On December 19, 2025, the official official account of Jiangsu Taxation Bureau announced a tax related illegal case of MCN. Some readers wondered why the tax related illegal case would be transferred to the public security organ? While analyzing this case, this article will also explain to readers the relevant legal provisions on tax evasion and tax evasion crimes, in order to be beneficial to everyone.

1、 Case report

The Second Inspection Bureau of Wuxi Taxation Bureau of the State Administration of Taxation has lawfully investigated and dealt with tax related illegal cases of Wuxi Muhan Media Co., Ltd. (MCN institution).

After investigation, from March 2023 to January 2024, Wuxi Muhan Media Co., Ltd. falsely offset input tax by having others issue invoices that do not match its actual business situation, overstated costs, and underpaid value-added tax, urban maintenance and construction tax, corporate income tax, and other taxes by 5.1596 million yuan. In October 2025, the Second Inspection Bureau of Wuxi Taxation Bureau of the State Administration of Taxation, in accordance with relevant laws and regulations such as the Enterprise Income Tax Law of the People's Republic of China, the Tax Collection and Administration Law of the People's Republic of China, and the Administrative Penalty Law of the People's Republic of China, lawfully pursued the payment of taxes and fees, imposed late fees, and imposed fines totaling 10.9297 million yuan. At present, due to the taxpayer's failure to pay taxes within the prescribed time limit, the case and related clues have been transferred to the public security organs for further investigation in accordance with the law.

The relevant person in charge of the Second Inspection Bureau of Wuxi Municipal Taxation Bureau of the State Administration of Taxation said that MCN institutions, as Internet media, should operate in compliance with regulations and pay taxes in good faith, but through malicious and false invoices to offset taxes, they achieved the purpose of tax evasion and damaged the market environment of fair competition. The tax department will continue to work together with public security, market supervision, the People's Bank of China and other departments to crack down on various tax related illegal activities, strictly prevent the phenomenon of "bad money driving out good money" in emerging industries, and make every effort to create a fair and legal tax business environment.

This part reproduces the "Jiangsu Taxation" official account in full.

2、 Legal analysis

Based on the second paragraph of the previous report and the explanation provided by the relevant person in charge of Wuxi Second Inspection, we can confirm that the MCN institution has been classified as "tax evasion" by the tax authorities, and therefore needs to pay taxes, late fees, and fines.

According to Article 201 of the Criminal Law and Articles 1-4 of the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases Involving Endangering Tax Collection and Management (Fa Shi [2024] No. 4), if a taxpayer is classified as tax evader, if the taxpayer fully pays the tax, late fees, or fines within the prescribed period or the approved deferred or installment payment period after the tax authority issues a notice of recovery (usually a "reminder letter" or a "notice of order to pay within a specified time limit"), they will not be held criminally responsible. Otherwise, there is a risk of being held criminally responsible for tax evasion.

In the tax evasion case of Wuxi Muhan Media Co., Ltd. (MCN institution), we can see that the tax authorities made a decision on handling and punishment in October, and transferred it to the public security organs in December, which is a relatively close time. This indicates that the tax authorities have served the execution documents, but the enterprise has not paid the taxes, late fees, and fines within the corresponding period, and has not reached an agreement with the tax authorities to pay in installments, nor has it carried out relief procedures such as reconsideration and litigation after the documents have been served. Therefore, the case has been transferred to the public security organs, and the relevant responsible persons will face the risk of being held criminally responsible for the crime of tax evasion.

3、 How taxpayers can effectively prevent criminal risks from the MCN agency tax evasion case

（1） After receiving the document, enter the channels of review, litigation and other remedies

1. If the classification of "tax evasion" is cancelled, tax evasion penalties will be exempted and criminal risks will be eliminated

When taxpayers are classified as tax evaders, they will receive a "Tax Processing Decision" and a "Tax Administrative Penalty Decision" from the tax authorities. According to Article 88 (1) of the Tax Collection and Administration Law and Article 33 (2) of the Tax Administrative Review Rules, taxpayers only have the right to initiate a review after paying their taxes, late fees, or providing corresponding tax guarantees, and being confirmed by the tax authorities, known as the "pre review tax payment procedure". Many taxpayers give up relief channels due to their inability to pay taxes, late fees, or provide tax guarantees.

