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OSAKA — A postal savings center in Kyoto has been ordered to pay about 1.1 billion yen in penalties and back taxes for failing to properly tax about 4.3 billion yen in interest on the savings it handles, sources close to the case said Sunday.

According to the sources, the Postal Services Agency’s Kyoto Business Center of Postal Savings, which handles savings for the four prefectures of Kyoto, Shiga, Nara and Wakayama, neglected to collect income taxes by illegally applying a tax-exemption system for the elderly to its general depositors.

The Kyoto center handled the interest as if it were covered under a government system that gives tax breaks to disabled people and to those aged 65 and over, according to sources close to the Osaka Regional Taxation Bureau.

The Kyoto center reportedly controlled outstanding deposits of roughly 15 trillion yen as of the end of March 2000, an amount that translates into about 6 percent of total postal savings nationwide.

The Osaka Regional Taxation Bureau ordered the center to pay some 1.1 billion yen, including roughly 225 million yen in fines to the central government and 200 million yen in local taxes, alleging that officials tried to destroy evidence of the wrongdoing ahead of official investigations, the sources said. It is extremely rare for a government organ to be slapped with fines in connection with tax irregularities.

There are 28 postal savings centers nationwide. For regular deposits, the center is obliged to collect and pay the state 15 percent of the interest as a central government tax and 5 percent as a local tax.

According to sources close to taxation officials, staffers falsified savings certificates so that deposits by regular customers appeared the same as those held by the elderly or disabled, who are exempt from taxation on deposits with capital of up to 3.5 million yen. The center then failed to deduct the taxes from the interest earned, they said.

The centers keep customer documentation after deposits mature or accounts are closed, and roughly 17,000 documents were found to have been tampered with in some way during an inspection by taxation authorities that began in May last year, according to the sources.

Many of these documents wrongly listed the age of the depositor as over 65 or names that could not be verified, the sources said.

The documents in question were also found stored in a location different from other documents of the same nature, they said.

Officials of the Kinki Regional Bureau of Postal Services denied the center abused the tax-break system and said that the misplacement of the documents in question was simply a clerical error.

They said that while the back taxes and fines have been paid, the bureau would file for the return of any taxes found to have been properly handled under the tax-exemption system.

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