Tax Accountant Highlights Additional Taxation Faced by Sugar Babies in Shocking Tax Evasion Case

There are only a few days left in the tax filing period. Many readers may be in the last spurt of their tax filing work right now. During this filing period, there were calls for a “#FinalTaxFilingBoycott,” but almost no one would take that seriously. However, there are some people who continue to “boycott” the tax filing process even though they have high income. Yes, these are the women who are the talk of the town.

After the COVID-19 crisis, we have been receiving a lot of inquiries from women who are active in the papa’s business and women who drink at the Gala. Not a few of them lack knowledge about taxes, and I often receive inquiries such as, ‘Do I have to file an income tax return too?

says Takahiro Matsumoto, a representative tax accountant at Matsumoto Tax Corporation, which handles a large number of cases involving nightclubs, including sex clubs and cabaret clubs. In recent years, there has been an increase in the number of girls who do daddy’s business on the side and girls who go out drinking, but many women are unaware that “pocket money from a daddy” is subject to personal income tax or gift tax,” he says. Matsumoto continues.

Some women often wonder, ‘What is the difference between an allowance from a parent and an allowance from a father? Parents and “dads” are different in that they provide a service, in other words, they want something in return. When a parent gives his/her child an allowance, he/she is not asking for anything in return, right?

In contrast, in the case of dads, the provision of services is generally assumed. Even if you just had dinner together, you have provided the service of having dinner together. Papa is giving you money in exchange for that. Even if Dad said, ‘I really just gave it to you. Even if the dad says, “I really just gave it to you, I didn’t ask for anything in return,” it is difficult to prove the feelings of the individual. Basically, the money is considered “income” earned through the “work” of “papa katsudo.

According to Matsumoto, even among night workers, the “papa katsudo” girls in particular tend to have a low awareness of paying taxes.

While there are a relatively large number of women who seek advice from the “paycheck-drinking” crowd, the number of women who seek advice from the “papa-katsu” crowd is much smaller. I think there is a self-centeredness at the root of it all, that they don’t want taxes deducted from their earnings. Also, some people think that it is easier for the tax office to find out about it because in the case of papa activities, cash is often received by hand. In fact, cash delivery makes it difficult to see the flow of money and difficult to be traced.”

While it is hard to be traced, it does not mean that it is undetectable. With the increase in the number of girls who are active as papa and girls who drink at parties, there are more and more cases where the tax office takes a closer look.

What are the routes through which they are exposed? In most cases, the paychecks are paid to the women through specialized matching apps, and in such cases, the money is generally transferred from the company that runs the app. The payment history will reveal the amount of money paid to the girls, i.e., their income.

Although most of the rewards from daddy-daddies are paid in cash by hand, and it is difficult to keep a history of the payment, few people keep their cash as it is in a cashier’s check for safety reasons. So their bank accounts can have an unusual increase in balance. The amount of credit card payments is also a clue. If they have not declared their income so far, the maximum amount of their credit cards should be less because they cannot prove their income. If there is no evidence that you have ever filed a tax return, but the credit card payments are dropping by 500,000 yen each month, the source of the money is suspect,” says Matsumoto.

The tax office can check bank account deposit/withdrawal information and credit card usage information without the individual’s permission. If they wanted to, it would be difficult for them to hide it. Of course, this is not the only thing they check.

We have former tax inspectors, and they check the girls’ social networking sites frequently. If it is a girl they have their eye on as suspicious, they look at it at the level of printing it out on paper and filing it every time it is posted. Some of these girls brag on social networking sites about their brand-name products, luxury cars, and frequent travel. When they post about their sparkling lifestyle, which is approximately unattainable with their ostensible income, such as that of a company employee, they try to investigate their ura income.

The tax office also receives tip-offs from acquaintances who are jealous, saying, ‘She’s making a lot of money. Various other information, such as posts on bulletin boards, are also collected and taken into consideration in the overall investigation.

In some unexpected cases, the papa will find out. A dad who runs a company may write off the cost of a date as an expense, or a dad who has discretionary authority over a company may pretend that he has hired a woman as an employee and paid her as a ‘salary’ to that ‘employee’. This is an old standard method of tax evasion. There was a case in which a tax audit was conducted on one such company, and it was discovered that the payment was made to a female employee of Papa’s and that she had not filed a tax return,” said Matsumoto.

(Matsumoto) “If you are not careful, the tax office will suddenly come to you. What will happen if they find out? In 2010, it was in the news that a galley-drinking girl who had earned about 40 million yen in income over a three-year period received about 11 million yen in additional taxes. When asked by a reporter if this was indeed a rare case among rare cases, Matsumoto said that this was not necessarily the case.

If you go back three to five years, it is not impossible to find a case of 10 million yen in additional taxes. We once received a consultation from a girl who had received about 15 million yen in additional taxes from her daddy. Many papa katsudo girls only receive money from their papa, and as a tendency, they do not have much in the way of expenses. Since there are few expenses that can be deducted from their income, if they do not file a tax return, the additional taxes are likely to be large.

Many people have no savings when the additional taxes come due. They spend the money they receive. It is not uncommon to hear of girls who have no money left over after spending it on shopping or going to a host. If you cannot pay the tax all at once, you can consult the tax office and pay in installments, with a fixed amount due each month. There is no possibility that some girls will have no choice but to earn money through daddy’s business because they are unable to pay their taxes.”

The tax office is very strict in its checks on those who have not declared their income. According to Matsumoto, if there is no improvement in the tax returns for the year following the tax audit and the year after that, the tax office may conduct another tax audit. It would be wise to file your tax return now, without thinking of “boycotting.