National Tax Service Urges Accurate Income Tax Reporting

On May 7, 2025, the National Tax Service (NTS) announced that it has sent mobile notifications to 1.19 million individuals subject to preliminary guidance on honest comprehensive income tax reporting. This initiative aims to assist taxpayers in accurately filing their taxes during the ongoing reporting period. The NTS emphasized the importance of correct reporting, warning against the common mistake of misclassifying business income as other income.

The notifications included critical guidance on several key reporting items. These included instructions to report income from the transfer of intangible property rights, such as patent rights, as other income. Additionally, the NTS advised taxpayers to report the disposal value of business tangible assets as business income. Taxpayers were also cautioned about the implications of not enrolling in business-only car insurance, which would prevent related necessary expenses from being included in their tax filings. Furthermore, the NTS provided guidance on how to report foreign currency income received from overseas platforms, including major companies like Google, Facebook, and Apple.

In a review of last year’s reporting details, the NTS found numerous instances where taxpayers incorrectly reported business income as other income. This misclassification often led to complications and potential penalties. For example, a professional lecturer, referred to as A, provided services to various companies and received lecture fees. The companies withheld taxes on these fees as other income, which A then reported as such in their comprehensive income tax filing. However, the NTS clarified that compensation received for providing services independently and repetitively should be classified as business income.

Additionally, the NTS discovered cases where sole proprietors, operating without employees, claimed excessive necessary expenses, such as travel and welfare costs. These individuals were subsequently selected for analysis due to the discrepancies in their reported expenses. The NTS stated that honest reporting is crucial for effective tax savings and urged taxpayers to refer to the provided assistance materials when filing their taxes.

The NTS's emphasis on accurate reporting comes as part of a broader effort to ensure compliance and reduce tax evasion. Officials highlighted that many taxpayers are unaware of the specific classifications required for different types of income and expenses. For instance, the NTS pointed out that penalties and compensation received due to breaches or cancellations of contracts fall under other income according to the Income Tax Law. However, some individuals have failed to report these amounts correctly, leading to further scrutiny from tax authorities.

In one notable case, a taxpayer identified as B entered into a sales contract to sell an apartment and received a deposit from the buyer. However, the contract was canceled due to the buyer's circumstances, resulting in penalty income for B. When filing their comprehensive income tax, B neglected to include this penalty income as other income. The NTS, upon reviewing real estate sales contract data, confirmed that B had indeed received the penalty and subsequently sent a notice for clarification regarding the comprehensive income tax filing.

Another case involved a wholesaler, C, who operated a business independently without any employees. C was found to have excessively included unnecessary expenses, such as travel and welfare costs, in their necessary expenses. The NTS analyzed C's account ledgers and financial transaction data, revealing that most claimed expenses were unrelated to the business operations. C acknowledged the misreporting and amended their comprehensive income tax return, excluding the unrelated expenses and paying additional taxes accordingly.

The NTS's proactive approach in sending mobile notifications and guidance aims to mitigate errors in tax reporting and enhance overall compliance. By educating taxpayers about the distinctions between different types of income and allowable expenses, the NTS hopes to reduce the frequency of misreporting and the resulting penalties.

Moreover, the NTS reiterated the importance of utilizing the reporting assistance materials provided to taxpayers. These materials are designed to clarify the reporting process and help individuals understand their obligations under the tax law. An official from the NTS stated, "Honest reporting is the best tax saving," urging all taxpayers to approach their filings with integrity and diligence.

As the deadline for comprehensive income tax reporting approaches, the NTS continues to monitor compliance and address any discrepancies found in taxpayers' submissions. The agency is committed to ensuring that all individuals understand their tax responsibilities and are equipped with the necessary tools to file accurately.

In conclusion, the NTS's efforts to provide personalized guidance to over a million taxpayers reflect a significant step toward improving tax compliance and reducing the incidence of misreporting. By fostering a culture of honest reporting, the NTS aims to enhance the overall integrity of the tax system and ensure that all individuals fulfill their obligations responsibly.