Cho High-2017-Seoul Government-2936 (2.05)

It shall not be subject to additional tax exemption because it is not reported to the trustee in bankruptcy as well as other income.

If a trustee in bankruptcy fails to report his/her remuneration as other income, non-performance of his/her obligation to report and pay shall not be deemed to be due to the comparison of opinions in the interpretation of the tax law on the nature of income of the trustee in bankruptcy; thus, it shall not be subject

Article 19 of the Income Tax Act

Seoul Administrative Court-2018-Gu Partnership-61413 ( September 21, 2018)

AA

○ Head of tax office

2018.08.24

2018.21

1. All of the plaintiff's claims are dismissed.

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

Cheong-gu Office

The imposition of global income tax for the year 201 on March 10, 2017, by the head of the tax office of ○○○ on the Plaintiff by the head of the tax office of global income *,***,****(including additional tax 8,***,***)), global income tax for the year 2012, global income tax for the head of the tax office of ○○○, △△△, △△, △△△ (including additional tax, additional tax), and global income tax for the year 2013, which belongs to March 15, 2017, and the imposition of global income tax for the year 2013 (including additional tax ○○,○○, ○○○, and ○○○○ (including additional tax), the imposition of local income tax for the year 2011, **** (including additional tax), and the imposition of local income tax for the year 2017, *315 (including additional tax for the year △△△*).

1. Details of the disposition;

A. The Plaintiff, as an attorney-at-law, was appointed as a trustee in bankruptcy from 2011 to 2013 and performed his/her duties. The Plaintiff received the instant remuneration in total from 2011 to 2011, △△△△△△, △△△, △△△△, 2012, * in 2013******* in 2011,***** in 2012, ** in 2012, △△△, △△△, △△△, △△△△, △△△△△, 2013, and △△△△△ in 2013, and the Plaintiff was not included in the instant remuneration at the time of filing a global income tax return for the year 201 to 2013.

B. On March 10, 2017, the head of the instant tax office deemed the instant remuneration as business income and imposed global income tax of 18,353,030 won (including additional tax) and global income tax of 339,220 won (including additional tax) for the year 2013, March 15, 2017. However, the Plaintiff’s global income tax for the year 2011 includes 14,731,390 won (including additional tax, 5,514,475 won), global income tax for the year 2013 includes 242,690 won (including 63,932 won), global income tax for the year 2013 as global income tax for the following reasons: (a) global income tax for the year 2011 was imposed upon the Plaintiff; and (b) global income tax for the year 2013 including 20 years and 2130 years, 2017; and (c) global income tax for the remaining tax for the year 2013 years 28.

C. On March 10, 2017, the head of each Si/Gun/Gu imposed a local income tax of 1,835,300 (including additional taxes) and 33,920 won (including additional taxes) on March 15, 2017. Since the imposition of the local income tax of 2013 as mentioned in the above paragraph (b) was revised in 201, global income tax of 2013 and the imposition of the additional tax in 2013, the local income tax of 2011 was revised in 1,473,130 won (including additional taxes), the local income tax of 2013 was revised in 24,260 won, and the local income tax of 2013 was imposed in 20,000 won (including additional taxes); the local income tax of 2012,834,010, and the local income tax of 201,000 won and the additional tax were imposed in 201.

D. On June 1, 2017, the Plaintiff filed an appeal with the Tax Tribunal on the instant tax disposition. On February 5, 2018, the Tax Tribunal dismissed the Plaintiff’s claim regarding the instant global income tax disposition, and 2) on March 12, 2018, rendered a decision to dismiss the Plaintiff’s claim regarding the instant disposition imposing local income tax.

Facts without dispute over the basis of recognition, Gap evidence 1 through 6, Eul evidence 1 through 5, Eul evidence 1 to 3, and the purport of the whole pleadings

2. Related statutes;

It is as shown in the attached Form.

3. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

1) Taking into account the legal status of the trustee in bankruptcy and the public interest of the expenses paid to the trustee in bankruptcy

On the other hand, it is difficult to view that there is profit-making nature in the business performed by the trustee in bankruptcy. In addition, even though the Plaintiff performed the business of the trustee in bankruptcy since 201, it was merely an incidental business, and it was no longer done after 1 case in 2013, it is difficult to deem that the Plaintiff continuously and repeatedly performed the business of the trustee in bankruptcy. Accordingly, the instant taxation disposition made by deeming the instant remuneration business income as illegal.

2) When the Plaintiff returns the comprehensive income tax for the year 2011 to 2013, the trustee in bankruptcy

There were different views under tax law on whether the remuneration is not business income or other income. The instant remuneration was withheld at the time when the payment was made, and the income belonging to year 2013 among the instant remuneration can be concluded as separate taxation, and the Plaintiff did not have any duty to make a aggregate report thereon.

Therefore, even if the Plaintiff did not report and pay the instant remuneration as business income, there is a justifiable reason not to charge the Plaintiff’s breach of duty, and thus, the disposition imposing the instant penalty tax is unlawful.

B. Whether the instant remuneration is business income

1) Article 19(1)20 of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014) provides for “income derived from continuous and repeated activities under his/her own account and responsibility for profit-making purposes” as business income, and Article 21(1)19(c) of the same Act provides for remuneration or other consideration that a person with professional knowledge or special skills, such as an attorney-at-law, receives for services temporarily by utilizing his/her knowledge or skills.

Business income stipulated under the Income Tax Act refers to income generated from a business, which is a continuous, repeated social activity, in an independent position for profit-making purposes. Whether a certain income constitutes business income or other income, which is a lump-sum income, ought to be determined in accordance with social norms, by taking into account the substance, period, frequency, mode, and all other circumstances before and after the activity of a person liable to pay tax, taking into account (see, e.g., Supreme Court Decision 2017Du36885, Jul. 11, 2017).

2) Considering the following circumstances that the aforementioned disposition process and Eul’s each statement as mentioned in the evidence Nos. 5-1 through 3 as a whole, it is reasonable to view that the instant remuneration constitutes business income under the Income Tax Act, which is “income obtained by continuously and repeatedly performing its own calculation and responsibility for profit-making.”

A) The Plaintiff, an attorney-at-law, is a bankruptcy trustee from 2011 to 2013.

With respect to the total of 38 cases in 2011 and the total of 26 cases in 2012, the remuneration of △△△△△, △△△△△, △△△△△, and △△△△, 2013 was received as a sum of KRW ********** in light of the period during which the Plaintiff performed the duty of bankruptcy, △△△△, △△△△, and △△△△△. In light of the period during which the Plaintiff was performing the duty of bankruptcy, the frequency of the performance, and the size of profit, etc., the continuity and repetition, as well as the commerciality thereof are recognized. Although the Plaintiff was appointed as a trustee in bankruptcy according to the court’s decision and

B) The bankruptcy trustee is appointed by the court, but is against the will of the party.

It is impossible to appoint a trustee in bankruptcy, and shall be supported and appointed by the public notice of the recruitment of the trustee in bankruptcy in the court, and shall be supervised by the court in order to prevent any unlawful or unjust result in the course of performing his/her duties, and the plaintiff shall not be deemed to have performed the above long-term insolvency

C) As above, the Plaintiff was a bankruptcy trustee for a long time, and considerable in performing its business.

As long as the remuneration was received in consideration of the number of remuneration, it is difficult to regard it as the remuneration for the service temporarily provided by utilizing the knowledge or skills.

D) If the Plaintiff received remuneration for one business in 2013, then the Plaintiff becomes bankrupt.

Even if the Plaintiff was not appointed as a person, the remuneration that the Plaintiff received in 2013 was paid in return for the performance of a series of duties that had been previously performed, so it is difficult to deny the profit-making, continuity, and reflectability.

3) Therefore, we cannot accept this part of the Plaintiff’s assertion on a different premise.

