Israel Tax Authority failed to repay billions in rebates

Joseph Shapira
Joseph Shapira

The State Comptroller discovered massive overcharging of taxpayers by an authority that didn't refund its overzealous collection.

The Israel Tax Authority failed to refund billions of shekels for three years, according to a chapter in the annual comptroller’s report published on Wednesday, in which State Comptroller Yosef Shapira examined the service provided by the tax authority to Israelis.

His troubling findings show the Tax Authority excels at collection with this year’s collection already passed its projection by NIS 9 billion. But if an individual overpays, the authority does not bother informing them and simply “holds on” to the money in the state coffers.

The overcharging was discovered in several sectors, including among salaried employees. The comptroller discovered that the tax authority overcharged salaried employees who only worked part of the tax year by several billions of shekels over the years. In 2012, the figure stood at NIS 563 million paid by some 364,000 employees, who are owed NIS 1,550 per year on average.

In order to receive the rebates they are owed, the affected individuals would need to file the necessary paperwork for a refund of an overpayment.

Furthermore, the authority overcharged salaried employees who worked for more than one employer by several hundred million of shekels. In 2012, there were 34,596 salaried employees who worked at two or more businesses and were entitled to rebates totaling NIS 74 million. The average amount owed was NIS 2,150, which the individual can receive if they request a refund.

In another worrying infraction, the report discovered members of the public were not informed of refunds over deductions for daily allowances. Comptroller Shapira noted that finance ministers over the years have avoided updating the deductions covering per diem expenses and that the current deductions were unrealistic.

When the figures were adjusted in 2011, taxpayers were able to deduct NIS 1.2 billion from their 2009-2010 income report: NIS 555 million in 2009 and NIS 667 million in 2010. However, the comptroller’s inquiry showed the tax authority never publicized the deduction using its available media outlets; thus, few of the 2009-2010 reports included deductions for per diem expenses mainly from tax authority employees.

“Overcharging taxes hurts the taxpayers’ trust in the system, deepens the feeling of injustice among taxpayers, and may even motivate taxpayers to evade paying taxes,” wrote Comptroller Shapira. “The authority must do everything in its power to collect taxes accurately from the taxpayer, and to refund any overpayment if such a situation arises.”

The report further revealed that the tax authority failed to notify or initiate any procedure to refund taxpayers, even in cases where the authority was aware that individuals were adversely affected by not utilizing their rights.

Published by Globes [online], Israel business news - www.globes-online.com - on October 28, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Joseph Shapira
Joseph Shapira
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