An affiliate of the Postal Services Agency failed to declare about 120 million yen in income over a three-year period up to March this year, informed sources said.

The Tokyo Regional Taxation Bureau imposed additional taxes and penalties totaling some 30 million yen on the Postal Services Center.

The center, the public corporation that mediates delivery of "furusato kozutsumi" (parcels from hometowns), failed to declare a portion of its income derived from commission fees in its declaration, the sources said Saturday.

The commission fees are charged on products chosen by consumers from fliers or catalogs at post offices nationwide. Consumers transfer the money to an account of the Postal Services Center, which deducts 7 percent of the amount and sends the rest of the money to product manufacturers.

Revenue from the commission fee, which was raised from 5 percent to 7 percent in April last year in line with introduction of computer processing system, accounts for the largest portion of the affiliate's income.

The sources said the affiliate reduced the amount of income it claimed to have derived from commissions by calculating it on a different business term, rather than on the required accounting term.

The affiliate also claimed production costs for catalogs that were never used, they said.

The Tokyo-based affiliate, established in 1967 under another name, was renamed the Postal Services Center in 1985, and primarily handles surveys and studies to promote the use of postal services.

It has about 90 employees, over 70 of whom are from the former Posts and Telecommunications Ministry.

According to the affiliate, it earned about 400 million yen in revenue in the nonprofit business category in the business year ending in March 2000.

Revenue in the profitable business category of the affiliate, however, totaled about 2.3 billion yen in the same year, most of which was derived from commission fees for handling the parcel gifts.

Public corporations are exempt from income tax imposed on nonprofit businesses on the grounds they provide a public service, but they are subject to taxation of profit-making activities, including the collection of commission fees.

Other sources said most of the businesses in the Postal Services Center, though it is a public corporation, are profit-making ones such as those usually handled by the private sector.

An official of the Postal Services Center admitted the affiliate was investigated by the tax authority, but stressed that it did not fail to declare income, but rather made an accounting error.

The official also stated that all businesses of the affiliate, in both the profit-making and nonprofit sectors, are public interests, noting the parcel gift business is a public project linking nearly 3,000 regional manufacturers and consumers.