National Tax Service Review Donation 2010-0108 ( October 17, 2011)

In case where only the second gift tax has not been reported, the propriety of the additional tax against insincere return

Even if the duty to report aggregate of the primary donated property was not fulfilled due to the failure to perform the duty to report the second donated property in the event of the second donation, the duty to report aggregate of the primary donated property cannot be imposed on the portion of the failure to report aggregate of the primary donated property, and thus the disposition of imposition is unlawful.

2011Revocation of revocation of disposition imposing gift tax, 10010

Doz. Doz.

○ Head of tax office

June 10, 201

July 6, 2011

1. The Defendant’s disposition of imposition of gift tax of KRW 5,690,390 against the Plaintiff on August 2, 2010 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On April 11, 2008, the Plaintiff received donation from KimB, the Plaintiff’s mother, DB, 719 EEE apartment 109 dong 906 (hereinafter “the first donation”). On July 11, 2008, the Plaintiff reported and paid KRW 83,700,000,000, which calculated the donated property at KRW 870,000.

B. After that, on August 13, 2008, the Plaintiff did not report the re-donation of KRW 302,00,000 from the FF, the father of the Plaintiff, by the due date for reporting the gift tax. On November 19, 2009, the Plaintiff received a notice of report and payment after the due date from the Director of Seoul Regional Tax Office, and on December 3, 2009, did not report the additional amount of KRW 302,00,000 for the donated property of KRW 30,00,000 for the reason that it did not report the additional amount of KRW 1,70,00,000 for the first donated property of KRW 870,00,000 which was previously reported pursuant to Article 47(2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9269, Dec. 26, 208; the Defendant did not report the additional additional amount of KRW 1,60,006,200.

D. The Plaintiff, who was dissatisfied with the instant disposition, filed a request for examination with the Commissioner of the National Tax Service on October 28, 2010, but the said request for examination was dismissed on January 17, 2011.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 through 8, Eul evidence No. 1, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

As long as the Plaintiff did not file a tax base return under the tax law within the statutory due date of return at the time of the second donation, it is possible to impose the additional tax on negligent tax returns on the basis of the provision on the additional tax without filing a tax return under Article 47-2(1) of the former Framework Act on National Taxes, and on the basis of the provision on the additional tax for underreporting under Article 47-3(1) of the former Framework Act on National Taxes, which assumes that the Plaintiff filed a tax base return within the statutory due date of return, the Defendant, by analogying Article 78(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003) which was already deleted by the amendment of statutes, imposed the additional tax for underreporting for the portion for which the Plaintiff failed to fulfill the duty to file a tax base return on the first donated property separately. This is an unlawful disposition that is obviously contrary to the

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

In full view of the following circumstances recognized by comprehensively taking account of the evidence adopted earlier and the overall purport of the pleadings, it is reasonable to view that even if the Plaintiff failed to perform its duty to levy the gift tax upon the second donation and thereby failed to perform its duty to file a report on aggregate of the first donated property, the penalty tax for failure to file a report on aggregate of the first donated property may not be imposed on the portion of failure to file a report on aggregate of the first donated property under the former Framework Act on National Taxes. Therefore, the disposition of this case imposing the additional tax on negligent return on aggregate of the first donated property is unlawful.

1) Article 47-2(1) of the former Framework Act on National Taxes provides that additional tax on negligent tax returns may be imposed on the premise that “where a taxpayer fails to file a tax base return pursuant to the tax law by the statutory deadline for filing a tax return,” whereas Article 47-3(1) of the former Framework Act on National Taxes provides that additional tax on negligent tax returns may be imposed on the premise that “where a taxpayer files a tax base return within the statutory deadline for filing a tax return within the statutory deadline for filing a tax return,” which is obviously unconformity with each other. Thus, in the instant case, if the Plaintiff fails to file a tax base return within the statutory deadline for filing a tax return at the time of secondary donation, it would be possible to impose additional tax on the Plaintiff on the basis of Article 47-2(1) of the former Framework Act on National Taxes, and that additional tax on negligent tax returns may not be imposed on the same ground that Article 47-3(1) of the former Framework Act on National Taxes was amended by Act No. 1010, Dec. 30, 2003>

2) Meanwhile, since the first donation is calculated by adding up the value of donated property at the time of the second donation, if a taxpayer fails to fulfill the duty to report at the time of the second donation, it may be deemed that the entire amount of donated property including the first donation that has the duty to report is not imposed. Thus, it may be interpreted that the additional tax may be imposed on the portion of the first donation on the ground of non-declaration of the additional tax under the former Framework Act on National Taxes, rather than the provisions on non-declaration of the additional tax on non-declaration of the first donation. However, even if a taxpayer fails to report on the first donation at the time of the second donation, even if the first non-declaration of the additional tax on non-performance of the duty to report on the first donation, it may be deemed that the first non-declaration of the additional tax on non-performance of the duty to report on the second donation should not be included in the first non-declaration of the additional tax on the non-performance of the duty to report on the second donation, which may not be included in the first non-declaration of the additional tax on the donation.

3) As the Framework Act on National Taxes was amended by Act No. 10405 on December 27, 2010, where there is any amount added to the previous donated property due to the re-donation, a provision was newly established to impose penalty tax for non-reported or under-reported return on the basis of the balance obtained by deducting the calculated amount of the previous gift tax from the calculated amount of the gift tax at the time of re-donation (Articles 47-2(8)2 and 47-3(3)). If a person fails to fulfill his/her duty to report at the time of re-donation or under-reported return, only the portion of re-donation except the previous donated portion may be imposed on non-reported or under-reported return.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is so decided as per Disposition.