U.S. Citizens Misinformed Of Tax Laws Upon Making Aliyah


taxesMany Americans who make aliyah are told, incorrectly, by their U.S. tax return preparer that once they settle in Israel they do not have to file U.S. returns.

Accountant Don Shrensky says there are two types of tax “damage” that new immigrants can incur. One can “easily be repaired,” while the other is “monumental.”

“Many Americans who make aliyah are told by their U.S. tax return preparer that once they settle in Israel they do not have to file U.S. returns,” explains Shrensky. “Obviously, this is incorrect information. If they recently came, then they can easily repair any damage. But if they made aliyah 10 or 20 years ago, the problem can be monumental.”

The “real problem” Shrensky says, is what he calls the “accidental U.S. person” – a U.S. citizen who immigrates as a youngster. “We have had several clients who were born in the U.S. while their parents were on sabbatical and returned to Israel at a very young age,” explains Shrensky. “They are U.S. citizens because they were born there. But they grew up in Israel, created lives and fortunes in Israel, and married Israeli [non-U.S.] spouses. They never filed U.S. returns, nor the required FBARS [Foreign Bank and Financial Accounts], because they had no idea they had such a requirement.”

Shrensky notes that in December 2011 the IRS issued a “fact sheet” recognizing that such U.S. persons should be treated more leniently.

“But they still have to prove they had reasonable cause not to have filed FBARS,” he says.

{Haaretz/Matzav.com Newscenter}


  1. And what exactly can they do to a person who doesnt file? If the have no $ in the states and they NEVER go back to the states – what is the sakana?

  2. They CAN arrest you from where you are as they have rented space in jerusalem,tel aviv and currently doing audits. all the red flags were raised bec in 2008 all of a sudden everyone ran to america to get all that money that bush was giving out. They now wanna know how come you didnt file in prior years to that???? == Red Flag and this is currently leading to a lot of trouble. The law is as long as you are a U.S. Citizen you must file a U.S . return and report all $ earned abroad. you might not owe bec the IRS gives tax breaks to people paying taxes in the country where they reside. Its really not that simple and people should speak to accountants or people who know these things.

  3. Also one more thing which the IRS takes very seriouslly- By U.S.law if one has a international bank account (out side of the U.S.) You must disclose that information to the IRS. its not taxable in any way. They just simply wann aknow. This is a serious crime by them if one dosnet report this. (that Includes Even the post office banks)

  4. To tzfat yid: One never knows if they have to come to the United States for medical treatment. It happens often that Israeli’s with US citizenship come for serious treatment and/or therapy (OT, PT, speech etc..) I see where the IRS is going after the wealthy foreign US citizens, however a lot of child tax credits will be paid that way too. Unless, they cancel that credit.

  5. somehow i doubt that they can or will extradite the tens of thousands of us expats here. Their is a reason that the us courts worry that a jew may flee to israel.

    I have yet to hear of a single case of somebody being arrested here in israel by the us gov. for anything less than massive fraud or a major felony ie: murder ect..

    The cost of extraditing is exorbitant, and has only succeeded 6-10 times in israel history.

    I am not saying that its smart to ignore the us tax codes – but i doubt it is as dangerous as these scare articles indicate.

    But I am far from an expert – and would love to hear if I am wrong.

  6. To no1: there is current legislation proposal before the Senate to bar US passport application from non-filers, FBAR has criminal penalty ramifications and US can lien against financial accounts held in Israel, plus under FATCA after 2013 US can have Israeli financial institutions withhold funds.