Tax Audit Defense

First check the notice for the taxes, periods, grounds, and start date of the audit. Advance notice is required in principle (Framework Act on National Taxes art. 81-7), and postponement can be requested for legitimate business reasons. Then review your filings, books, and supporting documents for the covered periods to identify likely issues. Preparation before the audit begins shapes the entire process, so consult a professional as soon as the notice arrives.

Yes. Taxpayers have the right to assistance from an attorney, CPA, or tax accountant during an audit, including attendance and statements of opinion (Framework Act on National Taxes art. 81-5). Counsel monitors whether questions and document requests stay within scope and ensures written records match what was actually said — critical where the audit may convert into a criminal tax investigation. Discuss attendance and preparation once a schedule is set.

Within 30 days of receiving the notice (Framework Act on National Taxes art. 81-15). Pre-assessment review challenges the proposed assessment before the tax bill is issued; if accepted, the matter can end without formal appeals or litigation. The window is short, so organize the issues and evidence immediately — after 30 days, only post-assessment remedies remain. Confirm the receipt date first and decide promptly with counsel.

Yes. Transfers into a family member’s account are often presumed to be gifts, and it falls on the taxpayer to show otherwise — living expenses, a loan, or entrusted funds management (see Inheritance Tax and Gift Tax Act art. 45). A loan claim needs more than a written note: actual interest payments and repayment flows must back it up. Substantiating after an audit or source-of-funds inquiry begins is much harder, so document large transfers in advance, and if questions have already been raised, organize your evidence with counsel first.

Tax evasion is a criminal offense. Evading tax through fraud or other improper means carries imprisonment or fines (Punishment of Tax Offenses Act art. 3), and where annual evaded tax exceeds statutory thresholds (KRW 0.5 or 1 billion), the Aggravated Punishment Act applies with substantially heavier penalties. The typical path runs from a tax audit converting into a criminal tax investigation, then referral and prosecution. The core disputes are whether "improper means" existed and how the evaded amount is computed — manage statements and document production with counsel from the earliest signs of conversion.

In principle an audit must stay within the taxes and periods stated in the advance notice; the scope may be expanded only on statutory grounds, such as specific evidence of evasion spanning other periods, with written notice of the reason and new scope (Framework Act on National Taxes art. 81-9). Document requests exceeding the scope are not uncommon, and whether to comply affects how the issues expand later — seek advice at that point, as it also shapes any subsequent appeal.

Yes. A taxpayer who received advance notice may request postponement before the audit begins on grounds such as fire or other disaster, illness, or extended travel (Framework Act on National Taxes art. 81-7). The grounds must be substantiated and approval rests with the tax office, so requests aimed merely at buying time rarely succeed. Regardless, start reviewing books and records for the covered periods as soon as the notice arrives.

Re-auditing the same tax items and periods is prohibited in principle (Framework Act on National Taxes art. 81-4), allowed only on statutory exceptions such as clear new evidence of evasion. Courts treat an assessment based on an unlawful duplicate audit as grounds for cancellation itself. Check which exception the notice invokes; if unclear, object during the audit and preserve the issue for appeal. Records of the earlier audit speed up that assessment.

Where the funds used to acquire real estate or shares are not explained by reported income, the difference is presumed to be a gift and you are asked to substantiate the source (Inheritance Tax and Gift Tax Act art. 45). Prepare a chronological reconstruction of the money flow — income, withdrawals, loans, lease deposits, proceeds of prior asset sales — linked account by account. Partial substantiation can leave the remainder taxed as a gift, so settle the scope and strategy before submitting a response.

A regular audit is an administrative process to correct tax; a criminal tax investigation examines suspected offenses such as evasion and carries criminal-procedure features (Procedure for the Punishment of Tax Offenses Act) — court-warrant searches become possible, and the outcome can lead to a notified disposition or referral to prosecutors. Statements recorded in confirmations and Q&A documents during a regular audit frequently become evidence in the criminal track, so manage every statement with counsel from the first signs of conversion.