본 연구는 2005년부터 2013년까지 유가증권 및 코스닥 시장에 상장된 비금융기업가운데 세무조사 이후 조세소송을 진행 중인 기업들을 대상으로 조세소송과 기업의 조세회피 성향과의 관계를 살펴보았다. 조세소송을 진행하는 기업과 그렇지 않은 기업을 비교하여 조세회피의 정도를 파악하고, 조세전략의 일관성이 조세소송과 조세회피 수준에 영향을 미치는지 여부를 재무보고이익과 세무보고이익의 차이(BTD）의 변동성을 통해 이해하고자 한다. 본 논문에서는 최근 증가세를 나타내고 있는 조세소송과 관련된 기업들의 특성을 간접적으로나마 이해하는데 그 의의가 있다. 주요결과는 다음과 같다. 첫째, 조세소송기업들의 조세회피수준은 그렇지 않은 기업에 비해유의한 차이가 없거나 다소 낮은 것으로 나타났다. 이러한 결과는 전체표본을 대상으로 한분석과 총자산 규모로 대응한 표본을 활용한 분석에서도 유사하게 제시되었다. 둘째, 조세소송기업들을 대상으로 조세전략의 일관성이 조세회피수준에 미치는 영향을 살펴본 결과, 조세소송기업 중 조세전략의 일관성이 있는 기업은 조세회피수준이 다소 낮은 것으로 나타났다. 이는, 과세당국의 우려와는 달리 조세소송이 조세회피의 한 수단으로 활용되는 경향은 낮을 수 있으나, 조세전략의 일관성에 따라 소송기업의 조세소송에 내포한 의도는 다를수 있음을 나타낸다.

The purpose of this paper is to evaluate the association between tax litigation and tax avoidance. Using firms that filed for any form of tax lawsuit as a result of tax investigation, we have tried to study if these firms have higher probability of engaging in tax avoidance activities compared to those that have not. Tax authorities‘ objective is to not only improve service for the tax paying public by facilitating voluntary participation in the tax system but also discourage and deter non-compliance activity by tax payers. However, after being audited, if the tax payers are dissatisfied with the outcome of the tax investigation, they can appeal their case to the tax authorities and try to avoid further taxation before going to the court. Recently, local press reported that the tax authorities are preparing to strengthen the defense in court by setting up a special team for future tax litigations as during the past four years, the cumulative amount that the tax authorities have lost in court exceeds 2 trillion won. Especially the loss for expensive lawsuit, lawsuit over 5 billion won, is around 1 trillion won. Therefore, by establishing and administrating an effective system of sanction, the tax offices aim to protect the government’s (public’s) wealth and preserve the national tax system. As for corporates, tax lawsuit can be a method of aggressive tax strategy. As a representative of shareholders, managers of a firm should try to increase shareholders’ wealth. In the process, the manager may engage in aggressive tax strategy that takes into consideration not only the explicit but also the implicit tax and nontax cost. Therefore, if the tax authority charges penalty, to avoid additional outflow of cash from the corporate to the government, the manager may aggressively seek to lower the tax by filing a lawsuit. However, tax lawsuit may not have any intention of tax avoiding strategy, but rather defending the firm itself by claiming a different interpretation of the law. This serves as a motivation for our study, as we believe that tax lawsuits directly impacts both the government and the corporate’s wealth. Therefore, understanding the relationship between the tax litigation and the tax avoidance (aggressive tax strategy) is important, as it serves as an indirect method of understanding why firms file for tax lawsuit. The paper will test whether for firms that have filed for tax lawsuit have higher tendency to participate in tax avoidance. Also, we will also investigate whether the consistency in tax strategy has any influence on the relationship between tax litigation and tax avoidance. Book-tax-difference (BTD) will be used as a proxy for change in tax strategy for our analysis. As tax litigation is infrequently a public information, there lies some limitation in gathering data. Therefore, tax litigation research is relatively seldom conducted from an accounting perspective. Nonetheless, the research on tax investigation and (general) lawsuit indicates that when litigation starts (disclosed), the market reacts negatively. However, if there is any positive news that can levy any uncertainty of the lawsuit, then the market is expected to react positively. Addition to the timetable of the litigation being difficult to estimate, the cost associated with the lawsuit (lawyer fee, auditor fee etc) is significantly high, and potential damage to the reputation that the lawsuit may bring is troublesome. So the fact that the manager decided to pursuit the lawsuit implies other benefit from the lawsuit will offsets the costs mentioned. (Scholes et al. 2015; Shackelford and Shelvin 2001) Prior literature documents that since recently tax department is being regarded as a profit center (rather then cost center), tax strategies are becoming more aggressive yet important. (Crocker and Slemrod 2005; Robinson et al. 2010) Graham and Tucker (2006) reports that for the 44 companies that have presence in the tax shelter, these firms displayed an improvement in the tax savings and leverage ratio through aggressive tax planning. Despite the positives of the effective tax strategy, the negatives also coexists. Mills and Sansing (2000) show that aggressive tax strategy can lead to increase in tax investigation cost. Frank et al. (2009) claim that firms that report lower tax earnings show lower quality financial report. Therefore firms report different result based on the tax strategy. Using listed non-financial companies in Korea from 2005 to 2013, we have hand collected companies that disclosed of engaging in any form of tax litigation and used a propensity score matching method to run a comparison test. The result of the paper indicates that companies that engage in tax litigation show that they have lower tax avoidance rate compared to similar companies that are not exposed to any litigation risk. Further as for companies that filed for tax lawsuit and display consistent tax strategy, these firms display lower tax avoidance level. Whereas, companies that have inconsistent tax policy (with litigation exposure) show higher tax avoidance level. The contribution of the paper is that not much empirical study has been done in analyzing the behavior of firms that engage in tax litigation. Especially, as tax strategy is becoming an important factor in management decision understanding the linkage between the tax litigation exposed company and tax avoidance seems important. The remainder of the literature is composed as follows. Section 2 explains the background of the research. Section 3 develops the hypotheses and provides information on the sample, data and shows the model used for the test. Section 4 presents the results and Section 5 concludes.