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Newsletter | February 2016, Issue 1
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Tax
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Supreme Court Renders Decision on the Scope of Duplicate Audits
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Holding & Reasoning
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In September 2015, in a case where Kim & Chang acted as legal counsel for the plaintiff taxpayer, the Supreme Court held that a subsequent tax audit – specifically focused on a share transfer that took place in a fiscal year that had previously been subject to a full-scope tax audit – was illegal. The Court reasoned that this constituted a duplicate audit of the same type of tax (here, corporate income tax) for the same tax year41 .
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Implications
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This Supreme Court decision implies that a subsequent tax audit will be viewed as an illegal duplicate audit, whether it entails a full-scope audit or a limited scope audit on the same tax years (provided that the same type of tax is reviewed twice).
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While this Supreme Court ruling is generally favorable to taxpayers, it may prompt the tax authorities to thoroughly screen all items during tax audits.
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Although the share transfer at issue had not been specifically reviewed during the previous audit.
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