I am worried about a tax audit due to recent sales increase. Could this be considered tax evasion?

Hello. I am a tax specialist attorney at Daeryun Law Firm (LLC).

Tax evasion suspicion can become an issue when taxes are reduced or refunds are received through fraud or other improper methods.

Representative types include omission of part of sales (revenue omission), use of borrowed-name accounts or identity disguise, treatment of fictitious expenses by creating false transactions, and asset concealment by hiding property or financial assets.

In particular, transactions where form and substance differ, such as family salary or cash sales, are areas easily suspected of tax evasion in National Tax Service investigations.

The level of punishment for tax evasion suspicion is clearly distinguished according to the scale of evaded tax under Article 3 of the 「Punishment of Tax Offenses Act」.

If taxes are not paid or refunds and deductions are received through fraud or other improper acts, imprisonment of up to 2 years or a fine equivalent to up to twice the amount of evaded tax (or refunded/deducted tax) may be imposed.

In particular, if the evaded tax or improperly refunded and deducted amount is 500 million won or more, the punishment is aggravated and imprisonment of up to 3 years or a fine equivalent to up to three times the amount may be imposed.

However, not all errors immediately lead to punishment, and intentionality, repetition, and scale are factors considered.

Reviewing transaction structures and reporting details before the tax audit stage and, if necessary, preparing amended returns or response strategies through consultation with a tax specialist attorney can help prevent escalation to tax evasion suspicion.