Tax delinquents with ample ability to pay their taxes have been caught in the National Tax Service's (NTS) intricate web of pursuit, having evaded taxes through various ingenious methods while enjoying extravagant lifestyles. The NTS has declared its strong resolve to uphold tax justice and alleviate the relative deprivation felt by honest taxpayers through large-scale asset tracing investigations against these high-value and habitual delinquents.
Increasingly Sophisticated Concealment Methods… Declaration of War Against 'Intelligent Tax Evasion'
The NTS recently launched full-scale asset tracing investigations into a staggering 710 high-value and habitual tax delinquents. Their tax evasion methods were incredibly subtle and organized, beyond imagination. They not only hid assets but also boldly exploited legal loopholes or involved family members, and even religious organizations.
One of the most common tactics is sham divorce. Delinquents would transfer all their assets to their spouse through divorce, then continue to live together, effectively concealing their wealth and evading taxes. The NTS is filing lawsuits to annul these fraudulent transfers (known as sahaengwi chwiso lawsuits, or actions for cancellation of fraudulent acts) to forcibly recover the assets. This type of lawsuit aims to cancel and restore the original status of an act where a debtor disposes of assets knowing it will harm the creditor's property rights, serving as a powerful legal tool to prevent asset concealment through sham divorces. In the past, cases of tax evasion amounting to billions of won through sham divorces were uncovered, and the NTS successfully recovered assets through sahaengwi chwiso lawsuits.
Additionally, nominee ownership is a frequently used method by high-value delinquents. Before or after tax liabilities arose, these individuals would transfer high-value assets such as real estate and stocks under the names of family members, acquaintances, or even corporations, attempting to elude the NTS's tracking. In particular, they even attempted fictitious relocation (known as wijangjeonip), by leasing expensive homes under their children's names while falsely registering their own addresses, making it difficult to ascertain their actual residences. For assets held under nominee ownership, the NTS is filing lawsuits for cancellation of ownership registration to restore the original ownership and then initiating compulsory collection.
Nominee Accounts, Secret Safes, Overseas Gambling… Endless Concealment Practices
Another widely used method involved channeling income into nominee accounts or storing cash, high-value checks, and precious metals in bank safe deposit boxes. For instance, a delinquent who amassed enormous interest income from private lending but paid not a single won in taxes, hiding all profits in a safe, was eventually apprehended through on-site searches after persistent tracking by the NTS. It's not uncommon for billions of won in cash bundles to be discovered during such on-site searches. In one past case, a high-value delinquent was found to have hidden gold bars worth 1 billion won and wads of cash in a bank safe deposit box.
Even more astounding are the cases of delinquents who indulged in lavish lifestyles by engaging in overseas gambling while neglecting to pay taxes. These individuals would stay long-term in luxury hotels near overseas casinos, withdrawing large sums of cash and purchasing expensive designer bags, continuing their extravagant spending with complete disregard for tax payments. The NTS intensified on-site collection activities, including stakeouts, inquiries, and searches at the actual residences of these delinquents, successfully seizing Rolex watches, precious metals, and large bundles of cash. In the case of overseas gambling funds, investigations can even be expanded to include inquiries into the source of funds and offshore tax evasion charges, making it a more serious issue.
NTS Activates Precise Tracking System Based on 'Big Data'
To counter the delinquents' cunning methods, the NTS is intensifying its tracking investigations based on a 'real residence analysis system' utilizing big data. In the past, the NTS often faced difficulties in collecting taxes due to false address registrations or the inability to identify the actual residences of delinquents. However, now, various big data sources such as communication records, credit card usage history, and vehicle movement paths are analyzed to track delinquents' actual living patterns and the whereabouts of their hidden assets. This scientific analysis system makes the NTS's tracking investigations more precise and effective.
On-site collection activities have also been significantly strengthened. The NTS makes unannounced visits to delinquents' residences or businesses to directly seize hidden assets such as cash, precious metals, and high-value items. They also actively conduct stakeouts, inquiries, and searches to uncover assets held under nominee names or fraudulent transactions. These field-oriented collection activities play a decisive role in directly finding hidden assets and recovering them into the national treasury.
Tangible Results… 2.8 Trillion Won Secured, 423 Indicted
The NTS's efforts have already yielded visible results. Last year, the NTS secured a total of 2.8 trillion won in cash or by securing claims through tracing hidden assets. This significantly contributes to minimizing the adverse effects of high-value habitual tax delinquents on the national economy and enhancing the value of taxes paid by honest taxpayers.
Specific activities included over 2,000 on-site searches and over 1,000 civil lawsuits. Furthermore, 423 individuals who actively participated in tax evasion were subject to criminal prosecution. This sends a strong warning message that tax evasion can lead to criminal penalties beyond administrative disadvantages. It is seen as a step closer to realizing tax justice, as it goes beyond simply collecting overdue taxes to strictly enforcing legal accountability for tax evasion itself.
Strategy for the Future… Strengthening AI, Big Data, and International Cooperation
The NTS announced that it will continue its efforts to track and collect from high-value tax delinquents. It plans to respond strongly by mobilizing all legal means, including public disclosure of names and travel bans. In particular, it will expand dedicated investigation teams within tax offices and advance its AI and big data-based analysis systems to improve the accuracy of delinquent detection. This signifies an intent to strengthen both human resources and technology to possess tracking capabilities that surpass the evolving concealment methods of tax delinquents.
Furthermore, the NTS plans to actively pursue international cooperation to track assets hidden overseas. As cases of money laundering and offshore tax evasion where assets are hidden abroad increase, the NTS aims to actively counter cross-border tax evasion through cooperation with tax authorities in various countries. This reflects the recognition that tax authorities' investigation capabilities must also be elevated to a global standard in the era of globalization.
In addition, the NTS plans to actively utilize the collection reward system to encourage voluntary tip-offs from internal employees. It has been proven that finding hidden assets through tip-offs from internal stakeholders or citizens who know the whereabouts of hidden assets is an effective way to increase collection rates.
Warm Consideration for Livelihood-Related Delinquents Also Not Forgotten
Separately from the strict sanctions against high-value and habitual tax delinquents, the NTS plans to strengthen warm tax support for livelihood-related delinquents or taxpayers facing difficulties due to economic downturns. It aims to help them regain self-sufficiency through measures such as installment payments of overdue taxes, exemption from delayed payment surcharges, and deferral of seizures. This demonstrates the NTS's philosophy that tax justice should not merely be punitive but also play an inclusive role in considering the socially vulnerable and assisting economic recovery. It suggests that one of the purposes of tax collection is also to help taxpayers continue their economic activities.
Ultimately, tax justice begins with the fairness felt by honest taxpayers. It is the most crucial duty of tax authorities to ensure that the efforts of the vast majority of citizens who abide by the law and diligently pay taxes are not in vain due to the cunning schemes of tax evaders. The NTS's current large-scale investigation into tax delinquents will serve as a strong warning to those who have evaded taxes while enjoying luxurious lives, and a small comfort to the honest taxpayers who have silently fulfilled their obligations. It is hoped that these efforts will continue, leading to a society where all citizens fairly fulfill their tax obligations and those taxes are used transparently.
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