Tax Criminal Defense

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.

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.

The roles differ. Tax accountants excel at filings, bookkeeping, and day-to-day audit handling; attorneys focus on contesting the legality of assessments and managing statements and evidence. Court litigation can only be conducted by an attorney (see Attorney-at-Law Act art. 3), and where a criminal tax investigation or referral is possible, a single statement can carry criminal consequences. In practice, your accountant and attorney work together sharing records and issues — start by confirming what combination your stage of the case requires.

When a counterparty is identified as an invoice mill, buyers typically face input tax denial plus penalties, and sometimes a criminal tax investigation. Courts protect bona fide parties who neither knew of the counterparty’s disguise nor were negligent in not knowing. Contracts, shipping documents, inventory records, and payment flows showing the transaction was real are the core of that proof — secure them the moment you hear of an investigation or receive an inquiry. Early advice determines what can still be proven.

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.

Issuing or receiving tax invoices without an actual supply of goods or services is itself a criminal offense (Punishment of Tax Offenses Act art. 10), even without resulting evasion. With a profit motive and aggregate supply values above the statutory threshold (KRW 3 billion), the Aggravated Punishment Act art. 8-2 applies with far heavier penalties. The central disputes are whether the transactions had substance and the extent of involvement. Consult before submitting materials or making statements.

Payment alone does not extinguish criminal liability. However, complying with a notified disposition (paying the fine-equivalent within the deadline) at the investigation stage can close the case without referral (Procedure for the Punishment of Tax Offenses Act art. 15), and after indictment, payment and amended returns weigh meaningfully in sentencing. When and how much to pay is intertwined with the strategy for contesting the scope of the charge — the wrong sequence can narrow your own defenses, so decide with counsel first.

At the latest, before a conversion to criminal investigation is mentioned or interrogations and written confirmations begin. Q&A records and materials produced during the audit become the skeleton of the later investigation and trial, and early statements are hard to correct afterward. Contesting the computed evasion amount also requires designing the tax appeal and the criminal defense together — the earlier both tracks are viewed jointly, the more options remain. If investigators contact you, consult before scheduling an appearance.