St. Louis law firm sheds light on U.S.-Israeli bank agreement, urges account holders to act now

By Heather Isringhausen Gvillo | Jan 23, 2015

Attorneys with the St. Louis law firm Capes, Sokol, Goodman & Sarachan, P.C. are urging people to become aware of a deal between Israeli’s Bank Leumi Group and the U.S. Government, saying it could impact local account holders.

The Bank Leumi Group, Israel’s second-largest bank, made a deal with the United States Department of Justice in December 2014, which could lead to substantial financial penalties or even potential criminal prosecution for U.S. citizens with Israeli bank accounts.

In a press release by the Capes, Sokol, Goodman & Sarachan law firm, it states that the bank admitted that it conspired to assist U.S. taxpayers to hide income and assets in bank accounts in Israel and elsewhere and to file false tax returns with the Internal Revenue Service.

According to the agreement, the Israeli bank will is required to pay penalties totaling $400 million.

“The significance of the agreement is not so much the financial penalties on Bank Leumi,” stated Capes, Sokol, Goodman & Sarachan attorney Justin Gelfand. “The agreement is a milestone because Bank Leumi is providing the names of more than 1,500 of its U.S. account holders to U.S. law enforcement. In my experience, those people may soon find themselves targets of federal criminal tax investigations regardless of whether they had the criminal intent to violate U.S. tax laws. I am concerned that Americans with the best of intentions in supporting Israel will find themselves in this dragnet.”

“Unlike banks in Switzerland and other nations, Israel is not traditionally considered a tax haven,” added attorney Laura E. Krebs Al-Shathir, who has experience in international tax law and compliance. “Many Israelis in the U.S. opened accounts there simply to support the Israeli economy – not to evade U.S. income taxes. The Bank Leumi agreement is the first time that an Israeli bank has admitted to such criminal conduct.”

Gelfand stated that taxpayers may still be able to avoid some or all of the criminal and civil consequences of holding undisclosed foreign bank accounts if they act quickly.

“The IRS has a number of programs available to taxpayers who qualify to minimize or eliminate the potential for criminal prosecution and substantial civil penalties,” he said.

Those IRS initiatives include the Offshore Voluntary Disclosure Program and a “Streamlined Filing Compliance Procedure” program, which the IRS modified in July 2014.

“Determining which program, if any, is best for any particular person requires a close examination of that person’s circumstances and tactical considerations of the possible consequences,” Gelfand stated.

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