Your Taxes: Filing extensions if you use a CPA

A feature of the Israeli tax system is that you get more time to file an annual tax return if you use an Israeli CPA.

By LEON HARRIS
taxes good 88 (photo credit: )
taxes good 88
(photo credit: )
A feature of the Israeli tax system is that you get more time to file an annual tax return if you use an Israeli certified public accountant (CPA). When is the initial deadline? As explained in "Who has to file a tax return for 2007?" (The Jerusalem Post, April 23, 2008), not everyone has to file a tax return; for example, employees whose salary did not exceed NIS 552,000 in 2007 if the required tax was withheld at source and whose other income from investments was below certain prescribed amounts (depending on the type of income). For individual taxpayers who have to file an annual tax return for 2007, the general deadline has been extended from April 30 to May 29, 2008. For businesses required to keep double entry books, the deadline is May 31, 2008. Additional time extensions can be requested from the Israel Tax Authority (ITA) if you have a good reason. Alternatively, most accounting firms are allowed to spread out the filing of their clients' tax returns over a longer period, without providing reasons, according to a special arrangement between the ITA and the Institute of Certified Public Accountants in Israel. To enjoy the CPA arrangement, the taxpayer must sign a form allowing the CPA to represent him, and this must be registered with the ITA. So how much time can you buy by using a CPA to file your 2007 income tax return? It partly depends partly on your status, partly on whether you return is filed on-line. Active companies - off-line filing: If the CPA files 30 percent of the returns by July 31, 2008, he receives an extension for the rest until November 30, 2008. If the CPA files 65% of the returns by November 30, 2008, he receives an extension for the rest until January 29, 2009. Companies - on-line filing (with supplementary off-line filing): If the CPA files 20% of the returns by July 31, 2008, he receives an extension for the rest until November 30, 2008. If the CPA files 65% of the returns by November 30, 2008, he receives an extension for the rest until February 26, 2009. Individuals - off-line filing: If the CPA files 45% of the returns by June 30, 2008, he receives an extension for the rest until July 31, 2008. If the CPA files 80% of the returns by July 31, 2008, he receives an extension for the rest until August 31, 2008. Individuals - on-line filing (with supplementary off-line filing): If the CPA files 15% of the returns by June 30, 2008, he receives an extension for the rest until August 31, 2008. If the CPA files 35% of the returns by August 31, 2008, he receives an extension for the rest until November 30, 2008. Charities - off-line and on-line filing: similar to active companies. Capital declaration (hatsarat hon), if requested by the Tax Authority: The deadline for filing capital declarations as of December 31, 2007, is the later of the due date (generally 120 days after the request) or the date for filing the annual income tax return, whichever is later. As always, consult experienced tax advisors in each country at an early stage in specific cases. leon.harris@il.ey.com Leon Harris is an international tax partner at Ernst & Young Israel.