Many new immigrants and returning Israelis have been receiving letters in recent weeks from the Israel Tax Authority demanding they report their sources of income from Israel and abroad within 30 days.
The letters, which are part of a four-year old crackdown by the authority, may come as a surprise to both groups because under the so-called Milchan Law they are exempt from disclosing their foreign income and assets for the first 10 years after they arrive.
The tax authority confirmed on Wednesday that the 5329 form that recipients are ordered in the letters to complete doesn’t require new immigrants or returning Israelis to disclose their income or assets from overseas, only their Israeli income and assets.
“Concerning their assets and incomes abroad, they have the option on the form of saying they are exemption from reporting,” the authority said. However, someone who opts not to disclose the information is at risk later of not qualifying for the tax authority’s voluntary disclosure track later on because technically receipt of form 5329 means the taxpayer is formally under investigation.
Meir Nussbaum, a tax specialist at the law firm Nussbaum & Company, said new immigrants and returning Israelis should exercise their right not to report income or assets abroad.