Appellate Court 2016No2735 ( October 20, 2016)

Since remuneration for the trustee in bankruptcy is recognized that he/she performs his/her business for profit-making purposes under his/her responsibility and responsibility, and has continuity and repetition.

Since the trustee in bankruptcy continues to perform his/her duties, repeated, there is no profit-making purpose, or is not a reimbursement for actual expenses, and business income is paid because he/she performs his/her duties under his/her own account and responsibility: Provided, That there is a justifiable reason that the plaintiff cannot expect that he/she will report

Article 19 of the Income Tax Act

2017Guhap51426 global income and revocation of such disposition

KimA

BB Director of the Tax Office

April 21, 2017

May 19, 2017

1. The imposition of each global income tax on the Plaintiff on October 00, 000 by the Defendant shall be revoked in the aggregate of KRW 000 of each additional tax imposed on the Plaintiff.

2. The plaintiff's remaining claims are dismissed.

3. 7/10 of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

Cheong-gu Office

Each global income tax (including additional tax) stated in the attached Form No. 1 written by the Defendant against the Plaintiff on October 000, 000.

All the disposition of imposition shall be revoked.

1. Details of the disposition;

A. The Plaintiff, as an attorney, was appointed as a trustee in bankruptcy in a number of individual bankruptcy cases from 000 to 000, and performed the business of the trustee in bankruptcy.

B. From 000 to 000, the Plaintiff received a total of 000 won (hereinafter “instant income”) as remuneration for the trustee in bankruptcy with respect to the performance of the trustee in bankruptcy. The Plaintiff’s year to which the pertinent income belongs.

The ratio of the income of this case to the number of cases in charge and the total amount of income shall be as specified in the following table:

Year

Number of cases in charge

Total revenue amount

Bankruptcy-Related Income;

Ratio

000

00

00 won

00 won

00%,

000

00

00 won

00 won

00%

000

00

00 won

00 won

00%

000

00

00 won

00 won

00%

C. The Plaintiff deemed the instant income as other income under Article 21 (1) 19 (c) of the Income Tax Act and Article 87 (1) 1 (b) of the Enforcement Decree of the Income Tax Act, and included the amount of income for each year of taxation, and applied the provision of Article 80% of the necessary expenses, thereby filing and paying

D. However, the defendant calculated the plaintiff's global income belonging to the year 000 to 0000 as it viewed that the income of this case falls under the business income unlike the plaintiff's return, and on October 00, 000.

In addition, each correction and notification of the global income tax of 000 won (including additional tax of 000 won) and 000 won (including additional tax of 000 won) for the global income tax of 000 years (including additional tax of 000 won) for the global income tax of 000 as shown in the attached sheet of imposition (hereinafter collectively referred to as the "disposition in this case").

E. The plaintiff was dissatisfied with the disposition of this case and filed an appeal with the Tax Tribunal on October 00, 000.

However, the Tax Tribunal dismissed the plaintiff's appeal on October 00, 000.[Grounds for recognition] The facts that there is no dispute, Gap's 1, 3, 5, Eul's 1 to 3 evidence (including branch numbers; hereinafter the same shall apply) and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The primary argument

A) The trustee in bankruptcy is a special institution for public interest, which leads the bankruptcy procedure as a judicial procedure, by controlling the interests of many interested parties such as the debtor and creditor, simultaneously with the declaration of bankruptcy. The trustee in bankruptcy bears the duty to maintain fairness and neutrality for all interested parties, so it cannot be deemed that the trustee in bankruptcy performs the business for profit-making purposes. Furthermore, the number of cases to be appointed as the trustee in bankruptcy, the amount of duties, remuneration, etc. are determined by the court, not the trustee in bankruptcy, but the trustee in bankruptcy. Since there is no autonomous decision-making right to the trustee in bankruptcy, the trustee in bankruptcy cannot be deemed to perform the business on its own account and responsibility. Furthermore, unlike the court, the trustee in bankruptcy bears the nature of assisting the court’s business, and the actual cost and time are more required, and the remuneration to be paid to the individual trustee in bankruptcy is also a small amount of remuneration to be paid to the trustee in bankruptcy. Accordingly,

B) The National Tax Service, around February 11, 200, expressed the public opinion through the authoritative interpretation that the remuneration of the trustee in bankruptcy constitutes other income (income 4601-22, 000.11.) and granted a legitimate trust to the trustee in bankruptcy, who is the taxpayer, for a period of 00 years since it expressed the public opinion through interpretation that the remuneration of the trustee in bankruptcy constitutes other income. If the Defendant determined that the remuneration of the trustee in bankruptcy cannot be seen as other income under a new personal bankruptcy system enforced from around October 000, it should be notified to the Plaintiff, but the Defendant did not take such measures. Accordingly, the instant disposition is contrary to the principle of trust and good faith.

