It has been revealed that SM Entertainment has recently undergone an irregular tax investigation.

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On February 4th, the Bureau of Investigation at the Seoul Regional Tax Office confirmed that they conducted an irregular tax investigation against SM Entertainment and the label’s founder, Lee Soo Man.

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SM Entertainment’s founder, Lee Soo Man | Hankyung

This particular tax audit is irregular due to the fact that it only occurs when unusual activity is detected. In this specific case, an investigation was launched against SM Entertainment and Lee Soo Man due to suspicion of tax evasion. According to tax authorities, there has been an outflow of corporate funds that have been transacted between Lee Soo Man and SM Entertainment. On the same day, however, SM Entertainment released a statement saying,

For six years since September of last year, we have been receiving regular tax audits. We have been working diligently and will be awaiting the results.

— SM Entertainment representative

SM Entertainment is home to some of K-Pop’s biggest idol groups, such as NCTRed VelvetEXO and more. They have been well respected within the industry for decades due to their incredible producing abilities. They quickly became one of South Korea’s “Big 3” labels, which includes JYP EntertainmentYG Entertainment and SM Entertainment.

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SM Entertainment artist, Red Velvet | SM Entertainment

While this entertainment powerhouse is known for their impact in the K-Pop world, this is not their first run-in with tax evasion allegations. Previously in 2014, Lee Soo Man found himself in hot water after he was accused of evading taxes. According to news reports, the SM founder set up paper companies in Hong Kong using artists’ names as a front in order to avoid reporting any overseas profits. These accusations launched an official investigation into SM Entertainment by the Seoul tax authorities. Lee Soo Man was ordered to pay approximately $10 million dollars in corporate taxes after their investigation concluded.

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| E Today

Lee Soo Man is currently the largest shareholder of the company, owning 18.73% of SM Entertainment as of September 2020.