However, in reality, taxpayers can directly initiate administrative reconsideration or litigation against the Tax Administrative Penalty Decision in accordance with Article 88 (2) of the Tax Collection and Administration Law and Article 7 of the Administrative Penalty Law, without the need to pay the fine in advance. As the basis for tax administrative penalties comes from the classification of "tax evasion" in the "Tax Processing Decision", the review and judicial authorities will also review the corresponding substantive issues after accepting the case. If the characterization of "tax evasion" is confirmed to "not constitute" in legal remedies, taxpayers will be directly exempted from tax evasion penalties and the potential risks of tax evasion will be eliminated.

2. During the reconsideration and litigation period, the tax authorities will not transfer the case to the public security organs

According to Article 88, Paragraph 3 of the Tax Collection and Administration Law, "If a party fails to apply for administrative reconsideration, file a lawsuit with the people's court, or comply with the penalty decision of the tax authority within the prescribed time limit, the tax authority that made the penalty decision may take compulsory enforcement measures as stipulated in Article 40 of this Law, or apply to the people's court for compulsory enforcement." Therefore, even if reconsideration or litigation does not affect the execution of effective tax documents, in view of the above provisions, during the taxpayer's reconsideration or litigation period, the tax authority generally will not serve enforcement documents such as "reminder letter", "notice of deadline for payment of obligations", "compulsory enforcement decision letter" to the taxpayer. Furthermore, according to Article 3, Paragraph 2 of Interpretation [2024] No. 4, "If a taxpayer has engaged in tax evasion and the tax authority has not issued a notice of recovery in accordance with the law, criminal responsibility shall not be pursued." Therefore, during the review and litigation period of the "Tax Processing Decision" and the "Tax Administrative Penalty Decision" (after all, there is also a possibility of revocation during the review and litigation period), the tax authority generally does not enforce them, and there is no risk of the case being transferred to the public security organs.

（2） Actively pay taxes, late fees, fines, or reach an agreement with tax authorities to pay in installments

According to Article 3, Paragraph 1 of the Interpretation [2024] No. 4, "If a taxpayer engages in the act of evading tax payment as stipulated in Article 201, Paragraph 1 of the Criminal Law, and before filing a case with the public security organ, after receiving a notice of recovery issued by the tax organ in accordance with the law, fully pays the payable tax within the prescribed time limit or the approved deferred or installment payment period, pays the late payment penalty, and fully complies with the administrative penalty decision made by the tax organ, no criminal responsibility shall be pursued. However, except for those who have been criminally punished for evading tax payment within five years or have been given two or more administrative penalties by the tax organ

According to this regulation, after the delivery of the "Tax Processing Decision" and "Administrative Penalty Decision", if the taxpayer does not enter the reconsideration or litigation procedures, or if the two documents are not revoked during the reconsideration or litigation procedures, the taxpayer should actively cooperate with the tax authorities to complete the payment of taxes, late fees, and fines. If there are difficulties in payment, the taxpayer can apply to the tax authorities to postpone or reach an agreement with the tax authorities to pay in installments (to be paid within the postponement period and installment period), in order to avoid being transferred to the public security organs.

summary

Taxpayers should increase their compliance with tax laws and not harbor a mentality of taking chances. If the tax authorities intend to classify the case as "tax evasion", they will first serve a "Penalty Notice" before making the "Administrative Penalty Decision", informing taxpayers of their right to make statements and defend themselves, as well as their right to a hearing. Taxpayers should attach great importance to the legal protection of their rights and interests, fully utilize the opportunities for statements, defenses, and hearings, and provide evidence and explanations on the substantive issues of the case. While cooperating with the tax authorities, ensure that the case is handled fairly and reasonably.

If the taxpayer has no objection to the investigation and punishment by the tax authority, or if the tax documents are upheld after reconsideration and litigation, the taxpayer should actively communicate with the tax authority, complete the corresponding payment within the specified time, and avoid national tax losses.