(photo credit: courtesy)
The US Internal Revenue Service (IRS) has extended the deadline for offshore
voluntary disclosure initiative requests until September 9 due to the potential
impact of Hurricane Irene.
US citizens holding accounts in Israeli banks
now have an extra nine days to benefit from the Offshore Voluntary Disclosure
Program (OVDP) for American citizens living abroad.
The initiative has
serious implications for US citizens living in Israel because most of them only
became aware of the reporting issue last year, and many missed the 2009 deadline
for the old OVDP.
Those who won’t use the opportunity face serious
Starting on January 1, 2013, a 30 percent withholding tax
will be imposed on certain US source payments made to foreign financial
institutions that did not reach an agreement with the IRS to provide annual
information concerning their US account holders.
Examples for such
payments include dividends and gross proceeds from the sale of assets, such as
stocks and securities.
According to Dave Wolf, a tax partner at Hacohen
Wolf, the extra nine days that the IRS has given US taxpayers might be a welcome
relief for those who were contemplating making the difficult decision during the
last two weeks but didn’t have enough time to think it over or were afraid that
they didn’t have enough time to process all the necessary
Growing numbers of US taxpayers do not want to wait for the
implementation of the FACTA provisions in 2014, when Israeli banks under certain
circumstances will disclosure to the IRS who their clients are.