Religious group Ho-no-Hana failed to report income

A controversial religious group in Shizuoka Prefecture has failed to report some 4.7 billion yen in income, tax officials said May 8.

An investigation by the National Tax Administration Agency into the finances of Ho-no-Hana Sanpogyo, based in the city of Fuji, has so far uncovered a total of 4.7 billion yen not reported by the group’s leaders and its affiliated businesses, the officials said. Investigators have determined that about 2.6 billion yen founder Hogen Fukunaga and other leaders received from the group in recent years amounted to personal rewards that should be subject to taxation, the officials said.

Most of this money has gone toward personal expenses, they said. Ho-no-Hana claimed 600 million yen that Fukunaga earned by “examining the soles” of followers’ feet “to judge their health conditions” is nontaxable because the practice is a religious activity. But tax authorities concluded it constitutes Fukunaga’s personal business, whose profits are subject to taxation.

In another case, an affiliated company that publishes books written by Fukunaga allegedly sold the books to the religious group for almost nothing. Tax authorities consider such sales as de facto donations to the group. Most donations of this type are not tax deductible, and investigators have concluded the publisher failed to report about 1.5 billion yen in income from 1992 to 1995, the officials said.

A number of lawsuits against Ho-no-Hana have been filed by former followers, seeking the return of huge “training fees.” Claims made by nearly 500 former followers total some 2 billion yen, which prompted tax authorities in Tokyo and Nagoya to investigate the group’s finances.

Ho-no-Hana was established by Fukunaga in 1987 and claims to have about 100,000 followers.