Tax audits generally require advance notice, but sometimes no notice is given. The basis is Article 74-10 of the General Act of National Taxes, titled“Cases Where Advance Notice Is Not Required.”It is.

These are called unannounced audits or audits without advance notice, but there is just one statutory provision.

The entire provision

Article 74-10 reads in full as follows.

Notwithstanding paragraph (1) of the preceding Article, notice under that paragraph is not required where the district director of a tax office or other authority, considering the contents of the returns or past audit results of the taxpayer specified in paragraph (3)(i) of that Article who is the subject of the audit, information about the taxpayer's business, or other information held by the National Tax Agency or related bodies or customs, finds a risk that notice would facilitate illegal or improper acts and make it difficult to ascertain the correct taxable base or tax amount, or otherwise hinder the proper conduct of an audit concerning national taxes.

It is one sentence. It can be divided into the information used for the judgment and the substance of the judgment.

What information is used?

The provision lists three types of information.

1. The taxpayer'sreturnsand their contents

2. Past audit resultsand their contents

3. Information about the taxpayer'sbusiness activitiesand other information that the National Tax Agency or related bodies or customsholds

The third category is broad; effectively, all information held by the authorities can inform the judgment.

What finding allows notice to be omitted?

The provision identifies two risks.

• A risk of facilitating illegal or improper acts and making itdifficultto ascertain the correct taxable base or tax amount
• Other risks ofhinderingto ascertain the correct taxable base or tax amount

the proper conduct of a national tax audit. The first part is a single connected phrase: “facilitate ... and make it difficult.” The second part is a catch-all, so the provision can be read as giving the authorities broad discretion.

Additionally,The statute does not say that cash-based businesses must always be audited without notice.No provision names particular industries. There is only the judgment framework described above.

Only the notice is omitted; the other rules remain

This is the most important practical point.

Article 74-10 removes onlythe notice under Article 74-9(1).All other provisions remain applicable.

In other words, the absence of notice does not expand officials' powers. There is no warrant either.The scope of questioning and inspection authority is exactly the same as in an audit with advance notice.It is.

When the audit ends, the procedures in Article 74-11 are required. If reassessment, determination, or similar action is not considered necessary, written notice to that effect is provided.

Common practical questions

• Must you respond immediately on the day officials arrive unexpectedly? The statute does not say “comply on the spot.” However, refusing to cooperate may raise an Article 128 issue, so the boundary requires careful judgment.
• How should a request to contact your tax adviser first be handled?
• How far should you permit inspection of the current contents of cash registers and safes?

When an unannounced audit occurs, your actions that day can shape what follows. Contact us and we can advise on the response at that point.

Legal basis

• Article 74-2 of the Act on General Rules for National Taxes (Authority to Question and Inspect Concerning Investigation of Income Tax, etc. by the Relevant Official)
• Article 74-6 of the General Act of National Taxes (Officials' Questioning and Inspection Authority for Investigations Concerning Aviation Fuel Tax and Other Taxes)
• Article 74-9 of the Act on General Rules for National Taxes (Prior Notice, etc., of Tax Audits to Taxpayers)
• Article 74-10 of the Act on General Rules for National Taxes (Cases where prior notice is not required)
• Article 74-11 of the Act on General Rules for National Taxes (Procedures upon Completion of Investigation)
• Article 74-13 of the General Act of National Taxes (Carrying Identification and Related Matters)
• Article 128 of the General Act of National Taxes

Article headings are verified using the statutory data from the e-Gov Law Search.