Seocho 2017west 1366 ( May 23, 2017)

Whether a tax investigation conducted after a post-verification and a regular audit constitutes a duplicate tax investigation

The principle of prohibition of duplicate tax audits requires the purpose, face-to-face, place, period and act, and the requirement of the person, and the ex post facto verification and regular audit do not constitute a tax investigation because they do not meet the above five requirements.

Article 81-2 of the Framework Act on National Taxes shall enact and deliver a taxpayers' rights charter.

2017Guhap65456 Revocation of Disposition of revocation of Tax Investigation

AAElectronic Co., Ltd.

BB Director of the Tax Office

August 24, 2017

September 21, 2017

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

On February 22, 2017, the Defendant’s disposition of tax investigation decision rendered against the Plaintiff shall be revoked.

1. Details of the disposition;

A. On February 1, 2016, the Plaintiff was a corporation that runs the wholesale and retail business of electronic devices, the wholesale and retail business of communications devices, etc., and the head office of Dobong-gu Seoul Metropolitan Government is located in Dobong-ro 248-1 (windong), Dobong-gu, Seoul, and the head office was transferred to Gangnam-gu, Seoul, 507, 1903 (Renal Dong-dong, Sung-dong 3).

B. On February 22, 2017, the Defendant notified the Plaintiff that the following tax investigation should be conducted in accordance with Article 81-7(1) of the Framework Act on National Taxes and Article 63-6 of the Enforcement Decree of the same Act on February 22, 2017 (hereinafter referred to as the “tax investigation of this case” and the “decision on tax investigation of this case”).

Items of investigation: Integrated investigation (all items of tax that are required to be reported and paid under tax laws in connection with the business);

조사대상 과세기간 : 2013. 1. 1. 〜 2013. 12. 31

조사 기간 : 2017. 3. 6. 〜 2017. 4. 9

Investigation Reasons: A tax investigation is conducted on the grounds that the Commissioner of the National Tax Service is suspected of being wrong as a result of a regular analysis of the taxpayer's return in accordance with Article 81-6 (2) 1 of the Framework Act on National Taxes.

C. On March 20, 2017, the Plaintiff appealed and filed a request for a trial with the Tax Tribunal on March 20, 2017, but on May 23, 2017, the instant decision on the tax investigation was dismissed on the ground that “the instant decision on May 23, 2017 does not themselves become the object of an appeal due

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Around November 2014, the head of the Z tax office conducted a post-verification on the part of the value-added tax for the Plaintiff in 2013. This constitutes a tax investigation that verified most of the Plaintiff’s sales based on the communications company’s sales data, and also constitutes a tax investigation even if the head of the Z tax office inspected the Plaintiff’s overall corporate tax cost from 2012 to 2013 in a regular cross-inspection on the ZZ tax base around August 2015. The instant tax investigation constitutes a double tax investigation on the same items of tax, such as a post-verification, regular audit, and the same taxable period.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) Post-verification of this case

A) On November 2014, the Plaintiff: (a) compared the Plaintiff’s report of value-added tax and the amount of data on terminal installment sales claims collected from the radio operator in 2013 from the Z head of the Z head of the Z head of the Z head of the Z office, and analyzed that the value-added tax was underreported as follows; (b) accordingly, the Plaintiff submitted explanatory materials as to the difference in the reported content and sales data by December 5, 2014; and (c) received notification of the ex post facto verification (hereinafter “after-verification”).

B) On January 2, 2015, the Plaintiff filed a revised return and paid each amount of value-added tax scheduled and finalized for the first period of value-added tax in 2013 as follows.

Value-added Tax

Taxation Period

Value-added tax base (unit: 00 won)

Value-Added Tax

Tax payable (including additional tax)

Original

Amendment

Difference

2013.1 Time-Limit

10,907,661

10,960,445

52,784

6,783

2013.1 Finality

8,853,519

8,907,537

54,018

7,272

guidance.

