Assessment Discussions- Appeal against an Order
If an article about appealing a tax order is relevant to you – you’re likely in the midst of a tax dispute with the Tax Authority following a best judgement assessment or additional conversations with an inspector.
This stage, also known as the end of stage B, before submitting an appeal against the order, is crucial, since it moves the case from the assessor (equivalent to the authority of a magistrate judge) to the Israeli district court. The difference between the two, legally are substantial -the assessor has the authority and interest to compromise, whereas the courts’ role is to judge and deliver a definite decision between what is right and what is wrong. Such a ruling will usually be dichotomous and include interests, linkage differentials, court costs, and fines such as a penalty fine.
Assessment Discussions with the Tax Assessor
Every tax payer is entitled to two separate assessment stages in which an income tax assessor (which reports to the tax department head) will examine the case. If the assessment discussions at stage B fail to bring an agreement between the two sides, the assessor will issue a best judgment assessment by order and any appeal against this assessment will be heard in the district court and considered an as an objection of the order. A taxpayer who feels disadvantaged by the assessor’s decision according to Section 152(b) (i.e. assessment by order) has the right to appeal the decision to the district court. If an appeal is submitted, the taxpayer must pay the undisputed tax balance within 15 days.
Filing in the District Court
According to the law, the appellant must submit a notice of to the district court within 30 days of receiving the assessment order from the assessor. The assessor must then file a statement of reasons for the assessment and its calculation within 3o days of the notice of submission appeal.
When challenging an appeal for an excessive assessment, the burden of proof rests with the appellant. If the appellant maintained proper records and the appeal involves unqualified records, the situation can change. If when these records have been audited by an accountant—whose opinion was either without reservations or with reservations deemed irrelevant to their admissibility by the court—the tax assessor or tax director is required to justify their decision.
The court has the authority to approve, reduce, increase, or cancel the assessment in full or to rule on the appeal according to what they deem appropriate. A notice regarding the taxable income and the amount the tax appellant must pay will be delivered to both parties. The decision of the District Court – according to Section 156 – may be appealed to the Supreme Court, acting as the Court of Civil Appeals.
At the stage of drafting the appeal, it is mandatory to involve a lawyer who will represent the company or taxpayer in the District Court. All claims not included in the appeal may be refused consideration by the prosecution. At this stage, it’s advised to carefully consider the implications of filing the appeal and establish a strategy for resolving the case. (Whether it be informally with the tax assessor or after a preliminary hearing, etc.)
As with any court case, the judges background and views on income tax issues are of high importance. Part of the preparation for the hearing at this stage involves a careful selection of arguments, order of arguments, preliminary motions, alternative claims, and so on.
Our firm has significant experience in reaching an agreement with the Tax Authority, even in cases that are already in the court. Beyond income tax officials we have expertise in discussions with the Taxation and Economic Prosecution in the relevant district.
