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CHEONGJU, Nov. 18 (Korea Bizwire) — A local tax office in Cheongju has won a rare legal victory against a high-value delinquent taxpayer who hid his income under his spouse’s name to avoid wage seizure, city officials said Monday. The ruling is expected to strengthen municipal efforts to crack down on sophisticated tax-evasion schemes.
According to Cheongju City, a 50-year-old man identified only as A had refused to pay 73 million won (about US$54,000) in local taxes.
To avoid garnishment, he arranged to have part of his salary paid into his wife’s bank account, ensuring that the amount reported under his own name stayed below the legally protected minimum that cannot be seized. He also filed separate social insurance reports to make the payments appear legitimate.
A’s employer, a small construction firm where he worked as a site manager, allegedly cooperated by drafting dual employment contracts, falsely recording his wife—who did not work for the company—as a salaried employee.
Suspecting deliberate evasion, Cheongju officials spent more than three years gathering evidence, persuading the company to hand over pay stubs and related documents. The city eventually filed a lawsuit seeking cancellation of what it deemed a fraudulent transfer of assets, known in Korea as a “fraudulent conveyance,” a tactic often used by delinquent taxpayers who shift assets to spouses or children ahead of seizure.
A local court sided with the city, concluding that the income diversion scheme constituted a clear attempt to obstruct tax collection. Once the ruling is finalized, Cheongju plans to move ahead with asset seizure and an auction to recover unpaid taxes.
A city official said the case marks the first time a Korean local government has successfully won a fraudulent-conveyance lawsuit based solely on concealed wage income. “We will continue to pursue malicious tax evaders to the end and uphold tax justice,” the official said.
Jerry M. Kim (jerry_kim@koreabizwire.com)
