Crypto assets seized: Tax delinquents discover their virtual wallets matter
Assets confiscated by the government from long-term tax evaders are put on auction at Kintex, Gyeonggi, on Nov. 26, 2024. [YONHAP] Gangnam District in Southern Seoul uncovered the key to cracking long-term tax evaders — cryptocurrency. As Bitcoin hit an all-time high on Aug. 13, the Gangnam District regional government seized the assets of a high-value tax delinquent and collected 140 million won ($101,000) of a total 210 million won in arrears, according to the district government on Friday. Related ArticleAuthorities clamp down on foreign tax evaders amid growing scrutinyNTS seizes $900,000 in assets from tax evaders, launches probe into 710 individualsTax evaders get creative with hiding money, revenue service says The district focused on residents who had deliberately failed to pay large amounts of tax. Many long-term delinquents had already transferred property into the names of relatives, acquaintances or shell companies, or disguised their real estate holdings as paper transactions or donations. Suspecting that some may instead be holding cryptocurrency under their own names, the district obtained account data from Korea’s five largest virtual asset exchanges. One delinquent resident was found to possess digital assets worth more than enough to cover their unpaid taxes. Gangnam District seized the assets and notified the resident, who was effectively unable to use their cryptocurrency. The resident then offered to pay the arrears immediately if the seizure was lifted. Bitcoin prices are displayed at cryptocurrency exchange Bithumb at the company's office in southern Seoul on Aug. 14. [YONHAP] District officials, citing the resident’s long history of ignoring payment requests, insisted on accompanying the individual to the crypto exchange. At the site, officials lifted restrictions while simultaneously securing 120 million won in back taxes. "Many Gangnam residents hold significant amounts of cryptocurrency and so by utilizing these holdings, taxes can be collected quickly and effectively," said a tax management official in Gangnam District. First cryptocurrency seizure by a Seoul district The move had a ripple effect. For some, the prospect of having all their digital assets frozen made paying overdue taxes the better option. One example was a resident who had failed to pay 19 tax bills since 2020, including registration license taxes, claiming to have no assets. After cryptocurrency holdings were seized, the individual paid 1.4 million won in arrears, saying they had never expected virtual assets would be targeted. Assets confiscated from long-term tax evaders [SEOUL METROPOLITAN GOVERNMENT] Since adopting the measure last year, Gangnam District has collected around 200 million won by seizing 340 million won worth of cryptocurrency. Even pre-seizure notices proved effective: Between January and February, the district collected an additional 120 million won simply by warning delinquents of impending seizures. The practice has since spread across Seoul’s 25 districts. The city government has also built a system for jointly searching for and seizing the cryptocurrency of delinquents in cooperation with local district offices. Looking ahead, Gangnam plans to streamline the process further. Currently, delinquents must first liquidate their own cryptocurrency before paying their taxes. Starting in the second quarter, the district will instead transfer seized assets to a nonprofit account and directly liquidate them to collect taxes, preventing delinquents from diverting funds immediately after sale. "We are seizing the cryptocurrency of all long-term delinquents without exception and will ensure tax fairness so that law-abiding taxpayers do not feel disadvantaged," said Gangnam District head Cho Sung-myung. This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.BY MOON HEE-CHUL [yoon.soyeon@joongang.co.kr]
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