A payment deposit made in a state without any negligence by the refund obligee is lawful.

In the absence of any agreement on the settlement between co-inheritors or the contents thereof, and the reason and the result thereof, the creditor of the refund could not be known without any negligence. Therefore, the deposit for repayment on this ground is lawful.

Article 51 of the Framework Act on National Taxes

2011 Gohap 5177 Refund

KimAA 2 others

Korea

January 6, 2012

February 3, 2012

1. All of the plaintiffs' claims are dismissed.

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

The defendant shall pay to the plaintiff KimA 471,025,520 won and 443,394,891 won among them, and shall pay to the plaintiff KimB 565,096,339 won and 531,765,130 won among them, as to the defendant KimCC 5,094,665,789 won and 4,807,118,195 won from January 1, 2011 to the delivery of a copy of the complaint of this case, and 0.118% per annum from the next day to the day of full payment.

1. Presumed factual basis

A. The defendant's disposition of imposing inheritance tax and decision of reducing the amount

1) The deceased KimD (hereinafter referred to as "the deceased") died on April 30, 2007. The deceased's heir, who is the spouse, has the EE, the plaintiffs, the KimF, and the KimGGG, who are children, and the deceased's heir who died around 1996, has the Park II, the deceased Kim JJ, KimJ, Kim KK, and Kim LL (hereinafter referred to as "heirs co-inheritors"), who is the spouse of the deceased's deceased Kim H, his children, and his substitute inheritors.

2) On September 1, 2008, the Defendant issued an inheritance tax imposition disposition that orders the co-inheritors to pay inheritance tax of KRW 1,936,908,268, and KRW 268 by September 30, 2008, based on the value of inherited property reported by the co-inheritors after the deceased’s death (hereinafter referred to as “first imposition disposition”). The co-inheritors paid inheritance tax of KRW 1,936,908,908, and additional dues from December 9, 2008 to May 29, 2009, respectively. The inheritance tax (including additional dues) paid by the co-inheritors are as follows.

3) After the first disposition, the Defendant conducted a separate investigation on the deceased’s inherited property. At the time, the real estate located in 1513-1, Gwanak-gu, Seoul Special Metropolitan City (hereinafter “instant real estate”) had completed the registration of ownership transfer in the name of the Plaintiffs, KimG and deceased Kim H. From among the instant real estate, the deceased, who had already been reported as inherited property, was in title trust with the above inheritor except the deceased Kim H’s share. The Defendant deemed that the deceased, among the instant real estate, had already been in title trust with the above inheritor, was the value of the remainder of KRW 5,584,714,01 as the sum of the value of the inherited property. On April 10, 2009, the Defendant issued an order to additionally pay KRW 4,301,245,265,000 to coinheritors until April 30, 2009 (hereinafter “the second disposition of imposition”) and imposed the inheritance tax on KRW 1301,139,124,200.

4) As above, the Defendant agreed on May 21, 2009 regarding the inheritance tax payment on the following (hereinafter “instant agreement”) among co-inheritors, the Plaintiffs, the Gangwon-E, Kim FF, and Kim GG among the defective co-inheritors.

5) Under the instant agreement, the Plaintiffs paid all inheritance tax (including additional dues) upon the second imposition of the said tax in their respective names from May 20, 2009 to June 15, 2009, as seen earlier, according to the instant agreement. The amount of tax paid by the Plaintiffs is as follows.

6) After that, on November 3, 2009, co-inheritors filed a request for a national tax trial with the Tax Tribunal on the grounds that the second imposition disposition is unfair. The Tax Tribunal did not separately determine the shares of the deceased KimH reported as inherited property at the beginning of the pertinent real estate, and decided to accept part of the co-inheritors’s Cheong-gu’s subscription to the remainder of the heir on November 4, 2010 on the ground that the deceased’s share was not a title trust but a donation by the deceased. Accordingly, on November 1, 2010, the Defendant corrected the total inheritance tax amount to be paid by the co-inheritors to KRW 2,637,71,222, and decided the tax amount to be paid by the co-inheritors as follows.

B. Plaintiff KimCC’s claim for reimbursement and substitute payment

1) After paying inheritance tax in its own name, Plaintiff KimCC filed a lawsuit claiming the return of inheritance tax paid to Gangwon (Seoul Central District Court 20107rhap41008). The above court agreed to settle the inheritance tax paid by the Plaintiffs through mutual consultation at the time the lawsuit disputing the second inheritance imposition disposition becomes final and conclusive, but the said court dismissed Plaintiff KimCC’s claim on October 14, 2010 on the ground that the decision of the Tax Tribunal was not yet made, and Plaintiff KimCC appealed appealed.