2) First Preliminary Claim

Before the enforcement of the new personal bankruptcy system on October 000, the bankruptcy trustee does not belong to a certain full bench and has been receiving dividends from many full benchs and has been engaged intermittent activities. Accordingly, the part of the income of this case in at least 000 among the income of this case shall be deemed to fall under other income.

3) 2 Preliminary Claim

Since there is a justifiable reason that the Plaintiff could not cause the failure to report and pay the instant income by classifying the instant income as business income, each of the instant dispositions is illegal.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Where the instant income constitutes business income and other income

A) Relevant legal principles

According to Article 19(1) of the Income Tax Act, income generated from a professional, scientific, and technical service business (subparagraph 13) and income similar to income under subparagraphs 1 through 19, generated from continuous and repeated activities under his/her own account and responsibility for profit-making purposes (subparagraph 20) constitutes business income. On the other hand, pursuant to Article 21(1)19(1)9(c) of the Income Tax Act, income, other than interest income, dividend income, business income, labor income, pension income, retirement income, and capital gains, provided by an attorney-at-law using his/her knowledge or function, falls under the remuneration or other consideration for temporary services provided by him

Whether a certain income constitutes business income shall not be based on the form, name, and appearance of the transaction entered into between the parties, but rather on the substance of the transaction. The determination shall be based on the ordinary social norms, considering the substance of the taxpayer’s vocational activity, the period, frequency, mode, and the other party of the transaction, in light of whether the activity is for profit-making purposes, and whether the activity is continuous and repeated to the extent that it can be seen as business activity (see, e.g., Supreme Court Decisions 86Nu96, May 26, 1987; 200Du5203, Apr. 24, 2001).

B) Of the instant income, the part on the year 000 and 000

The following circumstances revealed by the details of the above disposition and the purport of the entire pleadings, i.e., ① the Plaintiff performed the business of 000 cases in 000 and 000 cases in 200, and the Plaintiff performed the business of 200 cases in light of the number and period of the Plaintiff’s case, it can be sufficiently recognized that the Plaintiff’s business has continuity and repetition of the Plaintiff’s business. Thus, it cannot be seen as a “temporary performance”, and ② even if the trustee in bankruptcy has the public interest nature, the Plaintiff received or paid 00 won in 00,000,000 as remuneration for the performance of the trustee in bankruptcy, and the above remuneration among the total amount of the Plaintiff’s annual total amount of income accrued to the Plaintiff. Thus, it is reasonable to view that the Plaintiff’s assertion that the Plaintiff’s business of 00 years in 200 and 300 years in 20 as remuneration for the performance of the business of 0 years in 20 years in 20 years in 200.

C) Of the instant income, the part in 000

Before the enforcement of the so-called ‘new ‘Personal Bankruptcy System' in October, 000, the bankruptcy trustee, including the plaintiff, did not belong to a specific full-time panel and has been receiving dividends from many full-time courts, and it seems that the case selected as the bankruptcy trustee was relatively little.

However, even in 000, the Plaintiff performed the business of a number of trustees in bankruptcy over one year, and received or paid 000 won or more as remuneration (which accounts for a half of the total amount of income in 000) and received remuneration for the Plaintiff’s business, so there is no difference between the date of the implementation of a new personal bankruptcy system that gets income through continuous and repeated activities under one’s own account and responsibility for profit-making purposes. Therefore, it is reasonable to deem that the portion of the income in this case, as well as the portion of the income in this case, falls under the business income, and therefore, this part of the Plaintiff’s assertion is groundless.

