Securing a Suspended Sentence Without a Fine in a Case of Receiving False Tax Invoices and Violation of the Punishment of Tax Offenses Act

The client is a business operator engaged in the service industry. In connection with tax invoices received in the course of transactions, it became subject to an investigation by the tax authorities and, as a result, was criminally prosecuted on charges of receiving false tax invoices and the resulting violation of the Punishment of Tax Offenses Act. The supply value of the tax invoices at issue and the resulting amount of evaded tax were substantial, and as the related transactions were confirmed to have been repeated several times, this was a matter in which the possibility of criminal punishment had materialized beyond a mere tax error. In particular, the prosecutor, in the course of trial, sought a suspended sentence of imprisonment together with a heavy fine, creating a dangerous situation in which, if a guilty verdict were rendered, both criminal punishment and financial burden could arise simultaneously. The client argued that it had no intent to deliberately evade taxes, but this was a serious case in which, absent sufficient explanation, it would be difficult to avoid an actual prison term or heavy economic sanction.

The core issues in this case were, first, whether the act of receiving the tax invoices at issue could be evaluated as a criminal act based on an active and definitive intent to evade taxes; second, whether the client had obtained any actual economic benefit through the transactions in question; and third, even if the criminal facts were recognized, to what extent the type and scope of the sentence could be limited.

Insight Law Firm first comprehensively re-examined the investigation records, transaction details, and fund flows, and structurally organized the point that the client had actually paid the amount equivalent to value-added tax to its suppliers in the course of the transactions at issue, and that, as a result, there was no significant actual tax avoidance or improper economic gain. This was a key strategy to highlight the point that the intent of tax evasion cannot be concluded merely from the formal problem of the tax invoices.

In addition, by closely analyzing the circumstances in which the transactions took place and the internal management system, we emphasized that the matter stemmed from inadequacies in the transaction structure and management and operation, rather than being an organized act of tax evasion or a premeditated crime. In particular, we comprehensively organized factors favorable to sentencing-such as the fact that the related corporation had separately received a disposition of suspension of indictment, that the client's representative was a first-time offender with no record of criminal punishment, and the circumstances in which the client recognized the tax problem after the offense and cooperated in remedying it-and actively argued them. Furthermore, Insight Law Firm challenged the very appropriateness of the fine sought by the prosecutor, developing its argument centered on the point that imposing even a fine, in a matter where the actual economic gain was already insignificant, was excessive.

Through this, we emphasized that the essence of criminal liability lies in warning and the prevention of recurrence rather than in sanction, and presented persuasive logic so that the court could carefully choose the type of sentence.

As a result, the court sentenced the client's representative to imprisonment but suspended its execution and imposed a community service order, while rendering a judgment that did not impose the fine the prosecutor had sought. This was not merely an avoidance of an actual prison term; by also excluding the economic sanction, it was a result that minimized the burden on the client's business operations and financial structure. Taking this judgment as an opportunity, the client comprehensively overhauled its tax and compliance systems, establishing a substantial turning point for preventing the recurrence of the same legal risk. This case demonstrates that a matter perceived as a tax problem can expand into a criminal case, while at the same time showing that, by precisely analyzing the transaction structure and the existence of intent from the early stage and responding strategically, even the scope and content of the sentence can be substantially adjusted-making it a meaningful precedent.

"Your Legal Team" supports companies in sustaining stable management by going beyond reactive response to tax and criminal risks that may arise in the course of corporate activities, and providing advice centered on structural cause analysis and prevention.