19,761,180

19,867,982

106,802

14,055

2) Regular audit of this case

A) From August 24, 2015 to September 10, 2015, the commissioner of the XX Regional Tax Office conducted an cross-regular audit (hereinafter referred to as the "regular audit of this case") for the purpose of verifying the legitimacy and validity of the business affairs of the Z tax, and on August 25, 2015, the head of the XX audit team belonging to the Z tax office requested the tax payment of the Z tax authority and the Plaintiff, including the Plaintiff suspected of receiving regular documentary evidence, to conduct an internal review on five corporations, including the Plaintiff suspected of receiving regular documentary evidence, and, if necessary, to submit documentary evidence including documentary evidence from the above corporation. On August 25, 2015, the head of the Z tax office demanded that the Plaintiff receive regular documentary evidence from the Plaintiff for the business year of 2012 to 2013 as follows.

Guidance on the submission of piracy materials

In relation to the regular audit of the XX regional tax office conducted on August 24, 2015 to September 10, 2015, in accordance with Article 19 of the Audit Regulations of the National Tax Service and the Local Tax Offices, the following matters are required to be asked for explanation, and the related account books and documentary evidence necessary for verifying the following facts shall be submitted to the property corporation and the corporate tax office YY investigator until August 27, 2015.

◇ 해명할 사항 및 증빙서류

(unit: Won)

Items of Taxation

Reversion

Account Titles

Amount

Matters to be clarified

Jinay

Corporate Tax

2012

Rent

831,496,050

All of the heads and documentary evidence of each relevant account

(Admonical evidence)

Review of Unclaimed Document

Preparation and Submission)

Sales Fees

3,496,697,484

Fees for Payment

850,091,065

Sales promotion expenses

405,329,686

Other

478,296,637

2013

Rent

830,582,360

Sales Fees

3,017,435,342

Fees for Payment

608,487,885

Sales promotion expenses

596,227,576

Other

546,586,123

August 25, 2015

The Director of the Z Tax Office

B) On September 7, 2015, the Plaintiff filed a revised return on corporate tax of 2% of the additional tax to be paid in the evidence of disbursement as follows. The Plaintiff paid it on September 9, 2015.

Taxation Period

Tax Base

Additional tax (unit: 00 won)

Corporate tax (additional tax)

Additional Tax Amount

Original

Amendment

Jinay

2012 Business year

Not changed

-

1,465

Evidence of expenditure

Additional Tax on Non-payment

1,465

2013 Business year

Not changed

2,000

(Omission of Payment Record)

3,227

Evidence of expenditure

Additional Tax on Non-payment

1,227

guidance.

2,000

4,692

0

2,692

[Ground of recognition] Facts without dispute, Gap's 3, 6, 7 evidence, Eul's 2 to 8 evidence, witness MM's testimony, the purport of the whole pleadings

D. Determination

1) Relevant legal principles

A) A tax investigation is a kind of administrative investigation conducted to realize the State’s right to impose taxes, and refers to all acts of inspecting and investigating account books, documents, and other things or ordering the submission thereof. In the case of a tax investigation conducted with the authority of the tax authorities to ask questions to taxpayers or their taxpayers for the collection of taxation data and imposing legal duties on those taxpayers (hereinafter “taxpayers, etc.”). Meanwhile, repeated tax investigations on the same tax item and taxable period may seriously infringe on taxpayers’ freedom of business or legal stability and may lead to abuse of the authority to conduct a tax investigation. In light of the nature and effect of such tax investigation and the purport of prohibiting duplicate tax investigations, etc., it is difficult to view that such acts of tax officials are prohibited from conducting a tax investigation for a certain period of time without any specific taxpayer’s right to undergo a tax investigation, such as a taxpayer’s right to undergo a tax investigation to undergo a tax investigation or to undergo a tax investigation for a specific period of time. However, if such acts of tax officials affect the taxpayers’ freedom of business by having the taxpayers answer questions and undergo a tax investigation, it should be deemed that it constitutes an act prohibited from conducting a tax investigation.

