Tax Probe into 600 Suspected Speculation Cases in Chungcheong

The government is now set to launch intensive tax investigations targeting 600 individuals and 12 real estate agencies believed to be involved in land speculation in North Chungcheong Province, a strong candidate for the new administrative capital of Korea.

The National Tax Service unveiled its plan to probe sources of speculative funds in Daejeon and Chongcheong Province on May 13 in a bid to stabilize real-estate prices in the area.

˝We have decided to launch investigations amidst growing concern over rising land prices in 6 major cities in the Cheungcheong area, including Daejeon and Asan, both considered prime candidates for the new administrative capital, as well as five towns in the area,˝ said Kim Cheol-min, manager of the tax probe department at NTS. ˝We believe that speculators have been flocking to those areas after President Roh`s campaign pledge to move the administrative capital out of Seoul.˝

The tax agency has conducted a computerized analysis of 100,653 real-estate deals made in those areas from October of last year through January of this year, and selected 600 suspected buyers.

The list includes 246 sellers who are not residents in the area and are believed to lack the funds to purchase real estate; 116 residents in the area who are too young to buy land; 74 speculator suspects who have been involved in several real-estate deals but have paid low property taxes; and 76 who reported smaller amounts of income vs. the properties they bought; and 88 believed to have transferred land purchasing funds illegally.

NTS plans to conduct the 60-day probe beginning May 21. If the suspects are found to have underreported their property gains, the tax service will impose fines in addition to the still unpaid taxes.

The agency has also decided to investigate funding sources targeting those who have invested larger amounts of money than their income levels, by tracing their bank account transactions. The investigation will cover real-estate purchases outside the Chungcheong Province as well.

NTS further plans to investigate 12 real estate agencies believed to be involved in organized land speculation. The agencies allegedly purchased land expected to be developed on behalf of individual speculators and lured investors through briefings or telemarketing to resell the land at two to three times the original price.

Jin-Hup Song jinhup@donga.com