The Tax Authority has released the 2023 decisions of the Compromise Committee, with 55 out of 97 cases involving income tax and real estate taxation. At the heart of the report: concealment of rental income. A pensioner couple from the north failed to report NIS 1.6 million in rental earnings and will pay a settlement of NIS 240,000; another couple from Jerusalem concealed NIS 1.5 million and will pay nearly NIS 300,000 in settlement fees.
By Dror Nir Kastel, Nadlan Center
Concealment of rental income is at the center of the Tax Authority’s compromise decisions. 55 of 97 decisions in the 2023 Compromise Committee report published today (Monday) by the Tax Authority are in income tax and real estate taxation cases. The rest involve customs and VAT cases, with rental income concealment making up a significant portion of the higher compromise amounts. In total, these decisions imposed settlements amounting to approximately NIS 9 million.
According to tax law, one way to close investigation files suspected of tax offenses is through a compromise procedure as an alternative to criminal proceedings. For this purpose, the Israel Tax Authority has compromise committees that deal with income tax and real estate taxation, as well as committees that deal with VAT, customs, and purchase tax. The compromise amount is imposed in addition to the tax payment demanded in the civil process.
To access the full document published by the Tax Authority, click here.
Among the decisions in the current file: a couple from Jerusalem were suspected of omitting rental income between 2012–2021 totaling approximately NIS 1.5 million and of submitting a false exemption to the Real Estate Taxation Office, through which they avoided paying purchase tax of approximately NIS 200,000 on two apartments. For these offenses, a settlement amounting to NIS 285,000 was imposed on the couple.
Additionally, a pensioner couple from the north were suspected of failing to report rental income between 2011–2021 totaling NIS 1.6 million. For these offenses, a settlement of NIS 240,000 was imposed on them. In another case, pensioners from the central region were suspected of failing to report rental income between 2012–2022 totaling NIS 1.58 million, and were imposed a total settlement of NIS 238,000. A central region resident was suspected of failing to report rental income between 2017–2018 totaling NIS 454,000, and a settlement of NIS 110,000 was imposed.
Also in the real estate sector, a northern construction company manager and his company were suspected of unlawfully deducting expenses in 2019 using a single false invoice of approximately NIS 750,000. A total settlement of NIS 180,000 was imposed on the manager and the company. A central region resident involved in renovations was suspected of unlawfully deducting input tax between 2015–2018 totaling NIS 489,977. For these offenses, a settlement of NIS 147,000 was imposed.
Additionally, a business owner and a company from the central region involved in construction were suspected of unlawfully deducting input tax between 2015–2020 totaling NIS 519,035. For these offenses, a settlement of NIS 155,710 was imposed.
In forming its administrative discretion in imposing settlements, considerations include: the severity of the offense, the degree of the suspect’s involvement, prior convictions, previous settlements, personal circumstances, dependents, public interest in prosecution, rectification of the offense, whether it involves a representative acting in their role, whether the field involves a duty of trust, need for deterrence in the sector, and offenses under other laws in addition to tax law violations.
