[1] The scope of “material material” subject to monetary rewards under Article 84-2(2) of the former Framework Act on National Taxes and Article 65-4(11) of the former Enforcement Decree of the Framework Act on National Taxes and the burden of proof (=person who is the principal)

[2] The case affirming the judgment below which rejected the Gap's assertion that Article 6 (3) 3 of the former Regulations on the Payment of Monetary Rewards for Tax Evasion was invalid beyond the limit of delegation, in case where Gap filed a petition for a correction of corporate tax by voluntarily reporting the tax authority to collect corporate tax against Eul, and the tax authority paid a monetary reward to Gap based on the additional tax amount, and Gap filed a petition for a correction of corporate tax, including the amount of tax corrected and paid by Eul, but Gap received the notice of rejection

[1] The term "material material" eligible for a monetary reward should include specific material that can be easily verified by the tax authority, such as Article 84-2 (2) of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201) and Article 65-4 (11) of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 23592, Feb. 2, 2012). If the material provided is merely a point of view of the possibility of tax evasion, a critical material that makes it difficult for the tax authority to confirm the fact of tax evasion based on it, and thus, such material does not constitute "material material material material" eligible for a monetary reward. If, after any information, the fact of tax evasion was verified through ordinary tax investigation by the tax authority or voluntary report by the taxpayer, such material cannot be deemed directly related to calculating the amount of tax evasion or to have contributed significantly, and thus, it cannot be deemed as an "material material material material material material subject to a monetary reward."

[2] In a case where Party A filed a petition with the tax authority to voluntarily report and pay corporate tax to Party B by notifying the fact of tax evasion of Company B, and the tax authority paid a monetary reward based on the additional tax amount, and Party B received the notice of refusal, the case affirming the lower court’s determination that the additional tax payment provisions, other than the additional tax payment provisions under Article 84-2(6) of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 2011; hereinafter the “former Framework Act on National Taxes”), which is merely an invalid provision of Article 65-4(17) of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 23592, Feb. 2, 2012; hereinafter the “former Enforcement Decree of the Framework Act on National Taxes”), which, in light of the purport of Article 66(3) of the former Framework Act on National Taxes (amended by the National Tax Directive No. 1924, Jul. 1, 20192). 3).

[1] Article 84-2(1)1, (2)1, 2, and 3 of the former Framework Act on National Taxes (Amended by Act No. 11124, Dec. 31, 201); Article 84-2(1)1, 2, 3, and 4 of the former Enforcement Decree of the Framework Act on National Taxes (Amended by Presidential Decree No. 23592, Feb. 2, 201); Article 65-4(11)1, 2, 3, and 4 of the former Enforcement Decree of the Framework Act on National Taxes (Amended by Presidential Decree No. 23592, Feb. 2, 201); Article 84-2(1)1, (2)1, 2, and 3 [see Article 84-2(1)4 of the former Framework Act on National Taxes)

Nonparty

The director of the tax office

Seoul High Court Decision 2013Nu1395 decided August 16, 2013

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. Article 84-2(1)1 of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 2011; hereinafter the same) provides that a monetary reward may be paid to a person who provides a person who has provided a tax evasion or an illegally refunded or deducted amount of tax within the scope of KRW 100 million. Paragraph (2) of the same Article provides that “The materials or books that contain specific facts, such as the place of transaction, the date or period of transaction, the items of transaction, the volume and amount of transaction, etc. of the materials that may verify the location of the materials falling under subparagraph 1”, “specific information that may identify the materials falling under subparagraph 1”, “other material that may be recognized as important materials in view of the circumstances such as methods of tax evasion or illegally refunded or deducted, details and scale, etc.” (Article 84-2(3)1 of the former Framework Act on National Taxes and the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 2358, Feb. 25, 2019, 2012). 3).

