What should a tax delinquent lottery winner do?

A, who operated a distribution corporation, has omitted the corporation's income. As a result, he has become a high-amount tax delinquent because of failure to pay the comprehensive income tax and other taxes imposed as *recognized bonuses.

(*Recognized bonuses: Bonuses recognized as the representative director's bonuses in reality, though they are not the representative director's bonuses in name. They are subject to taxation.)

 

Meanwhile, A recently won a lottery first prize worth tens of billions of won. Although he had enough money to pay the taxes with the winning prize, he made a foolish decision not to pay the delinquent taxes. Instead, he embezzled the winning prize. He received the winning prize in his own account, and transferred a significant portion of the winning prize to his family's account for use. In addition, he withdrew some of the money in cash and check.

 

What is announced from the National Tax Service is not clear whether the lottery winnings were received in A's account or not. However, based on circumstantial evidence, it appears that A received the winnings in his own account. The important thing is that A is a tax delinquent, and if a large amount of money is deposited or withdrawn from a delinquent taxpayer's account, the National Tax Service will not be unaware. In addition, lottery winnings are subject to withholding tax (22% for amounts up to 300 million won, 33% for amounts exceeding 300 million won). If withholding tax is paid and reported to the National Tax Service, the National Tax Service will not be unaware that the delinquent taxpayer has received a large income. Even if one of A's family members received the payment, there may be suspicion if there was a transfer of funds between the delinquent taxpayer's account and the family member's account. This is because, since 2020, if a delinquent taxpayer owes more than KRW 50 million, financial inquiries can be made up to the sixth degree of relationship, including spouses, relatives within four degrees of consanguinity (grandparents, parents, siblings, etc.), and relatives within four degrees of affinity (daughters-in-law, sons-in-law, fathers-in-law, mothers-in-law, etc.). Looking at the National Tax Service's announcement that A transferred the funds to another family member's account, it seems that A received the winnings in his own account.

 

According to the National Tax Service's announcement, A is a high-amount delinquent taxpayer. A high-amount delinquent taxpayer refers to a taxpayer who owes more than KRW 200 million and has not paid for more than one year. Withdrawing the winnings in the form of a check from his own account was also a foolish decision. We live in the era of big data where even cash transactions are traceable. It is even more stupid to withdraw the winnings in the form of a check and use them. It is tantamount to sending a sign saying, "I am now committing various illegal acts, so please punish me."

 

According to an announcement from the National Tax Service, the bank account that received the lottery winnings has been seized and the remaining balance has been used to pay off outstanding taxes. However, it seems that the remaining amount in the account was not enough to cover all the taxes owed. The National Tax Service is considering filing a lawsuit to cancel the transfer of the lottery winnings to a family member's account, as the transfer may be considered an act of evasion. Furthermore, an investigation is underway to trace any cash or check withdrawals and hidden assets. To prevent further escalation of the issue, A should pay the remaining taxes as soon as possible. If the National Tax Service files a lawsuit for cancellation of the transfer and charges A with obstruction of mandatory execution, the losses could be even greater.

 

But what if another family member had received the winning lottery prize instead?

 

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