Excited by the Expected Refund Amount... The Betrayal of Samzzumzzum [Heotdari Economy]

(30) Tax Platform with Lost Trust Expected Refund Amount

Editor's NoteMany people thought they were engaging in smart economic activities to gain better outcomes, but it often turned out to be a misstep. When consumers are deceived by corporate marketing or blinded by momentary gains and make wrong decisions, they end up being the ones who suffer. We aim to examine economic activities where people have made mistakes by misjudging everyday situations and ended up on the wrong foot.

The sweet phrase from tax platforms claiming you can get refunds on unpaid taxes. Tax platforms like SamjeomSam, SaveIt (Toss), and 1Minute excite consumers with phrases like "You can get refunds on unpaid taxes." They also use phrases such as "If you miss this month, the refund amount may revert to the national treasury," "If the refund amount differs from the expected amount, you can get a 100% refund," and "The accuracy of the expected refund amount is over 96%." However, even after paying fees, the actual refunded amount often differs from the expected refund. Trusting the expected refund amount and signing up may lead to no money returned and potential leakage of sensitive tax information from the National Tax Service's Hometax system.

Mr. A discovered through SamjeomSam that he could receive a tax refund exceeding 1.5 million KRW and paid a fee of 199,000 KRW, but ended up having to pay 800,000 KRW in unpaid taxes instead. He also did not get his fee refunded. Mr. B saw an expected refund amount of 1.2 million KRW on SamjeomSam and paid nearly 200,000 KRW in fees but only received 700,000 KRW, which is 58% of the expected amount. When Mr. B requested a reduction in fees due to the lower refund, his request was denied. Mr. C paid a fee of 99,000 KRW after seeing an expected refund of over 500,000 KRW, but upon rechecking, the refund amount changed to zero.

SamjeomSam’s website states that if the expected refund amount differs from the actual amount, users can get their platform usage fee (commission) refunded. However, users complain that the refund amounts suggested by SamjeomSam differ from what they actually receive, and that after entering personal information, they find no refund at all. Even when raising issues, it is difficult to connect with representatives, and the platform consistently avoids responsibility, leaving consumers feeling deceived.

Photo by SamzzumSam, KakaoTalk message capture sent from SamzzumSam.

SamjeomSam takes up to 20% commission as a fee for finding tax refunds. The fee varies depending on the year and expected refund amount. SaveIt and 1Minute, which entered the market later, also charge up to 15% and 17% fees respectively, depending on the filing method and refund amount.

The Korean Association of Tax Accountants recently established a "Tax Platform Damage National Report Board" on its website after receiving continuous reports of damages caused by tax platforms. The association plans to assist taxpayers in damage relief and collect related data to provide to government agencies and judicial authorities. The association also claims that tax platforms encourage insincere reporting and tax evasion, stating, "Platforms like SamjeomSam collect sensitive tax information from the National Tax Service’s Hometax by advertising misleadingly that consumers who are not even eligible for refunds can receive refunds."

Refunds in comprehensive income tax arise from the difference between withheld tax and the final tax amount. In other words, refunds occur when the tax already paid exceeds the actual tax due. If more tax was paid, it can be reclaimed through a correction claim. Conversely, if less tax was paid than required, the missing amount may need to be paid back.

Tax platforms like SamjeomSam, SaveIt, and 1Minute advertise that they simplify the complex tax filing and refund process through applications (apps). SamjeomSam’s name comes from the 3.3% withholding tax rate applied to individual business income. Their business model is to handle tax services and take a commission from the refund amount. They are mainly used by part-time workers, freelancers, creators, and platform workers who are often in tax blind spots. Since its launch in May 2020, the platform has surpassed 20 million registered users (as of May) in about four years and exceeded 1 trillion KRW in cumulative comprehensive income tax refunds. Revenue from commissions has also surged sharply: 4.1 billion KRW in 2020, 31.1 billion KRW in 2021, 49.6 billion KRW in 2022, and 50.7 billion KRW in 2023.

Experts advise that even without using tax platforms, it is not difficult to receive tax refunds through the National Tax Service’s website. You can get a full refund without fees and without worrying about personal information leakage. An industry insider cautioned, "The initial information (expected refund amount) provided by tax platforms is not based on National Tax Service data, so there will inevitably be differences from the actual refund amount." They added, "You cannot know the exact refund amount by just entering personal information. Consumers should keep in mind that paying fees based solely on the expected refund amount presented by tax platforms may result in discrepancies with the actual refund."

Professor Kim Siwol of Konkuk University’s Department of Consumer Studies said, "Phrases or advertisements that mislead consumers’ choices can be problematic," adding, "This is an issue that the Fair Trade Commission should address."