2. The costs of lawsuit are assessed against the plaintiffs.

The following facts may be acknowledged in full view of the contents of Gap evidence 1 and 3-1, 2, Gap evidence 2, Eul evidence 1 and 2-1 to 4, and Eul evidence 3, respectively, and the purport of the whole pleadings:

A. Plaintiff 2 is the wife of the deceased Nonparty (hereinafter “the deceased”), and the remaining Plaintiffs are the offspring of the deceased.

B. As the deceased died on January 24, 2004, on June 17, 2004, the Plaintiffs reported the details of inheritance tax to the Defendant on June 17, 2004 as stated in the attached Table (1) and voluntarily paid KRW 1,904,382,835 of the inheritance tax amount in 2004.

C. As a result of the examination of the details of the above report of inheritance, the Defendant confirmed that: (a) the Plaintiffs’ filing of the report of inheritance as above falls under “where the purpose of use is objectively unclear” as stipulated in Article 15 of the Inheritance Tax and Gift Tax Act (hereinafter “the Act”); (b) the amount of KRW 2,914,548,600 included in the taxable value of inheritance tax; and (c) the amount of KRW 1,758,609,966 included in the return of spouse deduction exceeds the statutory maximum amount of KRW 1,469,245,206,000,000 included in the taxable value of inheritance; and (b) the amount of KRW 1,758,60,96

D. Accordingly, on March 11, 2005, the Defendant excluded the reporting tax credit for KRW 2,914,548,00 of the above donated property and for KRW 289,364,760 of the excess reported amount of spouse deduction as indicated in the attached Table No. 1 of the attached Table No. 2005, and notified the Plaintiffs of the amount of the reported tax credit at KRW 149,676,129, which is less than the initial reported amount of KRW 211,598,092,00, and the amount of the reported tax credit at KRW 61,921,963, which is less than the initial reported amount of KRW 1,802,214,562, the inheritance tax for the Plaintiffs was determined and notified as KRW 1,904,382,835, which is the difference between the voluntary paid tax amount and KRW 102,168,273, which is the aggregate of the donated property tax amount.

E. The plaintiffs raised an objection on April 1, 2005, but the director of Busan Regional Tax Office rendered a decision to dismiss the plaintiffs' objection on April 29, 2005.

F. On July 4, 2006, the National Tax Tribunal re-requested a national tax trial. On the ground that 2,914,548,000 won of the above donated property cannot be included in the subject of the reported tax credit, or 289,364,760 won of the above spouse’s excess reported tax credit should be included in the subject amount of the reported tax credit, the inheritance tax imposition disposition in 2004 of the above spouse’s excess reported tax credit in 289,364,760 won was corrected, and the remaining claims were dismissed.

G. Accordingly, on July 18, 2006, the Defendant: (a) determined the amount of tax credit for reporting as stated in the attached Table (1) as KRW 135,207,891, which is less than KRW 76,390,201, which is less than KRW 211,598,092, as stated in the initial report; and (b) accordingly, determined and notified the amount of tax credit for reporting to the Plaintiffs as KRW 1,787,746,324 in total (hereinafter the instant disposition).

2. Whether the instant disposition is lawful

A. Summary of the plaintiffs' assertion

The purpose of Article 69 (1) of the Act is to induce a person liable to pay inheritance tax to report the amount of inheritance tax in good faith, so long as the person liable to pay inheritance tax voluntarily reports the tax base and calculated tax amount by the filing deadline, even if he erred in factual and legal assessment of the elements constituting the tax base in filing inheritance tax return, the tax base and calculated tax amount originally reported shall be deemed to be the calculation basis of the reported tax amount. In addition, in this case, the Supreme Court has determined to the same purport, and in particular, in that both the disposal property before the commencement of inheritance under Article 15 of the Act and the biological donation property under Article 13 of the Act are included in the tax base of inheritance, the amount of tax credit on the plaintiffs shall be 2,115,980,927 won equivalent to 10/100 of the tax base initially reported by the plaintiffs, and according to this, the portion exceeding 2,151,598,092 won shall be deemed to be unlawful.

B. Relevant statutes

Attached Form (2) shall be as listed in attached Table (2).

C. Determination

Inheritance tax is not a method of tax return by which a taxpayer voluntarily reports the tax base and amount of tax to determine a tax liability, but rather a method of imposing tax liability by the tax authority to determine a tax liability (Article 76(1) of the Act) when the tax authority determines the tax base and amount of tax (Article 76(1) of the Act). However, the taxpayer bears the duty to report the taxable value and the amount of tax within six months from the commencement date of inheritance (Article 67 of the Act). In this case, the tax authority’s duty to report the tax base is not effective to determine the tax liability, and is merely a form of duty to cooperate of the taxpayer

In light of the nature of the return on the tax base of inheritance tax and the nature of the return on the tax amount, it is reasonable to view that the tax credit on the inheritance tax is an institution to induce the taxpayer to faithfully report within the statutory reporting deadline, and to grant tax credit to the taxpayer who cooperates with the tax authority by legitimately performing the duty to report, and as for the taxpayer who neglects the duty to report, additional tax is imposed [see Article 47-2 and 3 of the Framework Act on National Taxes and Article 78(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8139 of Dec. 30, 2006)]. The tax base and the amount of tax that serve as the basis for the tax credit on the return shall be limited to those consistent with the basic facts and not hindering the application of law (the Plaintiff asserted that the disposition in this case is unlawful on August 24, 2006, but the judgment in this case cannot be invoked as different from this case).

Meanwhile, the legislative intent of Article 13 of the Act regarding inclusion of the value of the property donated before and after the commencement of inheritance is to be prepared to reduce the inheritance tax which is imposed ex post by donation of the property before the predecessor who predicted the imminent death. However, the legislative intent of Article 15 of the Act on the inclusion of the value of the property disposed before the commencement of inheritance is to recognize the conversion of the real burden of proof to prevent unfair mitigation of inheritance tax by donation or inheritance of the property to the heir in a state where it is difficult to capture the taxation data on the disposal price of the property before the commencement of inheritance, and both are different from the purpose of the system and requirements for application. In this case, even if the above plaintiffs are aware of the donation of KRW 2,914,548,00 of the value of the property donated before the commencement of inheritance, to reduce the relevant tax amount, the plaintiffs intentionally reported that the purpose of use under Article 15 of the Act falls under the "where the objective purpose is not objectively clear." Thus, it is obviously contrary to the purport of the tax return system.

3. Conclusion

Therefore, the plaintiffs' claims are dismissed as it is without merit. It is so decided as per Disposition.

Judges Go Jong-ju (Presiding Judge) Kim Jong-sung's teaching resources