NTS seizes W36.6bil. in cryptocurrency from 2,416 tax dodgers

Jung Chul-woo, assistant commissioner for the collection, legal affairs and PR bureau at the National Tax Service (NTS), gives a briefing at the agency's headquarters in Sejong, Monday. Courtesy of NTS

By Lee Kyung-min

The National Tax Service (NTS) said Monday that it has seized about 36.6 billion won ($32.2 million) in cash and accounts receivables from 2,416 tax dodgers who held cryptocurrency assets, the first time for any law enforcement authority to forcibly claim a virtual currency.

The amount was taken from individual accounts managed by crypto exchanges, after a district court granted a provisional attachment order for the NTS, enabled by the clarified status of virtual currencies as assets following a Supreme Court ruling and revision of a related law governing digital currency transactions. Previously, cryptocurrency was not recognized as an asset and thus made it harder for government authorities to take necessary measures to seize it as is done with other assets.

The agency said the 2,416 people deliberately evaded taxes on business income and capital gains made following real estate transactions. Also included were inheritance and gift tax evasion. Most of them managed to evade the tax authorities' scrutiny because digital currencies were not identified by running a check on individual financial accounts over the past few years.

For example, a man whose identity is being withheld failed to pay 1.2 billion won in capital gains tax after selling a property in Gyeonggi Province for 4.8 billion won.

He delayed paying tax saying he had no money on hand, but the NTS was able to seize 1.2 billion won he held in bitcoin, a virtual currency, in January, after his account information was made available.

In another example, a doctor, who runs a hospital in Seoul's southern Gangnam District, failed to pay 2.7 billion won in tax on hospital income. The NTS determined he held 3.9 billion won in digital currency. The man elected to pay the outstanding taxes in cash in order to regain his crypto assets.

Many with tax debts but who possess digital currency are electing to pay debts in cash judging that the value of their cryptocurrency assets will soar further. “Some of the tax dodgers did not sell their cryptocurrency to finance payments, expecting that holding them will be much more beneficial,” an NTS official said.

The agency said that discussions are ongoing for those who have yet to pay taxes with their payment schedule to be finalized by March 25.

The NTS said people who report suspected tax dodgers to the NTS via nts.go.kr or the NTS Hotline (126) will be rewarded up to 2 billion won.

The agency said those who attempt to evade tax while holding cryptocurrencies will no longer be able to hide the digital asset, since the revised related law will require crypto exchanges to file a report regularly on the user information including the number of coins in their accounts.

Meanwhile, the unit price of bitcoin exceeded 70 million won for the first time, Sunday. According to cryptocurrency exchange Bithumb, one bitcoin had been traded for 70,594,000 won after surpassing 70 million won at 5:13 a.m. Bitcoin's price had stayed below 20 million won for the past three years, but spiked around the end of 2020 and is now on a steep rise.