2) 또한, 원고 김CC은 공동상속인 중 박II, 김JJ, 김RR, 김LL(이하 '박QQ 등'이라 한다)을 상대로 대납한 상속세의 반환을 청구하는 소송(서울중앙지방법원 2009가합86074호)을 제기하여 2009. 10. 27. 승소판결을 받았다.

(c) Deposit of refund money;

1) The Defendant initially issued KRW 6,228,04,401 (i.e., KRW 1,936, KRW 908,268 + KRW 4,291,136,133) calculated by deducting KRW 2,637,273,179 (i.e., KRW 6,228,04,04 - KRW 2,637,771,222) and additional payment on KRW 3,923,56,183 (referred to as “exchange 1,936, KRW 908, KRW 136,268) due to the disposition of imposition of inheritance tax and KRW 1,273,179 (i.e., KRW 2, KRW 700). However, the Defendant submitted to the Defendant’s written consent on the refund of 70,000 among the coinheritors’s claims or submitted the written consent on the refund of 70,007.

2) On January 25, 2011, the Defendant deposited KRW 3,139,715,887, which deducts the amount of provisional attachment and the deposit expenses, from the instant refund, on the ground that co-inheritors’s failure to submit a written consent, and thus, it is impossible to identify the creditor of the refund. On the ground that the amount of the provisional attachment and the interest on the bank deposit amount of KRW 781,923,984, the Defendant deposited KRW 3,921,639,871 (= KRW 3,921,639,871) under the latter part of Article 487 of the Civil Act on the ground that the amount of the deposit provisionally seized and the execution of the deposit under Articles 291 and 248(1) of the Civil Execution Act on the ground that the EE provisionally seized it, the Defendant deposited KRW 781,923,984).

[Reasons for Recognition] Unsatisfy, Gap evidence 1 (including paper numbers), Eul evidence 1 to 7 (including each number), the purport of the whole pleadings

2. The parties' assertion on the cause of the claim;

A. The plaintiffs' assertion

1) According to Article 3(1) and (4) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “former Inheritance Tax and Gift Tax Act”) and Article 2-2(2) of the Enforcement Decree of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Ordinance No. 22579, Dec. 30, 2010; hereinafter “former Enforcement Decree”), an heir is jointly and severally liable for payment to the extent of his/her inherited property, and the said inherited property is limited to total amount of assets acquired by his/her inheritance and the amount of limitation on his/her inheritance tax. Accordingly, the total amount of tax jointly and severally liable for payment by each of the Plaintiffs is limited to the amount calculated by deducting the total amount of total assets acquired by his/her inheritance from the total amount of assets acquired by his

2) The total amount of assets received by the Plaintiffs as a result of their inheritance is KRW 52,64,683, and total amount of total liabilities is KRW 5,538,341, respectively, and the amount calculated by deducting each total amount of liabilities from each of the above total amount of assets is KRW 47,126,342 (= KRW 52,644,683 - 5,538,341). The Plaintiffs are liable to pay annual taxes within the limit of KRW 47,126,342, respectively. The remaining amount calculated by deducting each of the above amounts from the inheritance tax and additional dues paid by the Plaintiffs constitutes inheritance tax that was erroneously paid by the Plaintiffs. Meanwhile, the inheritance tax erroneously paid by the Plaintiffs constitutes Plaintiff Kim Jong-A 443,394,891, KRW 531,765,130, KRW 4,807, KRW 118,95, and the amount calculated by adding Plaintiff 47,5269,257,2965,2569.

3) Meanwhile, although the Defendant deposited the remaining money after deducting the corrected amount from the inheritance tax already paid by the Plaintiffs, the provision on the collection of national tax affairs, which served as the basis of the provision, is merely the guidelines for administrative affairs and thus cannot be a legitimate ground for deposit. Therefore, it constitutes invalid deposit.

4) Therefore, the Defendant is liable to pay each of the above inheritance taxes that were erroneously paid to the Plaintiffs plus additional charges for refund.

B. Defendant’s assertion

1) The co-inheritors, including the plaintiffs, agreed to settle the amount according to the agreement after the plaintiffs paid all inheritance taxes. Since the part exceeding their own share of inheritance taxes paid by the plaintiffs is not paid by the plaintiffs as inheritance taxes but paid by the inheritance taxes of other co-inheritors, the defendant has no obligation to return it.

