Datan Dorot, a tax lawyer in Miami who represents U.S. clients of
Israeli banks, said that bankers from an Israeli branch of Bank Leumi
called his clients about six weeks ago to tell them they needed to
close their accounts at the bank's Swiss branches because of scrutiny
by the Justice Department.
Many of his clients, Dorot said, hold dual U.S.-Israeli citizenship
and had opened their Israeli accounts with Israeli passports and not
disclosed their U.S. citizenship -- a factor that makes them U.S.
taxpayers.
Dorot said Bank Leumi's advice that clients close the accounts -- and
presumably open new accounts elsewhere -- could cause problems for the
clients because the U.S. Internal Revenue Service does not consider
merely closing the account to be enough; the U.S. taxpayer must also
report the account to the IRS and pay taxes on it. "The Israeli banks
are suggesting a very bad idea," Dorot said.
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