National Tax Service Review Income 2011-0044 (201.30)

Since the act of title trust of forest land cannot be recognized as fraudulent or other unlawful act, the exclusion period shall be deemed five years.

In order to recognize the title trust of forest land as a "Fraud or other unlawful act", it is recognized that the tax authority concealed the income for the purpose of making it impossible to impose and collect the tax or making it considerably difficult, but the additional exclusion period should be considered as five years on the ground that there is no evidence to recognize it.

2011Guhap32706 Global income and revocation of disposition, etc.

Park XX

Samsung Head of Samsung Tax Office

April 20, 2012

May 4, 2012

1. The Defendant’s imposition of KRW 000 of global income tax in 2003 and KRW 000 of value-added tax in 2003 against the Plaintiff on January 3, 201 shall be revoked, respectively.

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

The decision is as follows (the plaintiff's purport of the claim is as stated in Article 47 (2) of the Framework Act on National Taxes, and the part exceeding KRW 000 in the imposition disposition of global income tax for the year 2003 and exceeding KRW 000 in the imposition disposition of additional tax for the amount of KRW 00 in excess of KRW 00 in each disposition of KRW 00 in excess of KRW 00 in the imposition disposition of KRW 000 in the amount of value-added tax for the second period of 2003 and the part exceeding KRW 000 in the imposition disposition of additional tax for the amount of KRW 00 in each disposition of KRW 00 in the imposition of KRW 20 in each disposition of KRW 00 in each case. However, Article 47 (2) of the Framework Act on National Taxes provides that additional tax shall be the tax item of the principal tax which is a national tax, and the disposition of imposition

1. Details of the disposition;

A. On May 7, 2003, the Defendant: (a) decided and notified each of the following grounds: (b) on May 7, 2007, the Plaintiff sold real estate brokerage to OO (hereinafter “O”) for KRW 000,000,000,000 for selling KRW 65-1 forest land and 160 square meters in Seongbuk-gu, Seongbuk-gu, Sungsung-si, which was jointly owned by EA, KimB, and ParkCC (hereinafter “the instant sales real estate”); and (c) on the ground that the Plaintiff received cash payment of KRW 00,000,000,000,000 global income tax for the second half-year of May 7, 2007; and (d) September 4, 2007, for the global income tax for the year of 203 (hereinafter “the instant first disposition”).

B. Since then, the Defendant was aware of the fact that the Plaintiff received a summary order of KRW 000 on April 15, 2005 due to the following facts constituting the crime, and received 3,55 square meters from forest land among the real estate traded in the instant case as a brokerage commission (hereinafter referred to as “the instant forest”) in addition to the amount stated in the above paragraph A., on the ground that it was additionally issued 3,555 square meters (hereinafter referred to as “the instant forest”). In addition, on January 3, 2011, the Defendant issued an additional decision of correction and notification of KRW 00 of global income tax for 2003 and value-added tax for 2, 2003 (hereinafter referred to as “the second disposition”).

C. The Plaintiff appealed and filed a request for review on April 12, 201, but the Commissioner of the National Tax Service dismissed the request on June 30, 2011.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 6, Eul evidence Nos. 1 through 6, 10, 11, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The instant forest land, which was the leading role in the transaction of the instant real estate, is paid to the Plaintiff the maximum amount of fees for its repair. However, as the Plaintiff asked that the Plaintiff would not be aware of the fact that the instant forest land was received as intermediary fees, the Plaintiff merely stated the instant forest land in the investigative agency as if the Plaintiff received the instant forest land as intermediary fees as requested by the Maximum DoD. Accordingly, the instant forest should be excluded from the Plaintiff’s brokerage fees.

2) The Plaintiff is merely an intermediary of each of the instant sales real estate under the Value-Added Tax Act, and thus is not an entrepreneur operating real estate brokerage business under the said Act, and thus, the instant secondary disposition based on the premise that the Plaintiff is a real estate broker

3) Even if the forest land of this case is the Plaintiff’s brokerage commission, the imposition period of the value-added tax for the second period of 2003 and the global income tax for 2003 was expired on January 25, 2009 and May 31, 2010, which was five years from the day following the day following the respective filing deadline.

B. Defendant’s assertion

1) The Plaintiff was based on the receipt of the instant forest by the investigative agency and the summary order was finalized.

2) The Plaintiff is running real estate sales business, and real estate brokerage business should also be seen as part of the Plaintiff’s incidental business activities.

3) The Plaintiff’s title trust of the instant forest to Park E constitutes “Fraud and other unlawful acts under the Framework Act on National Taxes” and thus, the exclusion period for imposition of the instant secondary disposition is extended to ten years. Thus, the instant secondary disposition is lawful.

(c) Related statutes;

The entry in the attached Form is as specified in the relevant statutes.

D. Determination

1) First, we examine whether the act of the Plaintiff’s title trust to Park E constitutes “Fraud or other unlawful act” under the Framework Act on National Taxes where the Plaintiff’s act of holding title trust to Park E constitutes “Fraud or other unlawful act.”

2) “Fraud and other unlawful acts” under Article 26-2(1)1 of the Framework Act on National Taxes refer to deceptions and other active acts that make it impossible or considerably difficult to impose and collect taxes, as the same meaning as “Fraud and other unlawful acts” under Article 9 of the Punishment of Tax Evaders Act (see, e.g., Supreme Court Decision 99Do5191, Feb. 8, 2000). Therefore, in order for a taxpayer to be recognized as having committed deception and other unlawful acts with intent to evade tax, thereby making it impossible for the tax authority to discover the taxation requirements or causing the tax authority to make a mistake, etc. by means of deception and other active acts with intent to evade tax, and it does not constitute mere failure to file a tax return under tax law or making a false report.

3) In order to recognize the title trust of the forest of this case as the “Fraud or other unlawful act”, the Plaintiff may find out the circumstances that the Plaintiff was deprived of the income for the purpose of making the tax authority impossible or considerably difficult to impose and collect the tax, and there is no evidence to acknowledge this. Rather, as seen earlier, since the forest of this case was located within the land transaction permission zone, the Plaintiff entrusted the title of ownership to Park E, who met the requirements for land transaction permission. As such, in principle, five years of the exclusion period of income tax and value-added tax are prescribed in the Punishment of Tax Evaders Act as a principle, and where the provisional illegality constituting the elements for the exclusion period of income tax and value-added tax is recognized, it is difficult to view the title trust of this case as the case where the Plaintiff evaded national tax due to fraud or other unlawful act.

4) Therefore, the second disposition of this case is unlawful since each of the exclusion periods for imposition was conducted after the lapse of the exclusion period for imposition, and thus, the remainder of the parties’ remaining arguments should be revoked without any need to further examine.

3. Conclusion

If so, the plaintiff's claim shall be accepted for the reasons and it is so decided as per Disposition.