2) In addition, after the payment of inheritance tax, the plaintiffs filed a lawsuit claiming the amount of reimbursement or substitute payment to other co-inheritors and received some winning decisions or pending lawsuit. If the plaintiffs received the amount of reimbursement from other co-inheritors in accordance with the settlement agreement or the result of lawsuit, if the defendant paid the amount of reimbursement from other co-inheritors, the plaintiffs would be entitled to double refund if the defendant paid the amount of reimbursement to the plaintiffs. In addition, other co-inheritors raise an objection to the payment of refund to the plaintiff by the defendant. This constitutes a case where the defendant's obligee cannot be known without negligence, and therefore it is legitimate that the defendant deposited the amount of refund.

3. Determination

A. Determination as to inheritance tax paid in excess of the Plaintiff KimCC at the time of the first and second disposition

1) In light of the first and second disposition of inheritance tax imposition, the Plaintiffs’ tax amount payable and the tax amount paid by the Plaintiffs are adjusted as follows.

2) In other words, Plaintiff KimA paid only KRW 495,328,120 (= KRW 145,024,69,69,69,772 + KRW 530,570 + KRW 145,024,690 + KRW 350,303,430) out of the total amount of tax payable pursuant to the first and second dispositions (= KRW 258,189,872 + KRW 830,570,570, KRW 570, KRW 470, KRW 470, KRW 461, KRW 2985, KRW 975, KRW 985, KRW 975, KRW 985, KRW 975, KRW 975, KRW 975, KRW 985, KRW 975, KRW 985, KRW 975, KRW 985, KRW 97, KRW 2985, KRW 985, KRW 2985, KRW

3) The Plaintiff KimCC claimed payment of KRW 5,094,665,789, including additional dues on refund, to the Defendant. Of these, whether the above KRW 4,050,169,974, which the Plaintiff KimCC paid in excess on the basis of the first and second dispositions, has been paid as inheritance tax of Plaintiff KimCC.

4) After having paid inheritance tax and additional dues pursuant to the first and second inheritance tax imposition disposition on inherited property in the name of the deceased through the agreement in this case and the proceeds of the sale of inherited property in this case and the real property in this case as collateral, the remaining co-inheritors except for the substitute co-inheritors paid inheritance tax in a reasonable manner in consultation among co-inheritors. Accordingly, the plaintiff KimCC paid inheritance tax in excess of their share of inheritance tax to avoid additional tax burden. The parties to the agreement in this case, including the plaintiffs, have tried to pay inheritance tax in the name of the plaintiff KimCC and settle it later for prompt and convenience of tax payment.

5) Furthermore, Plaintiff KimCC paid the above money and received a favorable judgment by filing a lawsuit claiming compensation against Park Ⅱ, etc., which is a succession heir. This still remains inherited property, and Park II, etc. did not become a party to the instant agreement, it seems that the remaining co-inheritors paid inheritance tax first and then tried to settle it later through consultation or reimbursement with the above Park II, etc.

6) In full view of the content of the instant agreement and the fact that the Plaintiff KimCC decided to dispose of jointly inherited property, and the circumstances after the payment of inheritance tax, the above KRW 4,050,169,974 was paid in its own name by the Plaintiff KimCC, but the Plaintiff KimCC was paid in substitute as inheritance tax with the knowledge that it was not paid as its own inheritance tax but as it was paid by other co-inheritorss, and thus, the Defendant did not have a duty to pay the above amount to Plaintiff KimCC. Accordingly, the Plaintiff KimCC’s assertion on this issue cannot

B. Determination as to Plaintiff KimA and KimB’s claims and the remainder of Plaintiff KimCC

1) The plaintiffs claim that, in accordance with the relevant provisions of the former Inheritance Tax and Gift Tax Act and the former Enforcement Decree, they are liable to jointly and severally pay taxes within the limit of the total amount of assets acquired by their inheritance less the total amount of liabilities. Thus, the defendant is liable to pay to the plaintiff KimA KRW 471,025,520, and KRW 565,096,339, and KRW 565,65,789, and KRW 1,04,495,815, except for the above KRW 4,050,169,974, and KRW 5,094,65,789, and KRW 1,04,495,815, which are deducted from the total amount of assets acquired by the plaintiff's inheritance at the time of the first and second disposition. The defendant asserts that there is no reason for the plaintiff's claim for reimbursement from the inheritance tax collected at the time of the first and second disposition.

