Trump’s amnesty stems from a settlement agreement on May 18 of a civil lawsuit between President Donald Trump, Donald Trump Jr., Eric Trump, and the Trump Organization vs the US Internal Revenue Service (IRS) at the Southern District Court of Florida.
Among other things, the settlement agreement required US Acting Attorney General Todd Blanche to issue an order, which he did on May 19.
The lawsuit was filed on January 29 after a former IRS contractor illegally disclosed tax returns of the Trumps. The Trumps said that was “representative of the sustained use of the levers of government power” by Democratic elected officials and others for improper and unlawful political, personal and/or ideological reasons and called it “lawfare” and “weaponization.”
Blanche’s order grants Trump an amnesty and establishes an Anti-Weaponization Fund of about $1.8 billion. The question is whether this covers tax evasion.
The order says: “The United States RELEASES, WAIVES, ACQUITS and FOREVER DISCHARGES each of the Plaintiffs [the Trumps] and is hereby FOREVER BARRED and PRECLUDED from prosecuting or pursuing any and all claims… that have been or could have been asserted… against any of the Plaintiffs… or parties including trusts, parent, sister or related companies… which arise out of… Lawfare or Weaponization…or any matters currently pending or could be pending (including tax returns)… before Defendants [the IRS] or other agencies or departments.”
This seems to provide a broad amnesty for tax and other US issues until the settlement agreement, but not after that point.
The Anti-Weaponization Fund has drawn extensive criticism, as it appears to be funded out of US taxpayers’ money. Nevertheless, the Trumps will apparently not derive any economic benefit from it.
Israeli tax amnesty
What happens if your name is not Trump, and you have an Israeli tax skeleton in your closet?
Last August, the Israel Tax Authority (ITA) announced a new Israeli tax amnesty (voluntary disclosure procedure). It is available until this coming August 31, unless it is extended. The ITA and Justice Ministry initiated the latest tax amnesty to help finance the war.
In applicable cases, the ITA, in conjunction with the Attorney-General’s Office, is willing to commit to refrain from initiating criminal proceedings against anyone who makes a voluntary disclosure if they meet all the conditions. These conditions are contained in Standing Rules and are further explained in ITA Operating Instructions.
Anonymous amnesty requests will not be accepted, tax is not reduced, and there is no automatic relief from fines, but mitigating circumstances must exist.
The amnesty has broad coverage, including income tax, capital-gains tax, real-estate tax, VAT, import tax, cash transactions over permitted limits, and various money-laundering offenses.
For income-tax cases, there will be a regular track and a fast track, or “green track.” The fast track is for smaller cases: (1) Financial assets in a foreign financial institution were below NIS 4 million at the end of 2024, and there were no deposits or movements in the amnesty period (not apparently defined); (2) Unreported rental income in Israel and/or abroad is not more than NIS 250,000 per year; (3) Unreported income from digital (crypto) assets is not more than NIS 500,000, and their fair value at the end of 2024 did not exceed NIS 1; and (4) a combination of the above.
What is the main problem?
In practice, full documentation going back all relevant years can be hard to obtain if a taxpayer doesn’t already have it. But full documentation spanning all years is critical to help avoid a “best judgment” estimated assessment. This is rarely best for the taxpayer.
Regulations authorize a court to admit evidence supporting a tax assessment or tax return even if the evidence would be unacceptable in civil proceedings. This implies that a court can admit a “best judgment” estimated tax assessment as evidence.
Comments: The ITA amnesty rules and clarification should be read between the lines. Undisputed tax should be paid. Strenuous attempts may be needed to conjure up sufficient paperwork and to keep the amnesty process going. Otherwise, a best-judgment estimated assessment may be issued, which a law court may later admit.
If all the paperwork does exist, an Israeli tax-amnesty request may be worth considering – especially in smaller cases eligible for the fast track. There is no need to change your name to Trump.
As always, consult experienced tax and professional advisers in each country at an early stage in specific cases.
leon@hcat.co
The writer is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd.
