Eight Housing Cooperatives Audited...Eight Cases of Unreported Acquisition Tax Detected, 2.3 Billion Won Collected

[Suwon Ilbo=Park No-hoon Reporter] Gyeonggi Province conducted joint tax audits with relevant cities and counties over three months from March to May on eight housing cooperatives in the province, detecting eight cases of violations including unreported acquisition tax, delayed reporting, and underreporting, and collected 2.3 billion won in local taxes.

According to Gyeonggi Province on the 9th, the province identified that housing cooperatives, unlike general construction companies, have a high possibility of tax non-compliance and errors due to their characteristic of being concluded as a one-time single project. The province initiated tax audits on a total of eight housing organizations: three reconstruction cooperatives with recently completed apartments and five regional housing cooperatives.
Under Article 7 of the Local Tax Act, when a housing construction company purchases land or completes a building for a new apartment construction project, it must report and pay acquisition tax to the relevant city or county, and this also applies to housing cooperatives. If this is not complied with, the tax amount including penalty surcharges for non-filing is collected.

Looking at the detected cases, A Cooperative in Hwaseong and others omitted reporting construction costs for landscaping work and optional construction within apartment complexes, or underreported cooperative operating expenses such as member recruitment fees, leading to a surcharge of 1.8 billion won.
B Cooperative in Uijeongbu and others purchased land but paid taxes belatedly and did not report financial expenses incurred during the fund-raising process, resulting in a collection of 400 million won in acquisition tax. Additionally, C Cooperative in Pyeongtaek constructed a temporary building and used it as a model house for over a year without reporting acquisition tax, which was detected in this investigation, leading to a collection of 100 million won.

Lee Ui-hwan, Director of the Tax Justice Division at Gyeonggi Province, said, "Since each cooperative member effectively bears the burden when acquisition tax imposed on housing cooperative apartments is not properly reported and collected, special attention is required when filing taxes," and "Considering the characteristics of housing cooperatives where investigations become difficult once dissolved due to inability to secure accounting records and other documents, we will continue to conduct timely investigations and make efforts to prevent illegal acts such as tax omissions," he added.

Meanwhile, Gyeonggi Province plans to publish a 'Local Tax Audit Manual for Housing Cooperatives' this month, which compiles specific audit techniques and various cases based on the results of this investigation, and distribute it to cities and counties.