The Yomiuri Shimbun/Asia News Network
Saturday, Feb 16, 2013
TOKYO - The Tokyo District Public Prosecutors Office arrested a consulting company president Friday for allegedly teaching more than 40 company employees nationwide how to fraudulently receive income tax refunds.
According to prosecutors, Hiroki Honda, 34, president of Gurobaru Wakusu, based in Shinjuku Ward, Tokyo, instructed employees to falsely claim incurred losses from a fictitious second job, a violation of the Income Tax Law.
These fictitious losses were then deducted from the employees' income. Under the method, 25 million yen was fraudulently refunded in the three years through 2012.
Informed sources said the company advertised the seminars on its website with slogans such as, "If you correctly file returns, you can get a refund from overpaid income taxes."
At the seminars, Honda explained to participants how to file returns. Afterward, he then held one-on-one talks with company employees and allegedly told them they could receive refunds for withholding taxes paid by companies through such means as claiming incurred losses from fictitious second jobs.
People are allowed to file retroactive tax returns going back as far as five years. Those who did so on the company's advice allegedly paid the company 70,000 yen to 80,000 yen in instruction fees for each year of returns.
Honda reportedly denied the allegations, saying, "While I gave them advice, each person chose to file their returns [under that method], so I was not directly involved."
The fraudulent refund case came to light after tax inquiries by the Tokyo Regional Taxation Bureau. Prosecutors believe the case could balloon to more than 100 company employees nationwide and exceed 40 million yen in fraudulent refunds.
Because the amount each individual employee received is small, they will not be held criminally responsible.
However, they will be required to return any refunds received and pay a heavy penalty or overdue tax.
As the period for filing final tax returns will begin Monday, national tax authorities plan to keep a sharp eye out because similar methods are suspected to be common among the public.
Detailed proposals provided
"I felt lucky because I could get a tax refund using that method. I wasn't aware it was illegal," a female company employee who attended one of Honda's seminars reportedly said after being audited by the Tokyo Regional Taxation Bureau.
According to the sources, the consulting firm's personal development seminars had been attended by many employees of prestigious firms.
Honda reportedly lured high-income earners by saying things such as, "It's like a deduction for medical expenses," and, "Smart asset maintenance is important."
Honda asked about their hobbies and interests, and suggested they pose as sports instructors, cram school teachers or consultants.
He also is alleged to have instructed them on how to make fraudulent documents for filing returns.
Due to the prolonged economic slowdown, saving on taxes by declaring losses from a second job has been widespread on the Internet, with some practices verging on being illegal.
According to a consultant who receives inquiries about tax-saving measures, in many cases company employees sell products online as a second job and file income tax returns by claiming losses for telecommuting and initial purchasing costs.
In one case, a person received a 200,000 yen refund by claiming a profit of 10,000 yen and a loss of 1.5 million yen after declaring rent as an expenditure.
Saturday, Feb 16, 2013
TOKYO - The Tokyo District Public Prosecutors Office arrested a consulting company president Friday for allegedly teaching more than 40 company employees nationwide how to fraudulently receive income tax refunds.
According to prosecutors, Hiroki Honda, 34, president of Gurobaru Wakusu, based in Shinjuku Ward, Tokyo, instructed employees to falsely claim incurred losses from a fictitious second job, a violation of the Income Tax Law.
These fictitious losses were then deducted from the employees' income. Under the method, 25 million yen was fraudulently refunded in the three years through 2012.
Informed sources said the company advertised the seminars on its website with slogans such as, "If you correctly file returns, you can get a refund from overpaid income taxes."
At the seminars, Honda explained to participants how to file returns. Afterward, he then held one-on-one talks with company employees and allegedly told them they could receive refunds for withholding taxes paid by companies through such means as claiming incurred losses from fictitious second jobs.
People are allowed to file retroactive tax returns going back as far as five years. Those who did so on the company's advice allegedly paid the company 70,000 yen to 80,000 yen in instruction fees for each year of returns.
Honda reportedly denied the allegations, saying, "While I gave them advice, each person chose to file their returns [under that method], so I was not directly involved."
The fraudulent refund case came to light after tax inquiries by the Tokyo Regional Taxation Bureau. Prosecutors believe the case could balloon to more than 100 company employees nationwide and exceed 40 million yen in fraudulent refunds.
Because the amount each individual employee received is small, they will not be held criminally responsible.
However, they will be required to return any refunds received and pay a heavy penalty or overdue tax.
As the period for filing final tax returns will begin Monday, national tax authorities plan to keep a sharp eye out because similar methods are suspected to be common among the public.
Detailed proposals provided
"I felt lucky because I could get a tax refund using that method. I wasn't aware it was illegal," a female company employee who attended one of Honda's seminars reportedly said after being audited by the Tokyo Regional Taxation Bureau.
According to the sources, the consulting firm's personal development seminars had been attended by many employees of prestigious firms.
Honda reportedly lured high-income earners by saying things such as, "It's like a deduction for medical expenses," and, "Smart asset maintenance is important."
Honda asked about their hobbies and interests, and suggested they pose as sports instructors, cram school teachers or consultants.
He also is alleged to have instructed them on how to make fraudulent documents for filing returns.
Due to the prolonged economic slowdown, saving on taxes by declaring losses from a second job has been widespread on the Internet, with some practices verging on being illegal.
According to a consultant who receives inquiries about tax-saving measures, in many cases company employees sell products online as a second job and file income tax returns by claiming losses for telecommuting and initial purchasing costs.
In one case, a person received a 200,000 yen refund by claiming a profit of 10,000 yen and a loss of 1.5 million yen after declaring rent as an expenditure.
