A tax official said Wednesday that the nontax-paying status of ETS Korea, the branch of the U.S.-based nonprofit organizer of TOEIC and TOEFL English proficiency tests, is under review to determine whether it merits a tax investigation.

"We are reviewing it and are planning to send the outcome of our review to the auditing department," the official at the National Tax Service (NTS) told The Korea Times.

He didn't say whether a tax audit would be conducted.

However, he said that the doors are open for ETS to explain about the situation on a voluntary basis.

An official of a PR agency representing ETS Korea told The Korea Times that the matter was being deliberated on at its U.S. headquarters, adding that representatives at his client company didn't want to speak on the issue without instructions from the headquarters.

"I can't say anything on this issue except for the fact that we are taking this matter seriously and a response is being prepared," he said over the phone.

ETS is accused of not paying taxes on billions of won it makes in TOEFL test fees.

The bottom line for tax officials is to see whether the Seoul office, set up in 2007, is a permanent establishment that is making a significant contribution to sales and promotions.

Tax officials say that, if ETS Korea is determined to be as such, it would be retroactively taxed from the day the office was established.

As reported, they have said that despite ETS paying taxes on its TOEIC tests, which are promoted by a Korean language institutes, the issue is related to TOEFL tests, which tens of thousands of Korean students take on an annual basis for admissions to U.S. universities or to prove their English proficiency when applying for graduate courses at Korean universities.

"Although the amount at stake is small, compared with many cases we deal with, TOEFL is a concern for many students and their parents, so it is not easy to let it go without adequate scrutiny," a tax official said.

foolsdie@koreatimes.co.kr