Your Taxes: Tax Authority moves Shabbat deadlines

It remains to be seen whether the ITA’s computer will refrain from imposing penalties and interest for businesses that file withholding-tax returns on Sunday.

By LEON HARRIS
Every now and then the Israel Tax Authority (ITA) gets things a bit... er... mixed up. Here’s an example.
On or before the 15th of every month, Israeli businesses flock to the nearest post office or bank to pay their periodic tax installments, accompanied by brief reports for the purposes of income tax, VAT, payroll withholding tax and National Insurance Institute obligations. Usually these reports relate to the month just finished; sometimes the reports are bimonthly. Online reporting is starting for certain taxpayers.
What happens if you file late?
If you haven’t filed on time, a few days after the 15th you can expect to receive a penalty and interest notice.
And what happens if the 15th is on Shabbat? The ITA has just issued a “clarification” on an inner page in the 2010 withholding-tax booklet (Form 102), which reads as follows: “Please note, in the 2010 tax year... the reports must be effected no later than the due dates even if the 15th of the month falls on Shabbat. The payment may not be postponed to the 16th of the month, as was customary in past years.”
What does the tax law say?
Section 173B of the Income Tax Ordinance (ITO) deals with withholding taxes, and Section 175(f) of the ITO deals with income-tax installments for businesses. Both Sections say: “The due date for filing reports will be postponed if in the five days prior to that date there were at least three days of rest, and it will be on the fourth work day at the end of the consecutive rest days.”
So presumably the ITA takes that to mean that if Shabbat falls within a period of less than three days of rest, the due date cannot be postponed any more to the following Sunday. Commencing in 2010, the ITA wants your tax reports and tax payments a day earlier, on Friday the 14th, if the 15th is Shabbat.
But is that right?
It seems the ITA may have overlooked Section 10(c) of the Interpretation Law, which says: “In counting a period of days, there will be taken into account statutory days of rest, recess or sabbatical by law, unless they are the last days of the period [italics added].”
If 15 days are allowed for filing withholding-tax reports but the 15th day is a Shabbat, that day does not count. So it seems those reports can be filed on the following Sunday after all. It remains to be seen whether the ITA’s computer will refrain from imposing penalties and interest for businesses that file withholding-tax returns on Sunday.
Some loose ends
A few other questions arise, such as: (1) Why was this clarification announced on an inner page of the 2010 withholding tax booklet? (2) What about other taxes? (3) What about the Torah?
As always, consult experienced tax advisors in each country at an early stage in specific cases.
leon.hcat@gmail.com
Leon Harris is an international tax specialist at Harris Consulting & Tax Ltd. and Western Fiduciary Ltd.