2) According to Article 3(1) and (4) of the former Inheritance Tax and Gift Tax Act, an inheritor is obligated to pay inheritance tax according to the ratio calculated as prescribed by Presidential Decree based on the property received or to be received by each inheritor among inherited property, and an inheritor is jointly and severally liable to pay inheritance tax within the scope of property received or to be received by each inheritor. Meanwhile, pursuant to Article 2-2(2) of the former Enforcement Decree, “property received or to be received by each inheritor” refers to the total amount of assets acquired by inheritance minus the total amount of liabilities

3) The Plaintiffs’ total amount of assets acquired by inheritance is KRW 52,64,683, and the total amount of total liabilities is KRW 5,538,341, respectively, is without dispute between the parties. If Article 3(1) and (4) of the former Inheritance Tax and Gift Tax Act and Article 2-2(2) of the former Enforcement Decree of the former Enforcement Decree are interpreted to impose joint and several liability within the limit of the amount calculated by deducting total liabilities from total amount of assets acquired by inheritance, not from total amount of assets acquired by inheritance, but from total amount of assets acquired by inheritance, the Plaintiffs are liable for joint and several liability only within the limit of KRW 47,126,342 (=total amount of total assets 52,64,683 - total amount of total liabilities 5,538,341 won). If the Plaintiffs paid inheritance tax in excess of KRW 47,126,342 as a result of the disposition of inheritance tax, the difference constitutes inheritance tax.

4) However, as inheritance tax based on the first and second dispositions, Plaintiff KimA paid a total of KRW 495,328,120, and Plaintiff KimB paid KRW 591,851,470, respectively. Of the inheritance tax that was paid in excess by Plaintiff KimCC, the part of Plaintiff KimCC’s burden was KRW 808,749,266. According to the above interpretation, Plaintiff Kim AA paid KRW 448,201,778 (= KRW 495,328,120 - KRW 47,126,342), Plaintiff KimB paid KRW 54,725,128 (= KRW 591,851,470 - KRW 47,126,342), Plaintiff KimCC’s payment was erroneous or erroneously paid KRW 761,629,292, KRW 808,726,426,47626).

5) However, in accordance with the purport of the decision of the Tax Tribunal, the defendant tried to refund money to the plaintiffs after deducting the corrected portion of inheritance tax paid by co-inheritors by revising the inheritance tax to reduce or correct the inheritance tax in accordance with the purport of the decision of the Tax Tribunal. However, other co-inheritors raised an objection to this, and refused to submit written consent. The defendant only made a deposit for repayment on the ground that the plaintiff KimCC did not know that there was a dispute among co-inheritors, by disposing of the joint inherited property under the above agreement, and by disposing of the other co-inheritors, the inheritance tax of other co-inheritors was paid in his own name. After that, the plaintiff KimCC filed a lawsuit claiming the reimbursement of the amount of reimbursement to the EE or box II, and thus, it was legitimate to deposit the refund money on the ground that the defendant did not know of the agreement on the settlement among co-inheritors, its contents and reasons, and the result of the dispute. In addition, the defendant's deposit for this reason is legitimate.

6) If so, regardless of the interpretation of the relevant provisions of the former Inheritance Tax and Gift Tax Act and the former Enforcement Decree, the defendant's obligation to refund was extinguished due to the above repayment deposit, and thus, the plaintiffs' assertion on this cannot be accepted.

C. Judgment on the plaintiffs' preliminary assertion

1) The plaintiffs, preliminaryly, asserts that if co-inheritors make payment of inheritance tax on the ground that they represent the plaintiff frame, the refund money to be paid to co-inheritors should also be paid to the plaintiffs, the representative of co-inheritors.

2) However, in full view of the reasons for the agreement in this case by co-inheritors, taking account of the contents of the agreement in this case and the nature of the property disposed of to pay the inheritance tax as a means of avoiding the burden of additional tax and ensuring convenience in tax payment, and the fact that the Plaintiff KimCC claims reimbursement from other co-inheritors, etc., it is difficult to deem that other co-inheritors consented to the payment of the refund money by setting up the Plaintiffs’ representative and receiving the refund money, and there is no other evidence to acknowledge

4. Conclusion

Therefore, the plaintiffs' claims are dismissed, and they are so decided as per Disposition.