Tax offenses are divided into two levels: technical offenses, failure to file reports on time, failure to keep books, failure to transfer withholdings, whose punishment is relatively light and can usually be resolved; and substantive offenses, committed with the intent to evade tax: Section 220 of the Income Tax Ordinance prescribes a penalty.
The legal framework
Tax offenses are divided into two levels: technical offenses, failure to file reports on time, failure to keep books, failure to transfer withholdings, whose punishment is relatively light and can usually be resolved; and substantive offenses, committed with the intent to evade tax: Section 220 of the Income Tax Ordinance prescribes a penalty of up to 7 years' imprisonment for omitting income, keeping false books, fraud and deceit; and Section 117(b) of the VAT Law prescribes a penalty of up to 5 years' imprisonment for acts intended to evade tax, and under aggravated circumstances up to 7 years. Fictitious invoices are the most pressing offense in the field, and are currently also treated as a money laundering offense with all that this entails: forfeitures and arrests.
How is a tax investigation conducted?
Israel Tax Authority investigations are initiated by intelligence information, computerized cross-checks, audits and informants. They include searches of offices and homes, seizure of accounting records and computers, account freezes and interrogations under caution, sometimes simultaneously involving the taxpayer, the accountant and customers. The civil proceeding (the assessment) and the criminal proceeding are conducted in parallel, and every statement in one affects the other. One must not be questioned without legal advice, and one must not "explain" things to the auditor in the field.
The unique tool: ransom
In tax offenses there is a route that exists in almost no other field: a monetary ransom. The ransom committee of the Israel Tax Authority is authorized, in appropriate cases, to convert the criminal proceeding into payment of a ransom, without an indictment and without a conviction. Eligibility depends on the severity of the offense, its scope, the taxpayer's history and the removal of the default (payment of the tax). A ransom application is a strategic step that requires precise timing and wording.
Legal representation in tax cases
Israel Arama, formerly of the Tel Aviv District Attorney's Office, represents taxpayers, business owners and managers in tax investigations, ransom proceedings and indictments, in cooperation with tax professionals. Contact us for an initial consultation without obligation, before the investigation and before any conversation with the authority.
The legal framework — what is important to know?
Tax offenses are divided into two levels: technical offenses, failure to file reports on time, failure to keep books, failure to transfer withholdings, whose punishment is relatively light and can usually be resolved; and substantive offenses, committed with the intent to evade tax: Section 220 of the Income Tax Ordinance prescribes a penalty of up to 7 years' imprisonment for omitting income, keeping false books, fraud and deceit; and Section 117(b) of the VAT Law prescribes a penalty of up to 5 years' imprisonment for acts intended to evade tax, and under aggravated circumstances up to 7 years. Fictitious invoices are the most pressing offense in the field, and are currently also treated as a money laundering offense with all that this entails: forfeitures and arrests.
How is a tax investigation conducted?
Israel Tax Authority investigations are initiated by intelligence information, computerized cross-checks, audits and informants. They include searches of offices and homes, seizure of accounting records and computers, account freezes and interrogations under caution, sometimes simultaneously involving the taxpayer, the accountant and customers. The civil proceeding (the assessment) and the criminal proceeding are conducted in parallel, and every statement in one affects the other. One must not be questioned without legal advice, and one must not "explain" things to the auditor in the field.
The unique tool: ransom — what is important to know?
In tax offenses there is a route that exists in almost no other field: a monetary ransom. The ransom committee of the Israel Tax Authority is authorized, in appropriate cases, to convert the criminal proceeding into payment of a ransom, without an indictment and without a conviction. Eligibility depends on the severity of the offense, its scope, the taxpayer's history and the removal of the default (payment of the tax). A ransom application is a strategic step that requires precise timing and wording.
This information is for initial orientation about the service and contact process. It is not individual legal advice.
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