The purport of the former Framework Act on National Taxes that provides a reward to a person who provides important data in calculating the amount of tax evasion is that the tax authority can easily collect the amount of tax evasion without any cost and effort if the tax authority provides specific data that can verify the fact of tax evasion under the realistic circumstances where it is impossible to investigate whether all taxpayers are liable to pay the amount of tax evasion. Furthermore, if the information on the tax evasion is activated, the tax authority can create a climate of tax evasion in good faith. Therefore, the tax authority’s payment of reward money to a person who provides information that satisfies certain requirements in relation to the amount of tax evasion can not be seen as having made compensation and encouragement. Therefore, the “important data” subject to a reward payment includes specific data that can sufficiently confirm the fact of tax evasion, as stipulated in Article 84-2(2) of the former Framework Act on National Taxes and Article 65-4(11) of the former Enforcement Decree of the Framework Act on National Taxes. If the provided data is merely the point of confirming the possibility of tax evasion, the submission of abstract evidence, and it is difficult to determine the amount of tax evasion by the tax authority’s.

B. On August 27, 2010, the lower court determined that: (a) the Plaintiff filed a revised tax base return to the Seoul Regional Tax Office on March 27, 2010 to the effect that it reported the fact of tax evasion over the period from March 2005 to August 10, 2010; (b) the Plaintiff was subject to tax investigation on the non-resident’s 282,95,410 corporate tax on the non-resident’s strengthening of the State on March 16, 201; and (c) the Defendant paid the Plaintiff a revised tax base return to the effect that it was not subject to additional sanctions; and (d) the Defendant paid a revised tax base return to the Plaintiff on the non-resident’s 239,300,000 won for the non-resident’s total amount of income tax on the non-resident’s 200,000 won for the reason that it was not subject to additional sanctions; and (d) the Defendant paid the additional amount of tax to the Plaintiff’s 20.37.105.

Although the reasoning of the court below is somewhat insufficient, the court below's determination that the plaintiff's information does not constitute "material material" that is subject to a monetary reward in relation to a return for revised return and tax payment for the strengthening of the scope of "material material" or the burden of proof is not erroneous in the misapprehension of the legal principles on the scope of "material material material material" subject to a monetary reward or the burden of proof, on the premise that there is insufficient proof that the plaintiff's information or material was directly related to calculating the tax evasion amount in light of the purport of the payment of the monetary reward and the importance of the material provided, etc.

2. Regarding ground of appeal No. 2

Article 84-2(6) of the former Framework Act on National Taxes provides that “The necessary matters concerning the payment criteria, method and period of payment, provision of data, method of reporting, etc. shall be prescribed by Presidential Decree.” Article 65-4(17) of the former Enforcement Decree of the Framework Act on National Taxes delegated by the National Tax Service shall be prescribed by the Commissioner of the National Tax Service.” Meanwhile, Article 6(3) of the former Regulations on the Payment of Monetary Rewards for Tax Evasion Report (amended by National Tax Service Directive No. 1924, Jul. 1, 2012; hereinafter the same shall apply) of the Commissioner of the National Tax Service who has determined the specific payment criteria, standards, method of payment, etc. of monetary rewards for tax evasion reporters, etc. shall be prescribed in subparagraphs 1 and 2 of Article 84-2(6) of the former Regulations on the Payment of Monetary Rewards for Tax Evasion Report (amended by National Tax Service Directive No. 1924, Jul. 1, 2012

The lower court rejected the Plaintiff’s assertion that Article 6(3)3 of the former Regulations on the Payment of Monetary Rewards for Tax Evasion excluding “the amount of tax additionally paid by disposal of income pursuant to Article 67 of the Corporate Tax Act” from the amount of tax additionally collected, which serves as the basis for calculating monetary rewards, is merely a specification of the purport of the former Framework Act on National Taxes and the relevant provisions under the former Enforcement Decree of the Framework Act on National Taxes or a specification of sufficiently possible interpretation of the parent law.

In light of the language and purport of the above provision and the fact that the tax amount additionally paid due to the disposition of income is common to the facts based on the original collection tax amount, and it is difficult to deem that there is an important material for the fact of separate tax evasion. Such determination by the court below is just, and there is no error by misapprehending the legal principles on the limitation of delegated legislation.

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)