[Tax Story] Is 'Contactless Tax Administration' Still Far Away?

A few days ago, I received a letter from the tax office instructing me to file a comprehensive income tax return because I had other income such as lecture fees in addition to earned income. I hurriedly logged into Hometax (an automated online tax payment system operated by the National Tax Service). However, due to the complicated tax terminology and complex structure, I wandered in a maze for hours without finding the right answer and eventually headed to the tax office.

At 3 p.m. on a rainy afternoon, dozens of people were lined up in the tax office yard to file their taxes despite concerns about the novel coronavirus infection (COVID-19). After about an hour, I received a waiting number ticket, and after waiting another hour, I finally completed the filing with the help of a tax office employee. Upon close observation, even a skilled employee needed about 10 minutes of processing time before the payment slip was issued.

As I thanked them and was leaving, I saw a banner that read, "Even if a tax office employee assists in preparing the tax return, all responsibility lies with the taxpayer." Oh no. Does that mean this is not the end? In fact, it is. The tax law states that the ultimate responsibility for income tax filing lies with the taxpayer.

What if I do not file? The tax office uses computerized information data to estimate my income amount and collects additional income tax. The tax office already "has a plan." So, do I really have to file? To compare my answer with theirs? Is the tax office that idle? Or is it because of the possibility of errors in the tax office’s answer?

In fact, business owners and the tax office spar over accounting books. There is no definitive answer. It is a domain for experts. However, for non-business taxpayers, the tax amount is already determined. If I do not file, the tax office’s answer is the correct one.

Given this situation, if the tax office shows its cards to the taxpayer first and the taxpayer agrees to those cards and files the tax return, that filing should be final. The first screen of Hometax could display, "Your income amount is ○○○ won. Do you agree to this?" and if the taxpayer agrees by clicking "Yes," the payment slip would be issued immediately. How simple would that be? This would be a tax administration suitable for the COVID-19-driven Untact society. Only those who disagree and want to pay less than the tax office’s answer would gather in the tax office yard.

Is there any need to set up ugly nets and traps in the canyon that honest taxpayers must pass through to file their taxes? Even if the tax office’s answer is incorrect (less than the amount the taxpayer should actually pay), it must be accepted as is. This is because the tax office holds the position of "gap" (dominant party).

In fact, although not well known, Korea’s tax administration using ICT is at a level incomparable to Japan or China and is by no means inferior to the United States or Europe.

However, it is regrettable that minor mistakes by honest taxpayers are treated like habitual offenders. A shift to a tolerance-based mindset that embraces the mistakes of the weak by the strong is needed. The French political thinker Philippe Schmitter’s proposition that "tolerance is a tool for the public good" can also be applied to tax administration.

As a side note, I hope that when taxes are paid, the tax office chief would at least say "Thank you" on the mobile phone screen, even if insincerely. Taxpayers are the owners of the nation. The Korea Disease Control and Prevention Agency communicates with the public like this every day. There is no reason why the tax office cannot do the same. With just a few minor improvements, Korea could be recognized as implementing K-tax administration at the level of "K-quarantine."

On a stormy day with rain and wind, the citizens who risked COVID-19 infection to stand in line and file their taxes looked truly great.

Changnam An, Professor, Department of Economics and Taxation, Gangnam University