B) Meanwhile, Article 81-2(2)1 of the Framework Act on National Taxes provides that "where a taxpayer asks questions to determine or correct his/her tax base and amount of tax, or inspects or investigates the relevant account books, documents or other things or orders the submission thereof (including the investigation of tax offence under the Procedure for the Punishment of Tax Evaders Act)," "tax investigation" means an act of inspecting or investigating books, documents or articles, etc., or issuing orders to the taxpayer or the taxpayer to correct their tax base and amount of tax if there are no errors in the reported tax base and amount of tax for the pertinent business year or if such errors are found in the reported tax base and amount of tax without due consideration of such errors in the pertinent tax investigation or corporate tax, etc., under Article 3 subparag. 1 of the Regulations on the Handling of Tax Evaders, which is the direction of the National Tax Service, are prohibited by the head of the tax office or the taxpayer to correct or correct the tax base and amount of tax for the pertinent tax, or by the taxpayer to find or correct errors in the reported tax base and amount of tax without due consideration."

In addition, in order to see it as a field investigation as a tax investigation to which the principle of prohibition of double tax investigation is applied, the purpose of imposing disposition is to directly contact taxpayers or other persons who are deemed to have a transaction with taxpayers (the requirement), and the place is to be the office, workplace, factory, address, etc. of taxpayers, etc. (the location requirements), and to ask questions to taxpayers, etc. over a considerable period of time, and to inspect and investigate books, documents, articles, etc. (the period and action requirements) for a certain period of time (the period and action requirements), and such questions or books, etc. should be suspected that they are related or related to the determination or correction of tax base and amount (the requirement).

2) Whether the instant post-verification is a tax investigation

In full view of the following circumstances, the above relevant legal principles and the facts of recognition, together with all the evidence and the purport of the entire arguments as seen earlier, it is difficult to deem that the instant ex-post verification conducted in the Zpian Property Tax and the Corporate Tax Act does not satisfy the above requirements, and it does not significantly affect the Plaintiff’s freedom of business. Therefore, this part of the Plaintiff’s assertion is without merit.

A) The fact that the instant post-verification was conducted is that the National Tax Service collected the data on installment sales claims, which is probable to be exempt from value-added tax on the nationwide mobile phone agencies, from the telecommunications company, and distributed the data to the national tax offices to verify whether the amount reported is less than the amount of the transfer of the installment sales claims, and the head of the ZZ Tax Office also received the data from the National Tax Service on the Plaintiff.

B) The procedure of the ex-post verification is to explain the suspicion of underreporting the sale of value-added tax in accordance with the procedure of the tax office’s property tax and corporate tax, and to request the taxpayer subject to verification in accordance with the procedure of the tax office’s property management to submit explanatory materials, or provide guidance on the revised return. The purpose of this case was to provide the Plaintiff with an opportunity for voluntary correction by proposing a revised return. In fact, the head of the tax office did not visit the Plaintiff’s place of business at the time of the instant ex-post verification and did not request the tax office to visit the Plaintiff, and even from the Plaintiff’s perspective, the head of the tax office did not request the Plaintiff to visit the tax office by mail, e-mail, etc. However, even if the Plaintiff’s accounting company, the Plaintiff’s tax agent, visited the ZZ tax office, and visited the public official in charge, and even if so, the amount of the above MM’s statement was about 2-3 times more than 30 minutes, so it seems that the above investigator’s simple interview or investigation for the purpose was conducted.

C) As a result of comparing the Plaintiff’s specific sales of terminal installment sales claims collected from the first half of the Value-Added Tax declaration in 2013 and the telecommunications company’s specific sales revenue collected, the head of the Z head of the Z head of the Z head of the Z head of the Z head of the Z head of the Z head of the 1,118,886,014 won, and notified the Plaintiff of the submission of explanatory materials and the revised return. Upon receipt of the above notification, the Plaintiff submitted the relevant materials to find and correct errors in

D) According to the Plaintiff’s explanation regarding specific suspicion of omission following the instant ex-post verification, some of the charges were imposed according to the Plaintiff’s explanation, and the remainder was voluntarily reported and paid value-added tax accordingly. It is difficult to view that the content of the instant ex-post verification conducted by the head of the Z tax office is difficult to respond to the Plaintiff, or that the Plaintiff’s business is significantly hindered.

