Lately, I’ve been so busy that it’s been a while since I’ve written, but today’s major event made me feel that I should document it.
A Sudden Tax Investigation
Two of the companies I managed payment processing for have suddenly been subjected to a tax investigation. One location is the home of Mr. N, a programmer like me, and the other is the home of Mr. M. While it wasn’t a forced search, the tax authorities informed them that they were being targeted for an audit. I was surprised when I received a sudden phone call early in the morning, but it seems that the tax office is interested in the actual workings of payment processing.
From what I gathered, they had wanted to investigate before I was arrested and had been waiting for my release. Although they didn’t come to my home, I find it a bit unsettling that they went to the homes of two associates (it feels similar to how the police tighten the net from the outside). However, after asking a few more questions, they said it was simply because my residence is far away, so I’ll take their word for it.
Key Points
I asked various questions, and they knew about my arrest and detention. They also seemed to know about online casinos and some related individuals. However, it seems they haven’t been coordinating with the police, so there might be things they need to verify going forward.
By the way, I was told that my seized items would be returned after the first trial, but they still haven’t been. It’s likely because I’m currently appealing. I want to inform international readers that in Japan, suspects and defendants are not allowed access to seized items during their trials. To add to that, many of my financial records and business data are stored on the computers that were seized. Some data was lost due to failed subscription payments. Without access to this evidence, I’m concerned that I’ll have to respond to the tax investigation without having any proof to counter their claims.
The keywords in this case are: income concealment, corporate tax, withholding tax, general ledger, and unpaid taxes.
Did I Hide Income Through Payment Processing?
To conclude, no, I didn’t. I had properly reported all revenue. I’ll spare the details of how I classified each item in the cash flow, but I kept my books honestly and paid taxes, so I have no idea why they’re accusing me of tax evasion or income concealment. In fact, I suspect that my straightforward reporting may have made me an easy target for the police. It might sound audacious, but I was a self-proclaimed “honest” payment processor, and in the end, honesty might just get me burned, so to speak. For now, I’ll take whatever records I still have and head to the Shinjuku Tax Office to find out what they’re investigating.
After consulting with my uncle, a tax accountant, and another uncle who handles my bookkeeping, they mentioned conspiracy theories about how the police might be trying to trap me again, but they reassured me that as long as I explain things honestly, I should be fine. So, I plan to explain everything clearly.
If for some reason I don’t come back, the one thing I’d like to tell my family is to send me books (because if it’s the Shinjuku Tax Office, that means I’ll likely end up detained again at the Shinjuku police station or in a detention center…). Okay, I’ll stop here since my bad premonitions keep coming true (haha).
How Other Payment Processors Operate (My Guess)
I assume other payment processors don’t report their taxes properly and instead abandon their companies (leaving them as empty shells) or move their operations overseas, possibly hiding their assets through cryptocurrencies. I’m pretty confident that this is what’s happening.
I know some of the darker practices in the industry, but SumoPay, the payment processing group I worked for, was committed to compliance and proper tax payments. We operated as a legitimate business because we believed that unless we did things the right way, there would be no room for future growth.
In my case, both I and the companies I directly managed always reported and paid taxes (and we paid quite a large amount). After all, I’m a true Japanese citizen, and since I plan to live here, I had no intention of doing anything illegal. I also maintained thorough records.
While there may be other processors who knowingly engaged in illegal activities, I believe our approach to the business was different.
If You Get Detained…
In short, detention in Japan means being at the mercy of the authorities. It’s long, and it’s extremely tough. There’s this uniquely Japanese practice of “banning meetings,” which means you’re prohibited from seeing family or friends—a violation of human rights that prolongs your detention until you confess.
You’re fed awful food, forced to sleep on a hard bed, and often prescribed antidepressants, essentially a form of long-term imprisonment.
They say you can’t be prosecuted separately for the same matter, but when the government decides to act, they can do pretty much anything. The thought is truly terrifying.
It seems my strange journey is still far from over.
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