| WASHINGTON, March 7
WASHINGTON, March 7 The U.S. Internal Revenue
Service has revoked access to an amnesty program for some U.S.
taxpayers with accounts at Israeli banks who were already taking
part in it, said three lawyers representing the customers on
In an unusual move that could scare others away from the
program, the IRS has told dozens of customers of Israel's Bank
Leumi they have been disqualified from participating,
said lawyers for the customers.
The program, revived in January 2012, has helped the IRS
collect billions of dollars in tax revenues. It allows U.S.
clients of foreign banks to step forward, tell the IRS about
hidden offshore holdings and pay their back taxes, in exchange
for possible government leniency.
An IRS spokesman said in a statement: "There are a number of
reasons why a taxpayer may be disqualified from participating in
the IRS' offshore disclosure program." The spokesman said the
IRS cannot comment on specific cases.
Some clients of Israel's Mizrahi Tefahot Bank have
been disqualified from the program, as well, said Edward
Robbins, a lawyer with Hochman, Salkin, Rettig, Toscher & Perez,
who is representing those clients.
Some of the taxpayers whose participation in the program was
ended had already paid back taxes, the lawyers said.
The IRS has sent two-sentence form letters to those being
disqualified that say "upon further review it has been
determined that your client is declined" from the program,
according to a letter from September obtained by Reuters.
"This is a very disturbing development," said Josh Ungerman,
a partner with law firm Meadows, Collier, Reed, Cousins, Crouch
& Ungerman LLP who represents clients in the amnesty process.
"The formal voluntary disclosure program is in danger of
becoming extinct through non-use," he said.
Bank Leumi, Israel's second-largest lender, has urged U.S.
clients to disclose offshore account information to U.S.
authorities, who are investigating Leumi and other
Robert McKenzie, a partner with law firm Arnstein & Lehr
LLP, who is representing a client with more than $1 million in a
Bank Leumi account, said program participants were misled. He
said he received a disqualification letter from the IRS on
behalf of his client on Wednesday.
A U.S. crackdown on Americans using offshore banks to avoid
taxes began with Swiss banks, but has widened to Israel.
In January 2012, the IRS revived the voluntary disclosure
program, which remains open. Two previous voluntary disclosure
programs, in 2009 and 2011, brought in more than $4.4 billion in
taxes from tens of thousands of tax evaders, the IRS said.