Violation of the Punishment of Tax Evaders Act | Case Securing a Fine on a Charge of Violating the Act

The tax invoice system is a system established under the Value-Added Tax Act so that, when goods or services are supplied, a business operator transparently reports the transaction details.

Accordingly, issuing or receiving a tax invoice for a transaction in which there is no actual supply is plainly unlawful.

What is a 🔗false tax invoice?

A false tax invoice means a tax invoice issued as if a transaction had taken place when in fact no transaction occurred, or a tax invoice issued with an amount recorded differently from the actual amount.

The client was a layperson with no expertise in accounting at all, and issued the tax invoices relying solely on what the personnel of company B said.

In fact, the client was reassured by statements such as “just issue the invoices and we will take care of the rest” and “we are responsible for the taxes,” and there were also circumstances showing that company B had, without any actual transaction, contrived a scheme of transferring the payment and then refunding it.

Through this, the tax attorney strongly argued that A had not intended to evade taxes intentionally.

In the early stage of the tax investigation, the client came to make false statements after believing the words of the representative of Company B, who induced him by saying, “If you take all the blame, I will pay the taxes on your behalf.”

Afterward, when contact with Company B was lost, he belatedly realized that he had been used, and in the course of the investigation he stated all the facts honestly.

The tax attorney explained in detail that this change in the course of the statements was not a mere retraction, but resulted from the reality the client faced at the time and from the deception of a third party.

In particular, the attorney emphasized that there was doubt as to the credibility and prudence of the initial statements, and that the client had actively cooperated by setting out the specific facts one by one in his later statements, thereby emphasizing that the client had participated faithfully in the investigation.

The tax attorney argued that the client, due to an unprecedented economic downturn, had reached a point where business operations were nearly suspended, and that the client received a tempting offer from Company B in a desperate situation in which he could not even afford employee wages and rent.

In particular, the attorney explained, with supporting materials, that the client did not obtain a direct tax benefit, that he received only part of a commission in return for issuing the tax invoices, and that there were even circumstances in which he in fact suffered a loss for some portion, and requested leniency.

The tax attorney emphasized that the client had paid part of the value-added tax imposed due to the issuance of false tax invoices and was making efforts toward substantial recovery of the harm.

The attorney also emphasized that the client planned to pay the remaining value-added tax in monthly installments and requested leniency.

Cases related to violation of the Punishment of Tax Evaders Act involve complex legal principles and procedures that are difficult for an ordinary person to readily understand or respond to.

The Punishment of Tax Evaders Act determines whether to impose punishment by comprehensively judging various factors, such as the purpose of issuing the tax invoice, whether an actual tax return was filed, and the status of tax payment.

Accordingly, it is very important to establish an appropriate response strategy from the early stage of the case through the assistance of an attorney well versed in the relevant law.

Daeryun LLC provides case-tailored legal response strategies by forming a task force composed of attorneys with extensive experience in tax and criminal cases such as violations of the Punishment of Tax Evaders Act, together with a tax accountant belonging to the firm.