Deal Between Israeli Bank and U.S. Government Could Impact Many Account Holders

Potential impact on American citizens and Israeli citizens living in the United States should not be ignored

Online PR News – 17-January-2015 – St. Louis, Missouri – A historic agreement between Israel’s second-largest Bank and the United States government could lead to substantial financial penalties or even potential criminal prosecution for United States citizens and residents with bank accounts in that country.

As part of a deal announced in December 2014 by the United States Department of Justice, Israel’s Bank Leumi Group admitted that it conspired to assist United States taxpayers to hide income and assets in bank accounts in Israel and elsewhere and to file false tax returns with the Internal Revenue Service.

The agreement calls for Bank Leumi to turn over to the United States government the names of more than 1,500 Americans with undisclosed accounts at the bank, and for Bank Leumi to pay penalties totaling $400 million.

Attorney Justin Gelfand, a former federal prosecutor now practicing at law firm Capes, Sokol, Goodman & Sarachan, P.C., in St. Louis, noted that the agreement’s potential impact on American citizens and Israeli citizens living in the United States should not be ignored.

“The significance of the agreement is not so much the financial penalties on Bank Leumi,” Gelfand said. “The agreement is a milestone because Bank Leumi is providing the names of more than 1,500 of its U.S. account holders to U.S. law enforcement. In my experience, those people may soon find themselves targets of federal criminal tax investigations regardless of whether they had the criminal intent to violate U.S. tax laws. I am concerned that Americans with the best of intentions in supporting Israel will find themselves in this dragnet.”

“Unlike banks in Switzerland and other nations, Israel is not traditionally considered a tax haven,” added Capes Sokol Attorney Laura E. Krebs Al-Shathir, who has significant experience in international tax law and compliance. “Many Israelis in the U.S. opened accounts there simply to support the Israeli economy – not to evade U.S. income taxes. The Bank Leumi agreement is the first time that an Israeli bank has admitted to such criminal conduct.”

Gelfand noted that taxpayers may be able to avoid some or all of the criminal and civil consequences of holding undisclosed foreign bank accounts if they act quickly.

“The IRS has a number of programs available to taxpayers who qualify to minimize or eliminate the potential for criminal prosecution and substantial civil penalties,” he said. Those IRS initiatives include the Offshore Voluntary Disclosure Program and a “Streamlined Filing Compliance Procedure” program, which the IRS substantially modified in July 2014.

“Determining which program, if any, is best for any particular person requires a close examination of that person’s circumstances and tactical considerations of the possible consequences,” Gelfand said.

Capes, Sokol, Goodman & Sarachan, P.C., is located at Pierre Laclede Center, 7701 Forsyth Boulevard, 12th Floor, St. Louis (Clayton), Missouri 63105. Call 314.721.7701 or visit

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Jeff Dunlap
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