[1] Whether a notice of change in income amount to a person to whom income belongs under the proviso to Article 192 (1) of the former Enforcement Decree of the Income Tax Act constitutes an administrative disposition subject to appeal litigation (negative)

[2] In a case where a notice of change in income amount under the proviso of Article 192 (1) of the former Enforcement Decree of the Income Tax Act was issued by the head of the tax office having jurisdiction over the place of tax payment or the director of the regional tax office, whether the notice was defective

[1] In light of the fact that a person to whom income accrues can sufficiently contest the existence or scope of the source tax liability arising from the disposition of income through a lawsuit seeking revocation of income tax, etc., it does not constitute an administrative disposition subject to appeal litigation, since the notice of change in income to a person to whom income accrues pursuant to the proviso of Article 192(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008; hereinafter “former Enforcement Decree of the Income Tax Act”) does not directly change the legal status of a person to whom income accrues, and thus, it does not constitute an administrative disposition subject to appeal litigation. However, the proviso of Article 192(1) of the former Enforcement Decree of the Income Tax Act is a special provision prepared to give a person to whom income accrues an opportunity to report additional tax base and pay an additional tax pursuant to Article 134(1) of the former Enforcement Decree of the Income Tax Act, and the existence or scope of additional tax based on such premise is required to determine the existence or scope of a taxpayer.

[2] Article 192(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008; hereinafter “former Enforcement Decree of the Income Tax Act”) provides that “the head of a tax office or the director of a regional tax office who determines or revises corporate income” shall be the subject of notification of change in income amount to the person to whom income accrues, and Articles 12, 66, and 67 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010) provide that the subject of notification of change in income amount to whom income belongs shall be the head of a tax office or the director of a regional tax office having jurisdiction over the place of tax payment, and Article 192(1) proviso of the former Enforcement Decree of the Income Tax Act provides that if a notification of change in income amount to whom a tax office belongs falls under the requirements for the notification of change in income amount to whom a tax office has jurisdiction over the place of tax payment or other tax office.

[1] Articles 134(1) and 192(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008) / [2] Article 192(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008); Articles 12, 66, and 67 of the former Corporate Tax Act (amended by Presidential Decree No. 10423, Dec. 30, 2010)

[1] Supreme Court Decision 2011Du14227 Decided July 24, 2014 (Gong2014Ha, 1685)

Plaintiff

Head of Namyang District Tax Office

Seoul High Court Decision 2012Nu14356 decided January 18, 2013

All appeals are dismissed. The costs of appeal are assessed against each party.

1. The plaintiff's appeal is examined.

The plaintiff did not submit a statement of grounds for appeal within a legitimate period. The plaintiff's appeal is dismissed in accordance with Article 8 (2) of the Administrative Litigation Act and Article 429 of the Civil Procedure Act, since there is no statement in the petition of grounds for appeal.

2. The defendant's grounds of appeal are examined.

(1) Article 192(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008; hereinafter the same) provides that “In determining or correcting corporate income under the Corporate Tax Act, dividends, capital gains, and other incomes disposed of shall be notified to the relevant corporation by a notice of change in income amount as determined by the Ordinance of the Ministry of Finance and Economy within 15 days from the date of the determination or correction by the head of a tax office or the director of a regional tax office who makes the determination or correction of corporate income: Provided, That where the location of the relevant corporation is unclear or it is impossible to serve the notice, or where the relevant corporation falls under the provisions of Article 86(1)1, 2, and 4 of the National Tax Collection Act, the relevant stockholder and the resident who has received the disposition of the relevant bonus or other income shall

Meanwhile, Article 134(1) of the former Enforcement Decree of the Income Tax Act provides that “When a corporation files a return on the tax base of corporate tax pursuant to the Corporate Tax Act after the deadline for filing a final return of global income, or the head of a tax office makes a return on the tax base of corporate tax pursuant to the Corporate Tax Act to determine or correct the amount included in gross income as dividends, dividends, or other income, and thus the liability for filing a final return on global income was not changed, a person who is not required to file a final return on tax base, a person who files a final return on tax base, or a person who files a final return on tax base is required to pay additional income tax (where a resident is notified pursuant to the proviso of Article 192(1), the resident concerned) by the end of the month following the month in which the notice of change in the amount of income pursuant to Article 192(1) is received (where the amount of income

(2) In light of the fact that a person to whom income accrues can sufficiently contest the existence or scope of a source tax liability arising from disposal of income through litigation seeking revocation of income tax disposition, etc., the notice of change in income amount on a person to whom income accrues pursuant to the proviso to Article 192(1) of the former Enforcement Decree of the Income Tax Act does not directly change the legal status of the person to whom income accrues, and thus does not constitute an administrative disposition that is subject to appeal litigation (see Supreme Court Decision 201Du14227, Jul. 24, 2014). However, the proviso to Article 192(1) of the former Enforcement Decree of the Income Tax Act is a special provision prepared to give the person to whom income accrues an opportunity to report and pay the global income tax base to the person to whom income accrues pursuant to Article 134(1) of the former Enforcement Decree of the Income Tax Act, and the existence or scope of additional tax premised thereon should be asserted by the person to whom income belongs in a lawsuit seeking revocation of income, etc.

In addition, Article 192 (1) of the former Enforcement Decree of the Income Tax Act provides that "the head of a tax office or the director of a regional tax office having jurisdiction over the place of tax payment shall determine or correct corporate income," and Articles 12, 66, and 67 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010) provide that the person in charge of determining or correcting corporate tax or disposing of income shall be the head of a tax office or the director of a regional tax office having jurisdiction over the place of tax payment, and Article 192 (1) proviso of the former Enforcement Decree of the Income Tax Act provides that the notification of change in income to the person in charge of income shall be the requirements for determining the period of tax return and the due date of tax payment related to the tax liability. In light of the above, if the head of a tax office having jurisdiction over the place of tax payment or the director of a regional tax office having jurisdiction over the place of tax payment other than the head of a tax office

(3) The lower court acknowledged the following facts: (a) while adding the processing purchase amount of accelerator to gross income for the business year 2006 and correcting corporate tax for the business year 2006, the amount of income was disposed of as bonus to the Plaintiff who is the representative director; (b) on July 3, 2007, the Plaintiff notified the Plaintiff of change in the amount of income pursuant to the proviso of Article 192(1) of the former Enforcement Decree of the Income Tax Act; and (c) on November 3, 2009, the Plaintiff failed to make a return and payment of the global income tax by the due date stipulated in Article 134(1) of the former Enforcement Decree of the Income Tax Act; and (d) on November 3, 2009, the Defendant issued the instant disposition imposing global income tax amount of KRW 94,94,380 (including the penalty tax amount of KRW 26,751,907) to the Plaintiff; (b) The lower court rejected the Defendant’s notification of change in amount of income due to the Plaintiff.

(4) Examining the record in accordance with the aforementioned provisions and legal principles, such determination by the lower court is justifiable. In so doing, the lower court did not err by misapprehending the legal doctrine on the nature of notification of change of income to the person to whom income accrues under the proviso of Article 192(1) of the former Enforcement Decree of the Income Tax Act, and the scope of grounds for objection that a person to whom income tax was notified by the competent tax authority pursuant to the proviso of Article 192(1) of the former Enforcement Decree of

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

Justices Lee Sang-hoon (Presiding Justice)