Investigation of 130,000 People for Insincere Property Tax Reporting

Tax audits will be conducted for over 130,000 individuals, who sold their rights to buy apartments last year, but did not report their transactions to the tax office or file for transfer tax.

At the same time, 755 major shareholders who sold stocks on the floor or on OTC markets in some 2,787 transactions will face tax probes for inappropriate reporting.

The National Tax Service (NTS) said yesterday that it sent announcements, informing the tax audits to 441,095 individuals, who were required to report or correct their tax forms in the run-up to the deadline for reporting and paying transfer taxes for 2003, which was set at the end of May.

By category, 308,775 are required to report property transfers, which were conducted over the past year, but did not file for timely payment of transfer taxes. These individuals sold their assets, such as land, stocks, or golf club memberships, but did not report any of the transactions to tax authorities.

Another 132,320 sold apartment purchase tickets last year and reported their transactions showing a reduced amount of money.

“Those who sold their assets and who are also subject to transfer tax, didn‘t report transactions or pay taxes. These people should report their transactions correctly with the authorities and pay their dues by this month’s end,” said Shin Hyun-woo, manager of the Property Tax Division at the NTS, and added, “The 755 stock holders who submitted false statements to the tax office will be targeted for closer investigation.”

Those who falsely reported taxes with authorities will have to pay tax dues and also pay an additional 10% penalty for underreporting, as well as annual 18.25% penalties for deceitful reporting. Further tax probes can be conducted during this process.

The NTS, however, explained that tax reporting was not necessary if one reported the property transfer ahead of documentation, one filed for a preliminary transaction, or one already received the transfer tax order from authorities.

Jin-Hup Song jinhup@donga.com