Under the rules of European soccer, a player is in an offside position if he is nearer to his opponent’s goal line than both the ball and the second-last opponent. Goals scored after committing such an offside offense don’t count. This can be frustrating for footy fans.And for Israeli tax purposes, many individuals and all employers are required to file online tax returns, not only paper tax returns. Otherwise, the tax return doesn’t count and you are basically offside with your paper-only tax return. This can be frustrating for any taxpayer who prepared a tax return but is not au fait with the new-fangled information superhighway.Some say this is what you expect in an efficient hi-tech country. Others say that by keying in your tax-return data online into the Israel Tax Authority’s computer system, you are doing their bureaucratic donkey work for them.Online filings are done in one of two ways: either by filing at the Tax Authority’s website, in Hebrew of course; or by having your accountant or tax adviser file over a special Intranet for professionals, usually known by the Hebrew acronym Shaam.Online tax filings are required from individuals if they are required to file a tax return (detailed rules exist) and any of the following also apply in the year: if they have income from a business, employment, agriculture; if they sold a nonexempt Israeli real-estate interest and didn’t pay tax at the maximum rate; if they are a 10-percent-ormore shareholder in a controlled foreign company; if they carried out a reportable tax-planning act; or if the Tax Authority requested it.Even if you are required to file online, you must still file the return the old-fashioned way (on paper).According to an announcement by the Tax Authority on September 21, 98% of employers and nearly 90% of individuals comply with the online filing requirement. Which begs the question: What to do about the recalcitrant paperonly filers? The Tax Authority said in its announcement that it has devoted considerable resources to educating taxpayers and even operates an advanced call-in center to provide telephone support. Now it has decided it is time to spoil the Succot spirit by rolling out “financial sanctions” – i.e., MONTHLY fines if you don’t file online.The fine is NIS 1,000 per individual per month of delay in filing the tax return online. For employers or payors of payments subject to withholding tax, the fine is NIS 1,500 per month. Other existing penalties will also continue to apply, and so will interest, index-linkage and penalties if you are late actually paying the tax.This is quite a broadside, so beware; for Israeli tax purposes, paper and silicone returns go hand in hand.But to allow us time to get ready, the Tax Authority has very kindly decided to phase in the fines. For the 2010 tax year, no fine will be imposed if you (or your professional adviser) file your online by this November 30, unless you apply to your Tax Office and get permission to file online by a later date. After that, the full panoply of fines, etc., will apply.For the 2007-09 tax years, no fine will be imposed if you (or your professional adviser) file your online by this November 30. But on this December 1 the fines will be imposed, in one fell swoop, as follows: three monthly fines for withholding tax filings for 2007; two monthly fines for 2008; one monthly fine for 2009. And for each additional month of delay after that, a monthly fine will be imposed.To sum up: Online filings are here to stay in Israel, no matter which generation you belong to – the Facebook generation or the quill feather generation.In practice, based on experience, there could be problems for a number of people. If you haven’t registered for Israeli tax purposes, it remains to be seen whether you will be able to file online.And if you are not an Israeli citizen (or Israeli company), you generally won’t have an Israeli identity number. Such people currently are bounced off the Tax Authority’s online filing system. All those unable to file online should consider registering at a local Israeli Tax Office or via an Israeli professional adviser.As always, consult experienced tax advisers in each country at an early stage in specific email@example.com Leon Harris is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd.