Tax Authority to businesses: Return COVID-19 grants or pay a fine

Roughly 150 business owners were asked to return the funds after the authority concluded they were undeserving of them.

BUSINESS OWNERS in Tel Aviv protest the ongoing nationwide closure, on Monday. (photo credit: AVSHALOM SASSONI/FLASH90)
BUSINESS OWNERS in Tel Aviv protest the ongoing nationwide closure, on Monday.
(photo credit: AVSHALOM SASSONI/FLASH90)
The Tax Authority has contacted roughly 150 business owners and requested they pay back COVID-19 relief grants they had gotten after the authority concluded they had no right to obtain such sums in the first place, the N12 news site reported on Tuesday.
An examination by the authority suggested that some business owners failed to meet the requirements to obtain the aid, while others actually made more money under COVID-19 than during 2019.
To receive aid, businesses had to demonstrate they suffered a loss when measured in comparison with 2019. Businesses with a business volume of below NIS 20 million, for example, were asked to prove they suffered a 25% decline in business in March and April when compared to the same months last year.
The authority now claims that due to misreporting or mistakes in its own process, it had offered underserved funds – and now would like them back. Hundreds of business owners will be contacted in the upcoming week with this demand, KAN reported.  
Business owners were given 90 days to return allegedly undeserved aid; a special section within the authority website was created for them to do so without fines. “Better to pay NIS 200,000 now than a much bigger sum in half a year,” a source in the authority claimed.
Since the grants given were based on reported losses, the sums business owners were asked to return differ, ranging from thousands of shekels to hundreds of thousands of shekels.  
The report came on the heels of the recent State Comptroller’s Report which slammed the authority for allegedly giving out underserved grants and failing to process applications thoroughly.
“Businesses are bleeding to death,” Revital Ben Ari, vice president of the Tax Advisers Board, said. “This is passing out a death sentence on businesses.”
“Have they lost their minds?” asked Roee Cohen, head of the Self-Employed Union. “The country is still under lockdown, tens of thousands of businesses are closed, the self-employed are out of work, business owners see their whole lives collapse without any hope or horizon to look forward to –  and the Tax Authority wants to get money back and adds the threat of fines?”
Those who opened their business this year, before COVID-19 struck, had no way to obtain grants, as they could not point to previous earnings. Many business owners complained that in some sectors, such as restaurants and bars, the rent cost alone is higher than the grants received. The number of small businesses across the country is roughly 80,000, a fifth of all businesses in Israel.  
The National Insurance Institute said on Wednesday that 1.08 million requests to obtain unemployment benefits have been received since the COVID-19 pandemic began, of which over 980,000 (92%) were granted.
The report added that 634,000 Israelis are currently out of work, and 121,000 are partially unemployed since they were let go by some of their employers but not all.
The report also said that 107,000 Israelis were unemployed before COVID-19, bringing the total number of those receiving benefits to 1.09 million unemployed Israelis.
People aged 28-39 are those most likely to remain out of work, and the number of unemployed Israelis in that age group is now 217,000. The food and service industry sectors report the highest rates of unemployment.