Seocho 2010west0726 (2010.05.04)

Additional dues due to the calculation of dividend income;

Although the dividend income received from a securities company was corrected for the reason that the dividend income is not subject to the calculation of dividend income, such distinction does not constitute a reason for exempting an additional tax for unfaithful payment even if the

1. The plaintiff's claim is dismissed.

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

The part of the disposition imposing global income tax of KRW 20,294,523 of the disposition imposing global income tax of KRW 25,63,780 for the year 2006 and the part exceeding KRW 13,685,672 of the disposition imposing global income tax of KRW 15,808,320 for the year 207 shall be revoked, respectively.

1. Details of the disposition;

The following facts are not disputed between the parties, or can be acknowledged in full view of the overall purport of arguments in each of the types of evidence Nos. 1, 2, 1-4 of evidence Nos. 1, 3-1, 1-13 of evidence Nos. 1, 2, 3-1, 3-11 of evidence Nos. 3, 1-12 of evidence Nos. 4, and 4-12.

A. When the Plaintiff filed a comprehensive income tax for the year 2006, the Plaintiff: (a) calculated the dividend income amount of KRW 209,644,648, which was received from the newly issued securities, as dividend income amounting to KRW 207,138,985; (b) calculated the dividend income amount of KRW 207,138,985 (hereinafter “Gros-up”); and (c) deducted KRW 31,070,847, which was added 15/100 to the said amount as dividend income amount; and (d) calculated the calculated global income tax amount by deducting KRW 31,07,847,00 from the calculated global income tax amount, including other dividend income, interest income, etc.

B. When filing a return on the global income tax attributed to year 2007, the Plaintiff: (a) considered KRW 140,365,935 out of the dividend income received from the newly issued securities as the object of Gros-up; and (b) calculated the calculated global income tax by adding the said amount to KRW 21,054,89,09,642,045 out of the said amount to Gros-up; and (c) deducted the said KRW 21,054,890 from the calculated global income tax amount by deducting the said amount from the global income tax amount.

C. On December 1, 2009, the Defendant notified the Plaintiff of the total income tax for the year 2006 and year 25,633,780 as well as KRW 15,808,320, respectively, on the ground that the dividend income received from the securities which had been issued with the right to claim for the payment of dividends is not subject to the calculation of dividend income. Of the global income tax for each of the above correction, the Defendant included KRW 5,369,257 and KRW 2,122,648 as the additional payment for the erroneous payment among the global income tax for each of the above correction (hereinafter “instant disposition”).

2. Whether the disposition is lawful;

A. The plaintiff's assertion

In full view of the following circumstances, the Plaintiff cannot be deemed to have a cause attributable to the misunderstanding that the instant key income is Gros-up income, and rather, this is due to a mistake in the statement in financial institution’s income withholding statement, which is a withholding agent of the State’s agent, and thus, the Plaintiff cannot impose an erroneous payment on the Plaintiff. Thus, the instant disposition should be revoked as unlawful.

1) Since the Gros-up system has been faced to the extent that the employees of financial institutions, an expert, have been properly gathered, the State, should provide institutional devices to enable citizens to properly report the global income tax on financial income, and the State, while continuing to implement the system and revising the Enforcement Rule of the Income Tax Act on April 17, 2007, stipulates that it is a dividend income subject to Gros-up as a tax classification code in the attached form of the Enforcement Rule.

2) According to the proviso of Article 133(1) of the Income Tax Act and Article 193(3) of the Enforcement Decree of the Income Tax Act, a financial institution is deemed to issue a withholding tax receipt if it notifies a financial institution of a financial transaction statement stating certain matters. This is interpreted to mean that even if the financial transaction statement is issued, the financial transaction statement will not be held liable to the taxpayer.

3) Although the statement of dividend income accrued in 2007 of the securities which had been issued with the right of redemption, the amount of dividend income accrued in the year 2007 should be indicated as ‘C' in the column of ‘classified' for the dividend income of 159,642,045 won of the dividend income subject to comprehensive taxation, the Plaintiff believed the statement and reported the global income tax by deeming that the amount of dividend income subject to comprehensive taxation is not the distribution of the investment trust income subject to dividend income but the distribution of the dividend income subject to general taxation.

(b) Related statutes;

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

C. Determination

Under the tax law, in order to facilitate the exercise of the right to impose taxes and the realization of tax claims, where a taxpayer violates the duty to report and pay taxes as prescribed by the Act without justifiable grounds, the taxpayer's intentional or negligent acts shall not be considered: Provided, That in a case where there are justifiable grounds for not being attributable to the taxpayer's failure to identify his/her duty, or where it is unreasonable for the taxpayer to expect the taxpayer to fulfill his/her duty, etc., it may not be imposed; however, the land or mistake under the law shall not be deemed a justifiable ground (see, e.g., Supreme Court Decisions 2004Du930, Nov. 25, 2005; 2001Du7886, Nov. 10, 2003).

In full view of the following circumstances where the purport of the entire argument in the evidence as seen earlier can be seen, the Plaintiff cannot be deemed to have any cause attributable to the misunderstanding of the instant key income as the dividend income subject to Gros-up. Therefore, the Plaintiff’s assertion is without merit.

(1) The global income tax is a tax item by which a person liable to pay tax shall file a return and pay the tax base and the amount of tax on his/her own, and the liability for whether the amount of such return and payment is appropriate on a daily basis.

② The issue of whether the dividend income is subject to Gros-up is determined in accordance with the provisions on dividend income under Article 17 (1) and (3) of the former Income Tax Act, and it seems that the Plaintiff, a tax agent (Korean accounting corporation), who filed a comprehensive income tax, could have sufficiently known about the above provisions. Furthermore, the Plaintiff could not know about whether the issue income of this case is subject to Gros-up dividend income from the total dividend income notified by the new securities, but the Plaintiff filed a global income tax return on the premise that the issue income of this case exceeds KRW 40,00,000 among the total dividend income notified by the new securities. In light of this, it is reasonable to view that the Plaintiff or its tax agent, at the time of filing a global income tax return, was well aware of the global income tax deduction system, including Gros-up dividend income, without sufficiently checking and examining whether the issue of this case is subject to Gros-up dividend income already taxed at the corporate stage. Therefore, the Plaintiff did not have any justifiable reason to determine that the Plaintiff’s dividend income is subject to Gros-up-up-up.

③ The proviso of Article 133(1) of the former Income Tax Act and Article 193(3) of the former Enforcement Decree of the Income Tax Act provide that a financial institution shall issue a withholding tax receipt if it notifies a dividend income recipient of the annual aggregate of dividend income, details of withholding taxes, and financial transaction statement stating the business registration number of the person liable to withhold taxes and his/her trade name or corporate name. As alleged by the Plaintiff, the said provision does not mean that even if a financial institution notifies the dividend income recipient of the financial transaction statement stating certain matters in lieu of the withholding tax receipt, it would not impose liability on

④ In addition, even if there was no indication of KRW 159,642,045 on the dividend income payment statement for the year 2007 as to the aggregate taxation income amounting to KRW 159,642,045, in the column of the classification, according to the statement of evidence No. 3-4, the above specification at the bottom of the above payment statement can be acknowledged as constituting supporting materials, and as seen earlier, the Plaintiff’s global income tax return through the tax agent (Korean accounting corporation) as a tax expert was not indicated in the column of the classification, and thus, it cannot be said that it was not caused by the Plaintiff’s fault or there was any reason to make such mistake legitimate.

3. Conclusion

Therefore, the plaintiff's claim is dismissed for lack of reason.