As many did, I had large fluctuations in my networth during the pandemic thanks to the wild stock market. In the end I lost significant money while, at the same time, life changes also caused a considerable increase in expenses causing stock sales. Anyway, I’ve always reported everything honestly.
I received a call from the tax office. They said my networth changes are suspicious and the fact that I changed to DIY taxes last year is odd. (I did that because the English speaking accountant was charging a huge amount just to tap a calculator and not provide any advice). I’m now scheduled for a three hour investigation where I need to show all my financial history details for five years. Although I have nothing to hide, I’m nervous.
Has anyone here been through this? Do I need to hire an accountant or attorney to be present?
17 comments
I’m not sure what is considered a full audit, but I have had to show all my documents to the tax office before because my income fluctuated a lot too. I was there for an hour or so and the guy asked for a list of documents. I showed those documents. I brought my laptop so they can look through the accounting software (they didn’t ask me too but I thought it was easier) and then they verified random transactions through receipts or bank statements. They said everything checked out and that was the end of it.
If you are being honest then you will have nothing to worry about. In my case it was painless but I don’t know if all tax offices are the same or not.
if you have nothing to hide it should be no problem. i had a similar thing about 15 years ago and did have some stuff to hide. but after a talk and checking out all the paperwork nothing came out of it. i didn’t bother with a lawyer.
Well, first and foremost: Just show the stuff. If there is anything wrong, you’ll find out about it.
Second: Make them hot tea. Kill with kindness (do NOT poison the tea).
Now, an avenue that will probably not be available to you is the path one person took who is legend: They were an artist who brewed their own indigo. When they were audited, they took pains to spend the time the auditors were there brewing indigo.
I’m told the smell is awful. heheheh edited: But I’d just go with tea.
Go in with the expectation that they’ve seen it all, are pretty much experts at what they do, and that they also have far more resources than you might expect. There’ll be some softball questions for warmup. Whoever you interface with will have a team behind them, checking and rechecking everything, if not initially, then certainly by the end of it all.
In the end it will get done right, and it they may even find stuff in your favor. If they do find that corrections are needed, they may check back on you in three years to see if lessons have been learned, so to speak.
Damn that sounds very tough.
Sorry you have to go through that. If you have energy afterwards, please post an update!
Hey, I went through this very recently (in the last few weeks) somewhat similar in that I sold off a decent amount of stocks, but also deposited ¥12m cash via an ATM in multiple batches (max was ¥2m per transaction) that had been withdrawn over a long period of time. It was all legitimate and a deposit for a housing loan, just the bank was busy (25th) because I left it to last minute and I was in a rush.
Basically they just asked for any relevant documentation, bank books, overseas financial statements etc. Took maybe 2 hours, they went through everything with a fine toothed comb, asked a bunch questions to confirm everything matched up, got me to scroll through a stock app and a crypto app to confirm transfers (but refused to actually touch my phone).
It wasn’t that bad, but they were very detailed and not overly friendly. Basically they concluded that it was all legit and requested I be careful not to do anything that comes across as shadey in the future, which in hindsight it obviously was.
>Has anyone here been through this? Do I need to hire an accountant or attorney to be present?
No, you aren’t officially in trouble, they just want to make sure all records match. They will already have a case file with a surprising amount of information in it, they basically knew everything already in my case, just wanted to confirm and maybe slip me up if I were up to something bad.
I was audited last year. Three days of visits. Ended up paying a small amount for a mixup in USA retirement fund reporting. Nothing beyond that.
Overall, non issue because even though all my docs are in English and digital only (tax office are modern now and will bring a secure USB stick to make copies) , the numbers add up. If you can prove you accurately reported your income, expenses, etc, **then you have nothing to worry about **.
I was nervous too and read one too much many Japanese blogs on these ‘voluntary audits’. Again, if you have supporting documentation and are confident it matches, YOU WILL BE FINE.
I do not think an accountant or attorney will help. On the contrary, if something is wrong it will make it seem less like incompetence and more like done on purpose.
My experience with the tax office was very positive. They were polite and professional. If you’re honest, it will almost be pleasant!
I’m curious to know how much money you guys (and OP) are moving to trigger an audit.
Sounds like I gotta be more careful from now lol
Yes. It was. I problem. I also report every tiny detail and it was a painless audit. Don’t sweat it
I’ve been through a personal audit, multiple business audits, and multiple sales tax audits. I have friends who have been through multiple personal audits and business audits. (I’ve been here a long time so this isn’t a case of “everyone I know gets audited all the time”.)
Every audit is different. If you just got flagged because of the big changes, and you have all the documentation they want, it probably won’t be that big a deal.
If they have substantial suspicion of wrongdoing….then things can get serious.
Try not to worry about it. Whatever is going to happen has already been set in motion. You can’t change it so there’s no point in worrying about it. Try to be as prepared as you can, and do your best to answer the questions they have with documentation to back you up. They don’t have unlimited time for a given audit so as long as they feel you are being honest in your answers they will likely wrap things up and send you on your way.
you may want to ask r/japanfinance too
Should have added this in my other reply, but you’re not really paying the accountant “to tap a calculator”. You’re paying them to sign their professional reputation to your tax return, which gives the tax office greater confidence in the return.
Should you get audited, your accountant will generally attend the audit with you and answer questions about your return.
If you have specific tax questions, you might get better answers in /r/japanfinance.
Do you trade in Japanese stock markets?
If you are hiding any profits then you may have to file for taxes, and you may get a penalty for hiding it. A Watanabe trader got one.
I filed my own taxes one year with no help which was a mistake. I was a consultant part of the year and a seishain the other and my mistakes were honestly just misunderstanding how the system works.
They asked me to come to the office, had a really cute young tax employee explain what I messed up very politely, what I owed and there was a penalty.
They really just wanted the money. No strongarm tactics no intimidation at all. I said sorry, paid it that day and done. And now I always use a pro.
Why are you worried? If you did everything honestly it’s just a PITA but such is life.