Tax Professionals Investigated for Allegedly Defrauding State of Millions
Translated & summarized from JDN by baba
The Israel Tax Authority is investigating two accountants and a tax advisor for allegedly failing to report millions of shekels in income for a controlling shareholder of a public company. The suspects allegedly helped their client misreport dividend income and undeclared withdrawals, costing the state over 800,000 shekels in taxes. The investigation became public yesterday, and the suspects were released under restrictive conditions with a gag order on their names.
The story in 5 lines · by baba
- Two accountants and a tax advisor are under criminal investigation by the Israel Tax Authority.
- They are suspected of failing to report 16.5 million shekels in dividend income for a client.
- The alleged misreporting cost the state over 800,000 shekels in taxes.
- The client also allegedly failed to repay 14.6 million shekels withdrawn from his private company.
- The suspects were released under restrictive conditions with a gag order on their names.
The Israel Tax Authority's Central Investigations Unit is conducting a criminal investigation into two tax accountants and a tax advisor. They are suspected of failing to properly report owner withdrawals and dividend distributions for their client, a controlling shareholder in a public company, over several tax years. The professionals are suspected of offenses under the Income Tax Ordinance, including high-level negligence.
The investigation began after an audit by the Rehovot Tax Assessor's Office uncovered evidence of ongoing non-reporting of owner withdrawals and dividend distributions. The case was subsequently transferred to the Central Investigations Unit. According to the investigation, the tax professionals allegedly assisted their client in filing personal tax returns for 2021-2023, omitting income and misclassifying taxes. They are suspected of helping the client report approximately 16.5 million shekels in dividend income as if from a regular shareholder, taxed at 25%, instead of reporting it as a controlling shareholder, which would incur a 30% tax rate. This alleged misreporting resulted in a tax shortfall of over 800,000 shekels for the state.
Furthermore, it is suspected that between 2021 and 2022, the client withdrew about 14.6 million shekels from a private company he owns and did not repay it by the end of the following year. This is legally defined as an event that helps trigger taxation as dividend income. The tax professionals are suspected of assisting in filing the returns without including this income.
The investigation became public yesterday with searches and evidence seizure. The suspects were brought before the Rishon LeZion Magistrate's Court, which released them under restrictive conditions and imposed a gag order on their names.
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