C. Whether the imposition of additional tax in this case is unlawful

1) Penalty taxes under tax law are administrative sanctions imposed, as prescribed by the Act, in cases where a taxpayer violates various obligations, such as reporting and payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim. The taxpayer’s intention or negligence is not considered, but does not constitute justifiable grounds that do not cause any breach of the duty (see, e.g., Supreme Court Decision 2007Du3107, Apr. 23, 2009).

2) Details of the instant taxation disposition and the period of the instant taxation disposition before the Plaintiff

In light of the fact that the Plaintiff did not entirely report the portion of the instant remuneration as other income, it cannot be deemed that the Plaintiff’s nonperformance of the duty to report and pay the instant remuneration is due to the establishment of an opinion in the interpretation of the tax law on the nature of the income. It is difficult to deem that there exists a justifiable ground for the Plaintiff to have failed to fulfill the duty to report and

3) Therefore, the Plaintiff’s assertion on this part cannot be accepted.

4. Conclusion

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

Related Acts and subordinate statutes

▣ 구 소득세법(2014. 1. 1. 법률 제12169호로 개정되기 전의 것)

Article 19 (Business Income)

(1) Business income shall be the following income, generated in the relevant taxable period:

1. Income generated from agriculture (excluding crop cultivating business; hereinafter the same shall apply), forestry and fisheries;

2. Incomes accruing from mining;

3. Incomes accruing from the manufacturing industry;

4. Income generated from electricity, gas, steam or water supply business;

5. Income generated from sewage, waste disposal, raw material recycling and environment restoration business;

6. Incomes accruing from the construction business;

7. Income generated from wholesale business and retail business;

8. Income generated from transportation business;

9. Incomes accruing from the restaurant and lodging businesses;

10. Incomes accruing from the publishing, video, broadcast communications, and information service business;

11. Incomes accruing from the banking and insurance businesses;

12. Income generated from real estate business and rental business: Provided, That in cases of rights prescribed by Presidential Decree, such as easements, etc.

income accrued by making such income shall be excluded.

13. Professional, scientific and technological service business (excluding research and development business prescribed by Presidential Decree; hereinafter the same shall apply);

income from such income; and

14. Income generated from business facility management business and business support service business;

15. Income generated from educational service business (excluding educational institutions prescribed by Presidential Decree; hereinafter the same shall apply);

16. Health business and social welfare service business (excluding social welfare business prescribed by Presidential Decree; hereinafter the same shall apply);

income accruing from the business;

17. Income generated from services business related to art, sports, and leisure;

18. Associations and organizations (excluding associations and organizations prescribed by Presidential Decree; hereinafter the same shall apply), repair and other matters;

Income generated from private service business;

19. Income generated from family-employed activity;

20. Incomes similar to those under subparagraphs 1 through 19, which are self-employed for profit.

income obtained through continuous and repeated activities under the accounts and responsibilities of the corporation;

Article 21 (Other Incomes)

(1) Other income shall include interest income, dividend income, business income, labor income, annuity income, retirement income, and capital gains.

The following shall apply:

19. Personal services (subject to subparagraphs 15 through 17) falling under any of the following items:

Consideration received for temporary furnishing of services (excluding services)

(c) An attorney-at-law, certified public accountant, tax accountant, architect, surveyor, patent attorney, or other professional knowledge or special case;

Providing a person with a function with remuneration or other consideration by utilizing his/her knowledge or function;

services to be provided

▣ 구 소득세법(2014. 12. 23. 법률 제12852호로 개정되기 전의 것)

Article 14 (Calculation of Tax Base)

(3) No amount of income under the following subparagraphs shall be included in the calculation of the tax base of global income:

7. Other income falling under any of the following items (hereinafter referred to as "other income subject to separate taxation"):

(a) Other income under Article 21 (1) 1 through 22 (b), (d) and (e);

other income under paragraph (2) of the same Article shall not exceed three million won, while Article 127 shall apply thereto.

income withheld pursuant to this section (when a resident with the relevant income calculates the tax base of global income;

(except in cases of adding up such amounts)