Cho High Court Decision 2014Do3781 ( December 29, 2014)

Other income of a person with only earned income, exclusion period for filing report

If a person with only earned income has failed to report other income in relation to the amount received in breach of trust, it constitutes a person who has not reported global income and the exclusion period is seven years.

Article 26-2 of the National Tax Basic Act

2015Guhap56939 global income and revocation of disposition

○ ○

○ Head of tax office

2015.06.05

2015.06.26

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposing global income tax of KRW 000,000,000 (including additional tax for negligent return and additional tax for unfaithful return) for the year 2006, which reverts to the Plaintiff on April 14, 2014 is revoked.

1. Details of the disposition;

A. The Plaintiff worked as a representative director or a full-time director in the Chinesez Korea Co., Ltd., and the Chinese z Korea Co., Ltd. is a shipping company in the People’s Republic of China, which is a shipping company in the People’s Republic of China established in Nayy’s Republic of Korea, with the aim of performing its agency business. The Plaintiff was prosecuted for the crime of taking property in breach of trust, including the following criminal facts, and was sentenced to three years of suspension of execution on October 22, 2010, with the sentence of KRW 200,000,000 for three years of suspension of execution on October 22, 201, and the Seoul Central District Court was sentenced to KRW 209, 1182, 209, 2009, 1198, 2009, 1314, 2069, 2069) and the Plaintiff’s appeal (Supreme Court Decision 201Do9238, Apr. 24, 2013).

- the following-

As of December 9, 200, the Plaintiff received 18,367,420 won from 00,000, which was the head of the Korea-Japan branch office, which was the Plaintiff’s driver, to transfer △△△△△ (1002-711-000) to the bank account (1002-71-0000) in the name of the Plaintiff, and then withdrawn 00,000 won in total over 33 times until August 17, 2007, or to the bank account in the name of the above △△△△△△ or in fact in the name of the Plaintiff’s operation, and used it for the Plaintiff’s living expenses, etc...

B. On April 14, 2014, the Defendant: (a) considered the amount of KRW 000,000,000 (hereinafter referred to as “the instant money”) received in 2006, as the Plaintiff’s other income; and (b) notified the correction and notification of the global income tax amount of KRW 00,000,00 (including the additional tax on negligent tax and the additional tax on negligent tax payment) for the period of 2006 (hereinafter referred to as “instant disposition”); (c) on July 11, 2014, the Plaintiff filed an appeal with the Tax Tribunal on July 11, 2014, but was dismissed on December 29, 2014.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) As long as the Plaintiff reported and paid the income tax through the year-end tax settlement on the earned income in 2006, even if the Plaintiff omitted the income tax return on the instant money, it is merely the fact that it did not constitute a tax-free return on global income. Thus, the exclusion period of five years pursuant to Article 26-2(1)3 of the former Framework Act on National Taxes (amended by Act No. 8139, Dec. 30, 2006; hereinafter “former Framework Act on National Taxes”) shall be applied. The instant disposition is unlawful as it was imposed on April 14, 2014, which was five years after the date on which the exclusion period was elapsed from June 1, 2007, which was the initial date.

2) The instant money was received by the Plaintiff as the representative director in return for the transportation good offices. Since then, the Plaintiff cannot be deemed to have caused other income to the Plaintiff, since it was merely repaid with the existing provisional collection from △△ Co., Ltd., which received the payment from the Plaintiff. Thus, the instant disposition was unlawful since it was erroneous as it misleads the

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on the first argument

Article 4 (1) 1 of the former Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006; hereinafter referred to as the "former Income Tax Act") provides that "the term "the term "global income" means "the total of interest income, dividend income, business income, earned income, pension income, and other income, excluding retirement income, transfer income, and interest income, dividend income, business income, pension income, and other income," and Article 70 (1) of the same Act provides that "the resident having global income in the relevant year shall report such global income to the head of the district tax office having jurisdiction over the place of tax payment as prescribed by the Presidential Decree from May 1 to May 31 of the year following the relevant year," and Article 73 (1) of the same Act provides that "the resident having global income shall be exempted from the obligation to make a final return on the tax base of global income of a resident."

According to the above provisions, only a person with wage and salary income may not file a final return on tax base. The reason is that the tax authority can grasp the tax base of the income subject to withholding through withholding and year-end tax settlement for the income subject to withholding. For this reason, if there are other kinds of income to be added to global income other than the wage and salary income subject to withholding and year-end tax settlement, such income shall not be exempted from the obligation to file a final return on tax base, so if a person with income did not file a final return on tax base, it shall be deemed as a non-report, and the exclusion period for imposition of income tax shall be seven years pursuant to Article 26-2 (1) 2 of the former Framework Act on National Taxes (However, it is reasonable to view that the income to be added to global income other than the wage and salary income subject to withholding and year-end tax settlement is not different types of income, but the exclusion period for imposition of income tax shall be five years pursuant to Article 26-2 (1) 3 of the former Framework Act on National Taxes for which the Plaintiff did not file a final return on tax base return on other wage and salary income in 20 years.

Ultimately, pursuant to Article 26-2(4) of the former Framework Act on National Taxes and Article 12-3(1)1 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 19893, Feb. 28, 2007), in cases of a national tax, such as global income tax, the date following the due date for filing a report on the tax base and tax amount of the relevant national tax can be assessed on the date when the tax base and tax amount can be assessed

Since the filing deadline for the aggregate income tax is by no later than May 31 of the year following the relevant taxable period, the plaintiff for the plaintiff.

The filing deadline of the global income tax for the year 2006 is until May 31, 2007, and the exclusion period of imposition runs from June 1, 2007 to June 1, 2014, which is seven years from that date. The instant disposition was completed on April 14, 2014, before the exclusion period of imposition expires. Accordingly, the Plaintiff’s assertion that the exclusion period of imposition lapsed and the exclusion period of imposition were groundless.

2) Determination on the second argument

On the other hand, in the criminal case, the plaintiff was convicted of the facts that he received the amount including the instant money from 000 to the illegal solicitation. During this process, the fact that △△△ was revealed to be the plaintiff's company in fact. According to the Gap evidence No. 5-1, 000, who remitted the money to the plaintiff's account at investigation agency, is the plaintiff's general manager in Pacificy in the investigation agency, and the plaintiff was expected to enter into a contractual relationship with Nayy and maintain this. The △△△△△△ corporation stated to the effect that the plaintiff was designated as the account for which the rebates△△△△△ corporation received the rebates's rebates, and that it was not related to △△△△△ corporation. The following facts were stated to the effect that the plaintiff paid the money to △△ corporation in its name, and that the plaintiff could not be deemed to have received the money as a breach of trust, i.e., the amount of the money received by the plaintiff, as acknowledged in the criminal judgment finalized, barring any special circumstances.

3. Conclusion

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