Israeli model and television personality Bar Refaeli recently agreed to sign a plea bargain agreement to settle a long-standing tax dispute against the top model and her family. The terms of the agreement include 16 months imprisonment for the celebrity’s mother and nine months of community service for the model. The agreement also resulted in the model and her mother paying $1.5 million in fines and back taxes.
What was the issue?
Israeli officials accused the woman of failing to pay tax obligations in her home country, Israel. The country generally requires those who spend most of a calendar year within the country to pay taxes as a resident of that country. As a result, the tax authorities expected her to claim her worldwide income in Israel.
Taxing authorities implicated the mother because she acted as her daughter’s agent. This led to income that she was allegedly required to report. The taxing authorities claim she failed to do so.
How would this case progress in the United States?
The United States government also has residency laws that result in tax obligations. A failure to abide by these obligations can result in serious penalties. In addition to hefty financial fees, if the government can establish the violation was intentional or “willful” it can also push for jail time. In this case, the model chose to agree to the plea deal in part because it removed a similar “willful” element. This led to a reduction in penalties, much the same as it would here in the U.S.