Cho High Court Decision 2010Du0072 ( November 16, 2010)

(1) A reward paid in return for the performance of duties or services of a school juristic person through the replacement of an executive officer shall constitute a reward.

The honorarium of other income refers to money and valuables paid for the purpose of a case in connection with administrative affairs or provision of services, etc., and the money is paid in return for administrative affairs or service affairs of a school foundation through replacement of executive officers, and falls under the honorariums. There is no provision to exempt an individual who is a withholding agent from submitting a written payment statement, and the disposition of imposition

2011Guhap427 Global Income and Revocation of Disposition

DoAA

XX Head of tax office

2011.04.15

2011.05.13

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The disposition of imposition of global income tax of KRW 60 million imposed on the Plaintiff on October 1, 2009 by the Defendant shall be revoked.

1. Details of the disposition;

A. On May 12, 2006, the Plaintiff: (a) decided to take over the instant school juristic person’s operating rights from Kim○, the president of the AA Teaching Institute (former BB, hereinafter “instant school juristic person”); and (b) paid KRW 3 billion to △△△△△△, which was the husband of Kim○, and the actual operator of the instant school juristic person, who was the principal manager of the instant school juristic person.

B. On December 1, 2008, the Defendant imposed an additional tax of KRW 60 million on the Plaintiff on the ground that the Plaintiff did not perform its duty to collect KRW 3 billion paid to △△△△△△, on the ground that the Plaintiff did not perform its duty to collect KRW 3 billion.

C. However, as a result of the audit by the National Tax Service, it was pointed out that the additional tax was omitted for failure to submit the payment record even if the said non-performance penalty tax was final and conclusive, the Defendant issued a notice of imposition and notification of global income tax of KRW 60 million to the Plaintiff on October 1, 2009 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1, Eul evidence 1-2, Eul evidence 2-2 and 3, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) The full amount of KRW 3 billion paid to △△△△△ in return for the Plaintiff’s transfer of the instant educational foundation’s operating right cannot be deemed as a honorarium.

(2) There is no practical way for an individual to pay the withheld tax amount on other income, and the person liable to submit the payment record under the interpretation of the Income Tax Act shall be limited to the business operator, so there is no obligation to submit the payment record to the Plaintiff as an individual, and there is no obligation to pay penalty

(3) The non-taxation practices were established for the submission of individual payment records, and the imposition of penalty tax to the Plaintiff, who is an individual, violates the principle of no taxation without the law, the principle of proportionality under the Constitution, and the principle of minimum infringement.

(b) Related statutes;

Attached Form is as shown in the attached Form.

C. Determination

(1) Whether the case constitutes an honorarium

Article 21 (1) of the former Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006; hereinafter referred to as the "Income Tax Act") provides that other income shall include income other than interest income, dividend income, real estate rental income, business income, labor income, day labor income, trust property, pension income, retirement income, transfer income, forestry income, and forestry income under each of the following subparagraphs, and provides a honorarium under subparagraph 17. Here, the honorarium refers to money and valuables paid as a meaning of a case in relation to administrative affairs or provision of services, etc., and whether it falls under this shall be determined by comprehensively considering the motive and purpose of receiving such money and valuables, relationship with the other party, amount, etc. (see Supreme Court Decision 97Nu20304 delivered on Jan. 15, 199).

If Gap evidence 2 and Eul evidence 4 are added to the purport of the whole argument, the president of the school juristic person of this case is Kim ○○, but the husband of this case exercised the overall right of operation when △△△△△△△△ was in charge of the principal position, the plaintiff decided to accept the right of operation of the school juristic person of this case, and the △△△△△△△.

12. The 3 billion won down payment and the remaining 2.7 billion won on July 26, 2006 paid all 3 billion won. The board of directors on May 25, 2006 (the board of directors on May 25, 2006) dismissed and appointed a new director as the president. The purpose of the Plaintiff’s payment of 3 billion won to this △△△△ was to take over the instant school juristic person by means of being elected as the officer through a resolution of the board of directors, and even some of them were paid for other reasons is not all. The △△△△△△△ was held a board of directors meeting in accordance with the time when the Plaintiff received the down payment and the balance, and the procedure was completed so that the Plaintiff may take the position of the president. Therefore, it is reasonable to deem the said money as an honorarium for the service under the Income Tax Act because it was paid in return for the business of acquiring the right to operate the school juristic person through the replacement of an officer.

Therefore, the plaintiff's assertion that all or part of KRW 3 billion does not constitute an honorarium is groundless.

(2) Existence of duty to submit written evidence

A) Existence of withholding obligation

According to Article 1 (1) 1 and (2) of the Income Tax Act, an individual who has a domicile in Korea or has a domicile in Korea for not less than one year, i.e., a resident, a nonresident, a domestic or foreign corporation, or a withholding agent prescribed in the same Act, is obligated to pay income tax collected at source. According to Articles 127 (1) 5 and 21 (1) 17 of the same Act, a person who pays a honorarium equivalent to other income to a resident in Korea is obligated to withhold income tax on the resident and pay it.

