishpacha Hebrew edition reports today -- US Federal Agents arrive in Israel to investigate possible fraudulent US/IRS tax rebates and citizenship/naturalization claims.

The article is all in Hebrew, but here are some salient points: (click images on the right to see them full-sized)
  • US federal government is in pursuit of those who "provide incorrect information and receive from the US IRS income tax rebates."
  • 13 IRS investigators from the US have arrived in Israel to verify the authenticity of existing documentation
  • Department heads familiar with the subject: The investigation will go on for a long time, and whoever submitted incorrect information will find themselves sued to return the money [and face criminal prosecution]
  • "The public does not understand the enormity of the problems involved," said one of the company owners that are experts in advancing US citizenship to individuals and families.
"The rumors flew about. The long arm of the US federal government had reached Israel to investigate Israelis with US citizenship who claim IRS tax rebates when they are not entitled to them for various reasons."

In a simplistic nutshell, any dual citizen of the US and Israel who earns annually in excess of certain amounts [$11,750 for '07 and $8,500 for '08] is entitled to a 15% IRS rebate of the excess, up to $1000 per child under the age of 17.

Experts told Mishpacha magazine that while its' legal to (a) get US citizenship for children and (b) request retroactive IRS refunds for up to 3 years -- one may not request a refund for a child retroactively if the child only received citizenship now. Apparently, less than scrupulous accountants and tax preparers have filed claims of this type.

Additionally, in order to receive the "maximum" tax rebate of $1000 per child, the familiy's income must reach a certain level/threshold. The IRS will be investigating whether the reported income filed with the IRS matches what has been reported to Israel's tax agency (mas hachnasa).

As a result of the investigation, tens of thousands of families may find themselves under IRS scrutiny, and those that illegally received US citizenship, illegally filed for tax rebates, or supplied incorrect information will find themselves forced to return the money, with penalties and interests in the best of cases, and in the worst case, find themselves imprisoned with large fines as well.

I did warn you to file the FBAR...

Wherever I am, my blog turns towards Eretz Yisrael טובה הארץ מאד מאד


Anonymous said...

All this money wasted on 1000 per child, go after the US corporate CEO who fudge and hide their money all the time

Anonymous said...

"Eretz Israel"... doesn't that mean the same as "Lebensraum"? (and for the same ultra-nationalistic reasons?)

Being a victim of genocide does not confer the right to commit genocide on another people. For the Gaza Incursion, Israel has been judged by World Opinion to be War Criminals.

(plus, you are NOT a nice person)

Baila said...

I can get 1000. per child? Who do I contact about this?

Orthonomics said...

Linked to your post. I heard about how to arrange credits you likely aren't eligible for years ago. I fear the headlines. I don't think this is going to be good.

Anonymous said...

This is very, very bad. Very bad, indeed.

Jameel @ The Muqata said...

Baila: Contact me -- I'll give you all the details how to do it legally.

SL: Thanks. You can get the credits legally, but there are many caveats.

There are way too many people playing the system...and its going to be bad news.


amyrpk said...

So my question is, do expatriates in other countries do this as well? Do Americans who've moved to Ireland, or Spain, or England, do this kind of thing?

Or is it only us Brainy Types that think up such things?

Rafi G. said...

I read the article over shabbat and it looks like the biggest problem they are interested in is people who apply for citizenship for kids, and then file for money for them fraudulently for years they were not citizens. The rest sounded like small things - people who file incorrect numbers, etc. The main thing sounded like the filing for returns for kids for when they wer enot citizens.

Jameel @ The Muqata said...

Amyrpk: Any expat-US citizen is eligible to do file for the child credits.

However, Israel is the leading country to naturalize children as US citizens...(see this post from years was only a matter of time)

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