Income Tax Attorney

An income tax attorney represents taxpayers in disputes with the Assessing Officer — during assessment proceedings, objections, and appeals to the District Court. If you received a best-judgment assessment, Section 150 of the Income Tax Ordinance gives you 30 days from the date the assessment notice is served to file a reasoned written objection. At our firm, these cases are handled by Adv. and CPA Shlomi Vaknin, which means every assessment is examined both from an accounting standpoint and on its legal merits. Send us the assessment notice and the return you filed, and we will check how much time remains and what arguments can be raised.

In most cases, the inquiry comes after receiving a document from the Assessing Officer that triggers a countdown of statutory deadlines:

• You received a best-judgment assessment notice under Section 145 because the Assessing Officer rejected the return you filed.

• The Assessing Officer notified you that the business's accounting books have been disqualified — for example, following an audit that uncovered unrecorded receipts.

• You were summoned to an assessment hearing or received a request to produce documents, and you want to come to the meeting prepared.

• You received a demand to file a capital declaration, or the capital declaration you filed shows an increase in net worth that your reported income does not explain.

• The objection you filed was denied, the Assessing Officer issued an order, and you have 30 days left to file an appeal.

• In addition to the tax, a deficiency penalty was imposed on you under Section 191.

• A payment demand arrived from the Collection Division, or a lien has already been placed on your bank account.

The civil proceeding against the Income Tax Authority goes through two stages before the Assessing Officer, and if no agreement is reached it continues to the District Court. The key deadlines are:

• Four years from the end of the tax year in which the return was filed: the period during which the Assessing Officer may examine it and issue a best-judgment assessment (Section 145(a)(2)).

• 30 days from service of the assessment notice: filing an objection (Section 150(a)).

• 30 days from receipt of the book-disqualification notice: appeal to the Committee for Admissibility of Books (Section 130(d)).

• 15 days from the assessment notice or the order: payment of the tax, or only the undisputed portion if an objection or appeal has been filed (Sections 183 and 184).

• Four years from the end of the tax year in which the return was filed, or one year from the date the objection was filed, whichever is later: the Assessing Officer must decide the objection by then; otherwise it is deemed accepted (Section 152(c)).

• 30 days from service of the order: appeal to the District Court (Regulation 2 of the Courts Regulations (Income Tax Appeals), 5739-1978).

Best-Judgment Assessment

An annual return filed under Section 131 is treated as a self-assessment. If the Assessing Officer has reasonable grounds to believe the return is incorrect, he may determine the income according to his best judgment (Section 145(a)(2)(b)). Before doing so, he must give you a reasonable opportunity to present your arguments, and the assessment notice must detail the reasons and the method by which the income was calculated (Section 158A). This method is usually the first place to look for errors. A person who did not file a return at all may receive an assessment under Section 145(b), and only the filing of a return for that year will be treated as an objection to it (Section 150(b)).

Disqualification of Books

The Assessing Officer may disqualify accounting books found to contain material deficiencies and must send a reasoned notice (Section 130(c)). Disqualification also carries weight in court: under Section 155, the taxpayer bears the burden of proving that the assessment is excessive, but a taxpayer who maintained admissible books shifts the burden to the Assessing Officer to justify his decision.

Objection, Assessment Agreement, and Order

The objection is filed in writing and sets out the grounds in detail. The objection is heard by an officer other than the one who made the assessment (Section 150A), and that officer may demand documents and summon witnesses (Section 151). The stage concludes either with an agreement under which the assessment is amended (Section 152(a)), or with an order in which the Assessing Officer confirms, increases, or reduces the assessment (Section 152(b)). All stages of the proceeding, including when an objection is deemed accepted automatically, are detailed on the page Objection and Appeal Against an Income Tax Assessment.

Appeal to the District Court

An order is appealed to the District Court in the jurisdiction of the Assessing Officer (Section 153). After the appeal is filed, the Assessing Officer submits the grounds for the assessment within 30 days, and the appellant responds with grounds of appeal within an additional 30 days (Regulation 5). The hearing is held in camera unless the appellant requests otherwise (Section 154(c)), and the judgment may be appealed to the Supreme Court (Section 157). The Assessing Officer is represented in court by the Fiscal Division of the District Attorney's Office.

Payment, Deficiency Penalty, and Collection

When the deficiency exceeds 50% of the tax you owe and you have not proven that you were not negligent, a penalty of 15% of the deficiency is added, and the penalty is doubled where there are grounds to believe the deficiency was caused intentionally (Section 191). A debt that remains unpaid after a written demand is transferred to collection under the Taxes (Collection) Ordinance, which allows the Collection Officer to seize assets — including bank accounts — without a court order. What the Collection Officer is authorized to do and how to request the removal of a lien is explained on the page Liens and Collection Proceedings by the Israel Tax Authority.

Annual Return and Capital Declaration

Under Section 135(1)(a), the Assessing Officer may demand a report on the capital and assets of you, your spouse, and children for whom you receive tax credit points. A gap between the increase in net worth and reported income may serve as a basis for an assessment. A person who was required to file an annual return and failed to do so also forfeits the protections of Section 158A: the right to be heard before the assessment is made and the Assessing Officer's duty to provide reasons for it.

1. You bring us the assessment notice or order, the returns for the years in dispute, the accounting books, and the correspondence with the Assessing Officer. First, we calculate the deadline for filing an objection or appeal.

2. We break down the Assessing Officer's calculation as detailed in the notice under Section 158A and reconstruct it against the books. This is where we may find, for example, income counted twice or an expense that was disallowed.

3. We draft the objection with the legal and accounting arguments and attach supporting documentation. If the deadline has passed, we examine whether there are grounds to request an extension under Section 150(a).

4. During the objection hearings, we present the arguments and respond to the Assessing Officer's demands under Section 151. When it is possible to reach an assessment agreement that reflects the actual situation, we recommend it. When it is not, the order opens the path to an appeal.

5. We file an appeal with the District Court within 30 days of the order and manage the proceedings against the District Attorney's Office. Even at this stage, negotiations can continue.

6. If a payment demand has been received or a lien imposed, we request that the Assessing Officer defer or spread the payment. Section 186 allows him to extend payment deadlines where there is sufficient cause, subject to linkage differentials and interest.

Assessment, objection, and appeal are civil proceedings. A summons for questioning under caution means the authority suspects a criminal offense — that is a different proceeding with different rules, which we discuss on the page Representation in Income Tax Investigations. The two proceedings affect each other: after a conviction for certain offenses or payment of a monetary settlement (kofer), the Director may reopen and amend the assessment up to one year from the date of conviction or payment (Section 147(a)(2)). A monetary settlement under Section 221 allows a criminal proceeding for certain tax offenses to be concluded with a payment, without an indictment. Details are available at Monetary Settlement (Kofer) and Administrative Penalties.

Income tax cases at the firm are handled by Adv. and CPA Shlomi Vaknin and his team. Shlomi, the firm's founder, has been a certified public accountant since 2000 and an attorney since 2008. He served for nearly a decade as a national inspector in the Professional Division of VAT at the Israel Tax Authority, and until he established the firm in 2024 he was a senior partner for 18 years at a tax law firm. In best-judgment assessments, this accounting background is critical because such assessments are built on calculations.