The Bottom Line: The Family Court cancelled a judicial order (originally granted with the parties' consent) that required the Israel Tax Authority (ITA) to disclose a mother's income reports in a child support dispute. The court ruled that the statutory duty of confidentiality imposed on the ITA (Section 232 of the Income Tax Ordinance) overrides the interest of discovering the truth in a private civil dispute. The ruling establishes that the ITA cannot be turned into a party in divorce proceedings, even when tax evasion is suspected.
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Executive Summary

• Supremacy of Confidentiality: Section 232 of the Ordinance prohibits tax officials from disclosing information obtained in the course of their duties, except for the purpose of enforcing the Tax Ordinance. This prohibition overrides the consent of the parties.
• Judicial Policy: Courts will not allow the ITA to be "dragged" into family disputes. This prevents procedural complications and privacy violations, even at the cost of potential evidentiary gaps.
• Revocable Consent: Even if a taxpayer initially waives confidentiality and agrees to the disclosure, they may retract this consent. The court will not compel the ITA to release information against its position.

The Background

In the context of a lawsuit filed by a father to cancel child support payments, the father claimed that the mother was concealing income and presenting a false representation of her financial status. The father requested a court order directing the ITA to release the mother's annual tax returns and capital declarations.

At a certain stage, the mother consented to the disclosure, and the court signed an order instructing the ITA to transfer the documents.
The ITA, which was not a party to the proceeding, filed an urgent motion to cancel the order. The ITA argued that the order was unlawful and that its duty of confidentiality is absolute and not subject to the discretion of the litigants. Concurrently, the mother retracted her consent.
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The Legal Issue

The central question was whether the Family Court has the authority to order the ITA to reveal confidential taxpayer information to clarify a civil dispute (alimony/child support), particularly when the taxpayer had initially consented, or whether the confidentiality provision in Section 232 is absolute and prevailing.
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The Decision

The Honorable Judge Nava Gadish accepted the ITA's position and cancelled the disclosure order.

1. The Status of Section 232
The court ruled that the statutory prohibition is unequivocal. An ITA employee "shall not be required to show any report... to a court... unless it is necessary for the purpose of carrying into effect the provisions of this Ordinance." A child support dispute does not constitute "carrying into effect the provisions of the Ordinance," and therefore, the court lacks the authority to compel the official to disclose the information.

2. Distinction from Precedent
The judge distinguished this case from a previous ruling (Ploni v. Plonim), where disclosure was permitted. It was determined that the previous case involved allegations of forgery and fraud (criminal nature) and the parties maintained their consent, whereas the current case is a standard economic dispute, and the mother had withdrawn her consent.

3. Policy Considerations
The court emphasized that the ITA should not become an "additional party" in every divorce case involving allegations of unreported income. Doing so would burden the Authority, complicate proceedings, and violate privacy without sufficient justification. Financial capacity must be proven through other means (e.g., bank statements, lifestyle analysis).
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Practical Implications

1. Limitations on Discovery: When managing family law cases or civil disputes in Israel, do not rely on obtaining the "full tax file" from the ITA via court order. The path to proving unreported income is through economic investigations, analysis of bank statements, and external evidence, not through the "front door" of the Tax Assessor.
2. The Power of the ITA: The Israel Tax Authority zealously guards the confidentiality of the information it holds (partly to encourage taxpayers to report truthfully). It will almost automatically object to any order directed at it in civil proceedings, and courts tend to accept its position.
3. Consent is Reversible: Even if the other party agrees to the exposure of tax documents, they can retract that consent as long as the information has not yet been released. Momentary consent is not an "irreversible contract" regarding the waiver of statutory confidentiality.
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FAQ

Q: Can Section 232 be bypassed if there is a suspicion of a criminal offense by the other party?
A: In very rare cases involving fraud or forgery, courts may show flexibility (as noted in the ruling regarding the Ploni case), but the burden of proof required to justify this is extremely high.

Q: How can one prove the income of a self-employed spouse who does not report truthfully?
A: Through orders directed at banks, credit card companies, and payment apps (Bit/PayBox), and by appointing a forensic accountant on behalf of the court to perform a "valuation" or "due diligence" of the business.

Q: Am I allowed to use tax reports I obtained myself (e.g., from a shared file at home)?
A: Yes. The confidentiality applies to the Tax Authority (the discloser), not to the document itself. If the document came into your possession lawfully, it can be submitted to the court as evidence.

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