A, the head of a small company running an online sales business, was startled to hear that several nearby counterparties had undergone tax audits recently. Although no audit notice had arrived yet, anxiety led A to seek out Pentagon Legal Tax Accounting (hereafter Pentagon).
When attorney Chae Yong-hyeon (4th bar exam, certified tax accountant) reviewed the books, some sales had gone into the head's personal account and were left out of the filing, and it was also confirmed that family members were listed as employees and paid wages. Personal spending was mixed into the corporate card expenditure history. A said, "Everyone in this industry does it this way," but it was a matter that could escalate into a criminal issue.
Attorney Chae said, "Personal use of a corporate card ends if you pay more tax, but omitting sales through a personal account is classified as 'fraudulent conduct' if the amount grows, and the additional tax rate jumps to as high as 40%." The exclusion period during which the tax authority can assess taxes also lengthens from five years to 10 years, and it can lead to a criminal complaint for tax evasion. A filed an amended return for the omitted sales and adjusted the family wages to match actual work.
Pentagon does not wait to respond after a tax audit or litigation starts; it focuses on reviewing the books from the early stages of a business to identify risk factors in advance. Early this year, after Kang Geon (Judicial Research and Training Institute class 43) joined, on the 1st, attorney Jeon Seung-hwan (11th bar exam, certified tax accountant) also came aboard. Including managing partner Chae Yong-hyeon, all three are former National Tax Service officials. They handle everything in one place—from bookkeeping to tax audits, objections to tax dispositions, and administrative litigation.
On the 26th of last month, we met the three attorneys at Pentagon's office in Seocho-dong, Seocho-gu, Seoul. The following is a Q&A.
─ You operate not as a law firm but as "legal tax accounting." What kind of organization is it?
(Attorney Chae) "Pentagon not only litigates but also directly performs tax work such as bookkeeping and filing representation. We monitor company operations and tax issues from the time a client starts a business, and we respond in coordination if litigation or disputes arise later. We also handle registration, debt collection, and intellectual property (IP) matters. We adopted the form of 'legal tax accounting' to provide integrated services by gathering related work in one place around law and tax."
(Attorney Kang) "At large law firms, they have experts by field—corporate advisory, taxes, IP—and form teams as needed. We provide services by following the flow of the client's business. From start-up to bookkeeping, tax audits, appeals, litigation, and succession, we support the necessary tasks continuously from start to finish at each stage."
─ All three attorneys came through the National Tax Service. How did you come together?
(Attorney Chae) "I started as a certified tax accountant and served as a public-interest legal officer at the National Tax Service and the Litigation Bureau of the Seoul Regional Tax Service, then worked at DR & AJU LLC as a partner attorney in taxes and corporate advisory. Attorney Kang Geon was on the side defending assessment logic at the Litigation Bureau of the Seoul Regional Tax Service, then served as a partner attorney at Shin & Kim LLC's tax group. Attorney Jeon Seung-hwan holds both certified tax accountant and attorney qualifications and handled field investigations for four years at Investigation Bureau 2 of the Seoul Regional Tax Service before joining this year. Three people who have built and defended assessment logic have banded together on the taxpayer's side."
─ Is this good for clients as well?
(Attorney Chae) "Typically, once a tax audit begins, clients separately look for audit-response specialists, and if it proceeds to appeals and then litigation, they look for a law firm again. Each time, they have to explain the case to a new representative and hand over materials, which takes more time and expense. Working with us means you don't have to repeat the same explanation to multiple experts."
(Attorney Jeon) "It's also important that the information doesn't break. If you change representatives at each stage—bookkeeping, tax audit, appeal, administrative litigation—the related materials are not properly handed over. As time passes, even the taxpayer may not remember the circumstances then, or the materials may disappear."
─ What difference does it make when attorneys are directly involved in tax work?
(Attorney Kang) "There are cases where a single transaction doesn't end as just a tax issue. Some conduct can become a criminal matter such as breach of duty or a violation of the Punishment of Tax Offenses Act, and it can also lead to labor or patent issues. Each part may look fine in isolation, but risks become apparent when seen as a whole. Examining these risks comprehensively to judge 'whether it's a risk that can be borne or something that must not be done at all' is a strength that appears when attorneys handle tax work together."
─ Do you have a case where this strength showed in practice?
(Attorney Jeon) "There was a case where the timing of issuing what seemed like a minor tax invoice became the issue. In the field, many issue a tax invoice on the day the money comes in, but the legally defined time of supply varies by contract terms. The issuance time differs depending on when the service is completed, whether the payment is split, and whether inspection conditions are attached. If you miss the timing, an additional tax is imposed and the transaction counterparty may not be able to deduct input tax. We review the contract legally while also determining when a tax invoice should be issued. This is what it means to do tax work and legal review at once."
─ Large law firms also have tax specialist teams. What is Pentagon's competitive edge?
(Attorney Chae) "When you work at a large firm, no matter how many experts are on the team, the number of people who actually handle a case is limited. When important issues arise, our partner attorneys get directly involved. Our edge is that people who have provided services at large firms take on work directly at prices accessible to small and midsize companies and small business owners."
─ You're also preparing the 'Dondok' platform. What is the service?
(Attorney Chae) "Dondok is a platform designed so that, when corporate clients who have entrusted bookkeeping to Pentagon log in, information equivalent to corporate due diligence materials is continuously updated. While working on mergers and acquisitions (M&A) at law firms, we thought, 'It would be good if small and midsize companies could routinely manage registration, articles of incorporation, permits and licenses, key contracts, receivables, and labor-related materials at a glance.' It's different from financial management platforms that just show this month's profit and loss or projected taxes."
(Attorney Kang) "The name 'Dondok' carries both the meaning of building a close relationship with clients and helping business owners make good money. We are currently preparing it for corporations that are bookkeeping clients, and plan to formally open it to the public next year."