E) In a case where a post-verification for verifying the accuracy of the reported details is deemed to constitute a tax investigation, the tax authority should always commence a regular tax investigation in sufficient cases only with the mere fact-finding confirmation, and cause taxpayers to undergo unnecessary regular tax investigations, and is unreasonable.

3) Whether the instant regular audit constitutes a tax investigation

In full view of the following circumstances, the aforementioned relevant legal principles and the facts of recognition, together with the overall purport of the evidence and arguments as seen earlier, it is difficult to deem that the instant regular audit conducted by a regional tax office does not satisfy the above requirements, as well as that it significantly affects the Plaintiff’s freedom of business. Therefore, the Plaintiff’s assertion is without merit.

A) The instant regular audit was conducted for the purpose of verifying the legality and validity of the handling of the Z tax. During the instant regular audit process, the head of the XX audit team of the regional tax office selected five corporations that are highly suspected of receiving regular documentary evidence, including the Plaintiff, and required the employees in charge of the relevant company to examine and report the results thereof with the explanation from the relevant corporation. The employees of the Z tax office directed the Plaintiff to submit explanatory data to the Plaintiff with the same content as the pointed out in the audit team. Accordingly, the Plaintiff submitted evidentiary documents that are kept in the Z tax book.

B) The instant regular audit was conducted for the purpose of adding additional tax under Article 76(5) of the Corporate Tax Act to corporate tax in the event that the Plaintiff, a corporation, is supplied with goods or services and pays the price to another business operator, and the Plaintiff’s failure to perform its duty to receive and keep a certificate of disbursement under Article 116(1) and the main sentence of Article 116(2) of the Corporate Tax Act, which is an obligation to verify whether the Plaintiff’s failure to perform its duty to perform its duty. In fact, the Plaintiff reported and paid corporate tax by adding the additional tax

The regular audit of this case is different from the tax investigation aimed at correcting the increase of the ordinary tax base and tax amount.

C) During the instant regular audit process, the Plaintiff did not have any contact with the auditor belonging to the relevant regional tax office, and submitted explanatory materials and revised reports through the taxpayer tax payment and employees of the Z tax office, and the auditor of the relevant regional tax office or the Z tax office did not exercise the Plaintiff’s right of inquiry by visiting the Plaintiff’s office during the said regular audit process. However, although the Plaintiff’s accountant, who is the Plaintiff’s agent, visited the Z tax office and visited the investigator, the amount of 2-3 times each time even based on the above MF’s statement, and thus, the interview with the Plaintiff’s agent for the above investigator was conducted for the purpose of mere fact-finding or simple inquiry and investigation ordinarily accompanied therewith.

D) The instant regular audit was commenced on August 25, 2015 by the head of the Z superintendent of the Z superintendent of the Z superintendent of the Z superintendent of the Z superintendent of the Z superintendent’s office, sending a notice of submission of the Z materials. On September 7, 2015, the Plaintiff filed a revised return of the corporate tax including the additional tax to be paid with the head of the Z superintendent of the Z superintendent of the Z superintendent’s office, and paid corporate tax on September 9,

E) At the time of being served with the above explanatory data submission guide, it is difficult to see that there was a big difficulty in submitting the relevant disbursement evidence to the head of the Z tax office as it appears that the Plaintiff had already been in custody of the relevant disbursement evidence pursuant to Article 116 of the Corporate Tax Act, and there is no other data to deem that the instant regular audit resulted in a serious obstacle to

4) Sub-determination

Therefore, insofar as it is difficult to view the instant post-verification and regular audit as a tax investigation, it cannot be deemed an illegal duplicate tax investigation with the instant tax investigation. Therefore, the instant disposition is lawful, and the prior Plaintiff’s assertion on a different premise is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.

section 3.