In full view of the above provisions, where a withholding agent pays income under the above provisions to a person liable to pay income tax even though an individual is not limited to a business operator, it is clear that a withholding agent is liable to withhold income in the case of a person who pays income under Article 127 (1) 3 of the current Income Tax Act, especially in the case of a person who pays income under Article 127 (1) 3 of the current Income Tax Act, the scope of a withholding agent is limited to a person who is prescribed

In this case, there is no dispute between the parties who have a domicile in the Republic of Korea or have a domicile in the Republic of Korea for at least one year. The Plaintiff, who is a resident, has a duty to withhold income tax on this case and pay a reward of KRW 3 billion to the Defendant, and if the method is either an electronic return or is not infinite, the report on the completion of the contract shall be filed.

(b)to submit written evidence;

According to Article 164 (1) 5 of the Income Tax Act, a person who pays other income to an individual liable to pay income tax (including a corporation) shall submit a written payment record to the head of the competent tax office having jurisdiction over withholding taxes by the end of February of the year following the year in which the date of payment of the income falls. Article 164 (2) of the Income Tax Act, Article 214 (1) and (2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19327 of Feb. 9, 2006), Article 97 of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 554 of Apr. 17, 2007; hereinafter referred to as the "Enforcement Rule of the Income Tax Act") is exempted from the obligation to submit a written payment record, regardless of the purpose of legislation and purpose of legislation, where income tax is not imposed or is not collected at source.

However, as an individual who is obligated to withhold taxes, the Plaintiff paid a honorarium of KRW 3 billion to the resident, and the type and amount of such income does not fall under any item provided in the Enforcement Decree and Enforcement Rule of the Income Tax Act where submission of a written statement is exempted. Therefore, the Plaintiff’s submission of a written statement of salary cannot be exempted.

Article 81(5) and 164(4) of the Income Tax Act, Article 147(6) and Article 214(3) of the Enforcement Decree of the Income Tax Act, the Plaintiff asserts that an individual is exempted from the obligation to submit a written payment statement on the basis of Article 81(5) and Article 164(4) of the Income Tax Act. However, Article 81(5) of the Income Tax Act only provides that if a person obligated to submit a written payment statement fails to submit it, an additional tax shall be imposed, and does not limit the scope of the person obligated to submit the written payment statement or exempt the obligation from the obligation to submit it. (2) Article 147(6) of the Enforcement Decree of the Income Tax Act does not provide that an additional tax shall not be imposed even if a person subject to simple payment files a written payment statement, and Article 164(4) of the Income Tax Act and Article 214(3) of the Enforcement Decree of the Income Tax Act do not provide that a person obligated to submit a written payment statement may submit it in writing.

C) Therefore, the Plaintiff’s assertion that there is no evidence to submit to the Plaintiff is without merit.

(3) Whether there is a non-taxable practice

Article 18(3) of the Framework Act on National Taxes provides, “The construction of tax-related Acts and the practice of national tax administration, which has been generally accepted by taxpayers” means, even if erroneous interpretation or practice, that is, it would not be unreasonable for a taxpayer to trust such interpretation or practice to an unspecified general taxpayer, who is not a specific taxpayer. The burden of proving the existence of such interpretation or practice is the taxpayer asserting it.

Furthermore, in order to assert that non-taxation practices have been established with respect to the submission of individual non-taxation records, at least income subject to withholding under the Income Tax Act was generated, and the individual, who is the withholding agent, failed to submit a written statement even though he/she had the duty to submit a written statement of tax payment, should assert that the administrative agency did not impose additional tax. However, in this case, there is no such case, if there is no case or no case of imposing additional tax with respect to the submission of individual's written statement of tax payment, it is not clear whether the additional tax was not imposed even if the individual did not perform his/her duty to submit the written statement of tax payment, or because the case where an individual, as the withholding agent, submitted the written statement of tax payment, was not sealed. Therefore, there is no evidence to deem that non-taxation practices have been established, and there is no ground to view that the provisions of the Income Tax Act or the Enforcement Decree of the Income Tax Act with respect

Therefore, the plaintiff's assertion that non-taxation practices were established is without merit.

(4) Whether it violates the constitutional proportionality, etc.

Under the tax law, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, where a taxpayer violates various obligations, such as a return and tax payment, as prescribed by the tax law without justifiable grounds, the taxpayer’s intent or negligence is not considered as administrative sanctions imposed as prescribed by the individual tax law. However, if a taxpayer’s negligence is not attributable to his/her duty, it may not be imposed (see, e.g., Supreme Court Decision 2006Du11750, Oct. 23, 2008). Therefore, the additional tax system itself is justified and it is not contrary to the principle of proportionality and the principle of no taxation without law. Thus, the Plaintiff’s assertion on this part is not reasonable.

3. Conclusion

Thus, the disposition of this case is legitimate, and the plaintiff's claim is dismissed as it is without merit.