"'Parent Chance' Caught Red-Handed... 1,543 Suspects of Real Estate Transaction Tax Evasion and 120.3 Billion Won Recovered"

Seoul Cheong Investigation Bureau Work Adjustment... Busan and Daegu Cheong Add Tax Evasion Response TF
Strengthening Information Collection on Real Estate Transactions... Strict Verification from Holding to Transfer

[Asia Economy Reporter Kwangho Lee] #Case 1. Professional qualification holder Mr. A, a young worker, purchased an expensive apartment despite having insufficient reported income. Mr. A claimed to have borrowed several hundred million won from his fifth-degree relative Mr. B and presented a loan agreement and interest payment records. However, the National Tax Service (NTS) investigation revealed that Mr. A's father transferred funds to Ms. C, the mother of Mr. B, who then sent the money to Mr. B and subsequently back to Mr. A, constituting a circumvention gift.

#Case 2. Minor Mr. D, who lacked financial capability, acquired an expensive apartment and was found to have received cash gifts from his father Mr. E, who runs a livestock business. The NTS imposed additional income tax and gift tax on Mr. E.

The NTS announced on the 7th that it investigated 1,543 people who purchased real estate without paying gift tax and income tax this year and collected 120.3 billion won in additional taxes.

The NTS collected and verified real estate transaction information through various methods, including the Real Estate Transaction Tax Evasion Response Task Force (TF), certified copy of the register, Real Estate Transaction Management System (RTMS) data, and tax evasion suspicion reports notified by related agencies such as the Ministry of Land, Infrastructure and Transport and local governments. As a result, with apartment prices rising this year, premiums on transferable pre-sale rights also increased, and multiple types of irregular tax evasion such as under-the-table contracts and non-reporting were identified during pre-sale rights transactions.

Additionally, through post-management of debts recognized during the investigation of sources of funds and tax data such as mortgages held by the NTS, it was confirmed that debts of financially incapable individuals were repaid. A detailed analysis of the income and property status of parents and spouses revealed tax evasion suspicions, including failure to report gift tax despite parents repaying their children's debts using the so-called 'parent chance' or forgiving debts borrowed from parents.

On August 21, NTS Commissioner Kim Dae-ji declared upon his inauguration that he would strictly respond with a zero-tolerance policy to irregular tax evasion in real estate transactions. Commissioner Kim stated at the time, "We must establish fair national tax administration that upholds tax justice," and "We will respond with a zero-tolerance policy to irregular tax evasion in real estate transactions."

Going forward, the NTS plans to strengthen information collection by coordinating the work of the Seoul Regional Tax Office Investigation Bureau and additionally establishing real estate transaction tax evasion response TFs at the Busan and Daegu Regional Tax Offices.

Kim Gilyong, head of the Real Estate Taxation Division at the NTS, said, "We will thoroughly verify and strictly punish tax evasion related to real estate transactions, which causes a sense of deprivation among the majority of citizens, from acquisition to holding and transfer stages," and added, "Filing taxes faithfully is the best tax saving, so we ask taxpayers to fulfill their tax obligations sincerely."

This content was produced with the assistance of AI translation services.