An office worker in his 20s, identified as A, reported a colleague at the same company, B, to the National Tax Service's real estate tax evasion reporting center earlier this year. A suspected that B had not properly paid gift tax. Over a meal with A, B said, "At the end of last year, when I bought an apartment worth several billion won in Yongsan-gu, Seoul, I received support from my father." When A said, "You must have paid a lot of taxes," B mumbled an evasive answer, which left A feeling uneasy.
The National Tax Service said on the 9th that since the real estate tax evasion reporting center opened in late Oct. last year, 780 tips were received over five months through the end of last month. That amounts to about 20 to 30 tips per month. The National Tax Service said it will strictly protect the identity of tipsters from exposure while handling reported matters sternly under a zero-tolerance policy.
If a tipster's suspicion of tax evasion is confirmed and at least 50 million won is additionally collected, the National Tax Service pays a reward. Under the rules for paying rewards for tax evasion tips, the tipster must specify the alleged evader and the conduct in detail. They must also submit books or documents that can prove the evasion, or equivalent materials. Previously, internal company documents, transaction books, information on where materials are kept, contracts, financial transaction data and court rulings were recognized as supporting evidence.
Rewards are paid on a sliding scale based on the amount of evaded tax. For evaded tax up to 500 million won, 20% of the evaded amount can be paid as a reward. If it exceeds 500 million won, a reward is paid by adding 5% to 15% of the amount over the threshold to the base reward. For example, for amounts over 500 million won and up to 2 billion won, the reward can be the base 100 million won plus 15% of the portion exceeding 500 million won.
According to the National Tax Service, one tipster received a 100 million won reward after reporting a case involving several hundred million won in capital gains tax evasion. The tipster suspected that another person, when transferring land, drafted a fake service contract to overstate necessary expenses and thereby evade capital gains tax. The tipster submitted account transaction records and contracts to the tax authority. When the National Tax Service investigated, it found that evasion had indeed occurred.