Card companies admit tax foul-up

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Card companies admit tax foul-up

Four credit card companies have found they made errors in information provided to the tax authority in the latest year-end tax settlement, causing as many as 2.9 million customers to file inaccurate reports and pay more.

The four card companies are BC Card, Samsung Card, Hana Card and Shinhan Card.

BC Card was the first to announce on Friday that it found transportation spending of 1.7 million customers miscategorized as general spending, and those customers couldn’t get deductions to which they were entitled.

On Monday, Samsung Card and Hana Card found the same error.

According to the Financial Supervisory Service, the total amount of miscategorized spending is approximately 160 billion won ($147.7 million) at the four companies.

Samsung Card said 17.4 billion won in the transportation spending by 470,000 customers was not reported properly. Hana Card said 520,000 users’ transportation spending of 17.2 billion won was misreported.

Samsung also said as many as 120,000 people who purchased mobile phones using the company’s cards through an installment payment service that was subsidized by SK Telecom couldn’t receive the deduction benefit.

About 41.6 billion won was supposed to be deductible.

Samsung Card and SKT have been partnering to offer the installment service by attracting customers with tax deductions since June 2013.

An additional 21.9 billion won worth spending on phones was found omitted in 2013.

“The company made corrections with the National Tax Service (NTS) today and now they are all reflected correctly in the reports,” the company said in a statement. “Relevant customers already have been notified by the company about the error.”

Shinhan also found about 24 million won in spending at outdoor markets by 640 users was misreported.

As the companies announced the errors, financial authorities started to get involved.

“Since the companies have voluntarily made the announcements and are trying to help solve the problems, there will be no sanctions, but we will keep monitoring on the issue,” said an official at the Financial Services Commission.

“Card company officials calculate the transportation and outdoor market spending ... and there are high chances of mistakes,” said an FSS official. “If there is bigger damage for consumers, the authority will consider taking measures.”

The companies plan to notify their customers of the errors and send corrected reports to the NTS.

But what annoys taxpayers is that most companies have finished their tax settlements. To apply for deductions that were omitted, employees should revise and resubmit the settlement documents. But that would produce maximum tax refunds of only several thousand won.

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