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OSAKA (Kyodo) Aiful Corp. has paid about 260 million yen in back taxes for its failure to report about 850 million yen in income for the year ended March 2005, sources close to the case said Friday.

An investigation by the Osaka Regional Taxation Bureau has revealed that Aiful overstated its loan losses for the year, the sources said.

The Kyoto-based moneylender said that although its and the tax authority’s opinions regarding the matter differed, it has paid the full sum of back taxes as demanded by the bureau.

The company is alleged to have booked loan losses although it was actually collecting loan money from the borrowers, the sources said.

Beset by numerous allegations of illegal lending and aggressive money collection practices, Aiful was forced in May to suspend part of its operations at all of its nearly 1,900 outlets nationwide in accordance with an order from the Financial Services Agency.

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