If you have an account with Bank Leumi in Israel and you recently received a letter from them asking you to submit a Form W-9 and a confirmation that you comply with United States tax laws relating to the account, you are not alone.
Recently, Bank Leumi sent thousands of these notices to their United States account holders. This presumably comes as a result of Bank Leumi’s efforts to comply with FATCA (the Foreign Account Tax Compliant Act), which will require them to report their United States account holders to the Internal Revenue Service. Because this reporting begins with respect to accounts that are in existence for 2013, many US account holders who received the notice believe that they will become compliant and avoid controversy with the IRS by simply closing the account by the end of 2012. This is not true. Bank Leumi may very well succumb to pressure from the United States Department of Justice to disclose names of US account holders going back several years. For example, when UBS provided US account holders names to the IRS, they went back to accounts that were in existence in 2000.
Additionally, as reported on Friday by Swiss media , Credit Suisse has formally acknowledged that it provided the IRS with names of their United States account holders, presumably going back several years. People who rush to close their Bank Leumi accounts and then attempt to hold their assets in a manner that does not require future disclosure under current law may find themselves in the future responding to IRS questions as to why they suddenly closed their account and failed to properly disclose it for tax years 2011 or 2012.
Under those circumstances, it will be very difficult to convince the relevant authorities that the failure to comply with United States tax laws was non-willful.
Joseph Septimus is a tax and trusts and estate attorney with the law firm of Kostelanetz & Fink, LLP, and can be reached at (212) 808-8100 or email@example.com
(Joseph Septimus – YWN)