NTS Cracks Down on Loan Sharks, Funeral Companies

By Kim Jae-won

Staff Reporter

The nation's tax agency imposed punitive taxes of more than 87 billion won on 227 local company owners for falsifying income tax reports in 2009, the National Tax Service (NTS) said Thursday.

The move came as part of the agency's efforts to crack down on tax evasion, which has been increasing among private business owners over the past years.

"The NTS investigated 227 firms suspected of falsifying income tax reports last year, and levied income tax and corporate tax totaling 87.3 billion won," Song Kwang-jo, assistant commissioner for investigations, said at a press conference Thursday.

He said that most of the companies involved were loan companies, funeral firms and private cram institutes.

The most popular method for loan companies was to open bank accounts in other people's names and get customers to pay interest and repayments into them. One even illegally charged 200 percent in annual interest to the owner of a financially-troubled company - currently the maximum annual interest is capped at 49 percent.

"The owner of a loan company lent 3 billion won to a small firm proprietor, and forced him to pay 50 percent in interest in three months," Song said. "We imposed 1.8 billion won in punitive income tax, and asked the prosecutor's office to investigate him."The NTS said the culprit is a 38-year-old Seoul resident and identified him only by his family name, Kim.

Many funeral firms, which are growing rapidly here, were also engaged in illegal tax activities.

A funeral company owner, identified as Park, used 5 billion won of customers' money to buy another funeral home in his name but falsified his income tax reports. The 42-year-old Gyeonggi Province resident also registered his restaurant under his wife's name to avoid progressive taxation. He did not report its revenue of 5.1 billion won.

The tax office imposed a 2.5 billion won in punitive taxes on Park, and also asked the prosecutors to investigate this case.

The 161 private cram school owners were also levied 38.3 billion won in income tax as they avoided reporting revenue by forcing customers to pay tuition in cash.

The NTS said it is currently auditing another 61 companies nationwide including 22 loan companies and three funeral firms.

"We will continue to audit to those firms and maintain our strict stance as such businesses are deeply related to the general public," Song added.