Bureaus put foot down over Honohana taxes

The Tokyo and Nagoya Taxation bureaus have discovered that Honohana-Sanpogyo, a religious cult based in Fuji, Shizuoka Prefecture, failed to report payment of 850 million yen in salary over a five-year period to former leader, Hogen Fukunaga, sources said.

The 55-year-old founder of the foot-reading cult is currently standing trial on fraud charges.

According to the sources, the cult tried to avoid criticism of the self-styled guru's high-rolling income by included his entertainment expenses and rent on the cult's list of expense-account spending.

The taxation bureaus have ordered the cult to pay about 400 million yen in income taxes withheld at source--including penalty taxes--because they determined that the expenses and rent were in fact part of Fukunaga's salary.

Both Fukunaga and his cult were inspected by the bureaus in 1996. The bureaus discovered that the group had paid 2.6 billion yen for its leaders' personal expenses, including 700 million yen in rent for a luxury apartment rented by Fukunaga and his family as well as for a one-month stay at a first-class hotel. They determined that these perks in fact constituted salary and found the cult guilty of failing to report part of the salary paid to Fukunaga.

According to the sources, this time around the bureaus decided that the cult's action constituted intentional tax evasion because it had continued trying to pass off entertainment expenses for Fukunaga and his family as business expenses, despite the bureaus' warnings in 1996.

Since that date, the cult has been under fire by former believers who have filed lawsuits against it demanding a return of fees donated for "religious training."

Because Fukunaga has been criticized in these trials for his high personal expenses, he tried to avoid further such criticism by having the cult use inventive accountancy, the sources said.