2) Whether the instant disposition violates the principle of trust protection and the principle of good faith

In general, in order to apply the principle of trust and good faith to the tax act of a tax authority in tax legal relations, the tax authority must name a public opinion statement that is the object of trust to the taxpayer. In addition, in order to establish a non-taxable practice under Article 18(3) of the Framework Act on National Taxes, the tax authority must not impose taxes on the tax authority for any specific circumstance, with the knowledge that there exists an objective fact that has not been imposed for a considerable period of time, and that the tax authority is able to impose taxes on the relevant matter. Such public opinion or opinion must be expressed explicitly or implicitly. However, in order to indicate an implied opinion, there must be circumstances where the tax authority expressed its intention not to impose taxes on the state of non-taxation for a considerable period of time, unlike a mere omission of taxation. In such cases, the application of the above principle must be denied if the expression of intention by the tax authority is merely a general opinion statement (see, e.g., Supreme Court Decisions 90Nu10384, Jul. 27, 1993; 200Du5203, Apr. 24, 2001)

As to this case, the authoritative interpretation of the National Tax Service cited by the Plaintiff is clearly related to the case where the trustee in bankruptcy provides services on a temporary basis. Accordingly, it cannot be deemed that there was a public opinion of the tax authority on the case where the trustee in bankruptcy continuously and repeatedly provides services as in the instant case. Moreover, it is merely a mere factual act to receive taxes reported and paid by the taxpayer in the form of tax return such as global income tax, and the tax authority cannot be deemed to have expressed a public opinion. Accordingly, since there is no public opinion of the tax authority that the remuneration for the trustee in bankruptcy’s business falls under other income, the disposition in this case does not constitute a violation of the principle of trust protection or the principle of good faith. Therefore, this part of the Plaintiff’s assertion is without merit.

3) Whether the imposition of additional tax is lawful

Under the tax law, penalty taxes are administrative sanctions imposed, as prescribed by the Act, in cases where a taxpayer violates various obligations, such as a declaration and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim. Therefore, in cases where a taxpayer cannot be aware of his/her obligations due to a conflict of views arising out of the meaning of tax interpretation beyond the scope of simple legal sites or misunderstandings, it is unreasonable for the taxpayer to be unaware of his/her duties due to a conflict of opinions arising out of the meaning of the interpretation of the tax law beyond the scope of misunderstandings, etc., or where there are circumstances where it is unreasonable to expect the party to perform his/her duties or where it is unreasonable to expect the party to perform his/her duties, etc. (see, e.g., Supreme Court Decisions 92Nu2936, Oct. 23, 1992; 2943; 2016Du4711, Oct. 27, 2016).

Article 19 (1) 20 of the Income Tax Act clearly states that the concept of business income under the Income Tax Act is "income obtained through continuous and repeated activities under his/her own account and responsibility for profit-making purposes." The problem of whether the remuneration for the trustee in bankruptcy is business income or other income is not a dispute in the interpretation of the concept of business income under the Income Tax Act, but a dispute over whether the remuneration paid by the trustee in bankruptcy is included in the concept of business income under the Income Tax Act, i.e., a dispute over the application of the law, is merely a dispute over whether the remuneration paid by the trustee in bankruptcy is included in the concept of business income under the Income Tax Act.

However, unlike the business conducted by other general business operators, the trustee in bankruptcy has a public nature different from the business conducted by other general business operators. For that reason, there is a conflict of opinion as to whether the remuneration received by the trustee in bankruptcy is business income earned by continuous and repeated activities under his/her own account and responsibility for profit-making purposes, or is other income paid in terms of public interest or other income. Therefore, it cannot be said that the Plaintiff’s remuneration received as the trustee in bankruptcy is merely a mere misunderstanding of legal sites or misunderstandings, on the ground that it

Furthermore, comprehensively taking account of the overall purport of the arguments in evidence Nos. 2, 24, and 26, the Seoul Central District Court may recognize the fact that the Plaintiff paid the instant income to the Plaintiff and withheld taxes by classifying it as other income. Thus, even though the court did not reach the public opinion of the tax authority, the tax authority also received the amount of tax reported and paid by classifying it as other income, even if the Plaintiff is a legal expert, it cannot be expected that the instant income should be returned and paid by classifying it as business income, after closely reviewing the legal reasoning that it is doubtful that the instant income constitutes business income different from the court’s business income.

Ultimately, there is a justifiable reason that the Plaintiff cannot be found to have caused the failure to report and pay the instant income by classifying the instant income as business income. Therefore, each of the instant dispositions is illegal.

3. Conclusion

Thus, the plaintiff's claim of this case is justified within the scope of the above recognition.

(s) The application for money shall be dismissed as it is without merit. It is so decided as per Disposition.