Citizens paid NIS 3.6 billion they did not have to pay to the tax authorities in 2013-2019

Citizens paid NIS 3.6 billion that they did not have to pay to the tax authorities in the years 2013-2019. This is according to the State Comptroller's report published on Tuesday. The report also states that the Tax Authority did not act to correct the many deficiencies found in the previous report regarding the exercise of public rights in the tax field. The tax they deserve, so they did not use it and paid the state treasury more tax than the law obliges them, and moreover: the tax authority does not have the details of the bank accounts of half a million Israelis at all, who may very well deserve money from the tax authorities.
State Comptroller Matanyahu Engelman states in the report that the estimated excess taxes paid more annually by the public reach NIS 1 billion. Meanwhile, only a minority of those who paid higher taxes than required by law submitted a refund report.
According to the report, 76% of the deficiencies discovered in the previous auditor's report in 2015, which dealt with the extraction of tax benefits from the Israeli Tax Authority, were not corrected at all or were corrected only to a small extent. For example, as of March 2021, 3,831 citizens did not receive NIS 9.7 million for work grants (additional income for low-income earners). The reason: lack of update of bank account between the years 2013-2019. 1,000 eligible for a work grant in the 2013-14 tax years did not receive the grant and are waiting to receive it for over six years. The Comptroller notes, however, that at the beginning of 2021, the Tax Authority updated the data on the bank accounts of 856 (18%) of those eligible and thus made it possible to transfer the grant to their account. It also shows that as of March 2021, a credit balance of NIS 9.7 million is available to bank account holders.
The estimated tax collection collected by more than 380,000 citizens who did not submit a tax refund report for 2014, which is already obsolete (after seven years or more), is NIS 670 million. Based on data from 2014, it can be assumed that public losses (individuals or families Who are not required to submit an annual income tax report) amount to NIS 1 billion over the years. It also shows that as of 2021, 435,546 families have not yet submitted a report to the income tax for the tax year 2016. The tax refund that these families are entitled to is estimated at NIS 803 million. In accordance with the law, if they do not submit a tax refund report for this year By the end of the 2022 tax year, families will lose the money.
The previous report stated that although the tax authority has information on the income of the taxpayer public, it does not have information from it on how citizens exercise the tax benefits to which they are entitled, and that the authority did not review the barriers facing the public to exercise its rights. It is noted that the defect has been slightly corrected since 2015, and that the Tax Authority has not acted to obtain the full information that will allow it to exhaust the rights of all taxpayers, including taxpayers who are not required to file an income tax return.
The previous report stated that even when the authority had information regarding financial harm to citizens who did not exercise their right, it did not act on its own initiative to return these amounts, nor did it inform citizens that according to its data they are entitled to a refund. Over the years, employees who worked in two jobs in the same tax year are estimated at several hundred million shekels.
Follow-up findings indicate that the defect has not been corrected. Every year, hundreds of thousands of families pay more taxes in the amount of about a billion shekels. The follow-up findings further revealed that hundreds of thousands of overpaid families do not file tax return reports at all and therefore do not exercise their right.
As stated, the follow-up findings also revealed that as of February 2021, according to the Tax Authority's calculations for the 2013-2019 tax years, it owes about two million cases - individuals who are not required to submit an annual income tax report - a total amount estimated at NIS 3.6 billion. These include, for example, employees who reported working in two or more jobs, paid the maximum tax rate but did not make a tax adjustment. And there were also employees who worked part of the tax year and did not file a tax return report that was overpaid.
The report shows that 54% of individuals in Israel do not qualify for income tax at all and therefore have no possibility of receiving tax benefits. 67% of women and 44% of men in Israel do not actually reach the tax threshold, which allows them to receive tax benefits in 50% of families The working couple there is a partial or full non-utilization of the tax credit points. These targets are not optimally realized given the fact that for a large proportion of the target population, the income is below the tax threshold.
The Tax Authority responded: "In order to facilitate the process of receiving tax benefits on an ongoing basis and to eliminate the need for tax refunds, the Tax Authority has been working hard in recent years to expand its existing databases. Information about people with disabilities is currently available from the National Insurance Institute, the Holocaust Survivors Authority and the Ministry of Education. In accordance with the databases received, initiated moves were made that led to the exercise of rights for eligible populations such as Holocaust survivors and parents of children with disabilities and the return of approximately NIS 20 million to these populations.