Tax Break

John Fisher, international tax consultant

Archive for the tag “Sanctions”

The postman doesn’t even ring once


Charles Dickens spent much of his literary career railing against the demonic effects of 19th century bureaucracy. He could just as well have been writing today. Unfortunately, now as then, most of us obediently accept the nonsense thrown at us by the nation’s institutions, because – once solved – we don’t have the time, patience or money to attempt to bring the perpetrators of our suffering to account.

It was, therefore, particularly gratifying to see a court decision a couple of weeks back in which the little guy won against the Israeli Tax Authority over an issue that has affected most of us at some point in our lives.

There is a particularly nefarious right and practice of the Israel Tax Authority and the National Insurance Institute to freeze bank accounts of anybody who they consider owes them money. Sometimes they get it right, sometimes they get it wrong.

A resident of Northern Israel was surprised one day to discover that his bank account was frozen, and cheques were being returned and standing orders refused. When, after a number of visits to his local tax office, he finally convinced them that the $1500 (fifteen hundred dollars!!!) was owed for non-filing of a tax return that he probably shouldn’t have been required to file at all, they cancelled the fine, and released the funds. However, the damage had been done. He had been humiliated before his creditors.

The individual sued the tax authority for defamation.

The case revolved around the local postman. The authorities claimed that they had sent warnings to the plaintiff before opting for their last resort. The plaintiff parried their claim by proving that they hadn’t used his full address, and he had thus never received the warnings. Called to give evidence, the local postman said that there were lots of people in the town that had the same name and while, in the good old days, he would have found ways of matching the letter with the person, since 2007 he was under instruction from head office to just ‘return to sender, address unknown’.

The individual was awarded around $1700 in damages, in keeping with the entirely petty nature of all the sums involved.

The tax authority will, hopefully, now tighten their procedures and fewer of us will suffer unjustifiably at their hands. However, in the third decade of the 21st century, it is surely time to rein in this overzealous bureaucracy and its step-brother, the National Insurance Institute. Apart from examining whether they should have a greater right than any other creditor to freeze assets, they should be forbidden from using such sledgehammer tactics for debts under a certain, material, amount. But, most of all, the doomed-to-fail blind reliance of one bureaucracy on another has to stop. In this case, serendipitously, the tax authorities did not use the plaintiff’s full address, so the post office was off the hook. I dread to think what the outcome of the case might have been had the facts been different.


I need only mention a personal experience five years ago when I needed to send my British passport and accompanying documents  to the UK for renewal. Having waited forty- five minutes in the queue at the local post office, I presented the meticulously correctly addressed parcel to the person behind the counter.

‘Is it important it gets there?’ was her opening salvo.

‘Definitely – it is my passport,’ I answered truthfully.

‘In that case, I suggest you send it DHL.’

Doing my best John Cleeseian impersonation (not very good), I turned and theatrically surveyed the entire room. Turning back to her, I ventured,

‘It’s not much of a  post office, is it?’

Bottom line – there should be no freezing of accounts before a registered letter has been sent and the tax authority has checked that it has been received. Alternatively, a foolproof electronic procedure should be found, obviating the interference of the post office entirely. People’s reputations are precious.

The plaintiff in the above case could have quoted Sydney Carton in A Tale of Two Cities: ‘It is a far, far better thing that I do, than I have ever done.’ What the Dickens!

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