Seoul Administrative Court 2012Guhap21352 ( November 15, 2012)

Cho High Court Decision 201Do3282 (Ob. 22, 2012)

The exclusion period of global income tax applied at the time of bonus disposition;

The exclusion period of global income tax shall, in principle, apply to the cases where the amount of embezzlement is equal to the deductible expenses and the representative disposes of the bonus, or the exclusion period of global income tax shall apply to cases where the representative fails to file a report despite the business income

2012Nu37830 Notice of change in amount of income

AAA, Inc.

Head of the District Tax Office

Seoul Administrative Court Decision 2012Guhap21352 decided November 15, 2012

August 21, 2013

September 11, 2013

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

On June 1, 2011, the defendant revoked the disposition of notice of change in the income amount of the OOO members, disposed of as the bonus belonging to the year 2005 by making the income earner BB against the plaintiff on June 1, 201.

2. Purport of appeal

The same shall apply to the order.

1. The part citing the judgment of the court of first instance

The reasoning of the judgment of this court is as follows: 1. The details of the disposition and 2. Whether the notice of change in the income amount of this case is legitimate; 1. The plaintiff's assertion and 2. The related statutes are the relevant part of the judgment of the court of first instance.

2. Determination

A. Assertion and issue

The plaintiff asserts that since the exclusion period of imposition of the global income tax of BB from the disposition of this case is five years pursuant to Article 26-2 (1) 3 of the former Framework Act on National Taxes, notice of change in the income amount of this case made after the exclusion period is expired is unlawful. The defendant, and BB, the original taxpayer, did not submit a tax base return within the statutory declaration period, and the above act of BB, as it constitutes "where the taxpayer, as provided in Article 26-2 (1) 1, evades national tax due to fraudulent or other unlawful act," and the exclusion period of imposition of the global income tax falls under seven years or ten years pursuant to Article 26-2 (1) 1 or 2 of the above Act.

Therefore, it is reasonable to view that the exclusion period for imposition of global income tax for the year 2005 of BB from the disposition of the instant income falls under any of the 10 years, 7 years, and 5 years as stipulated in the subparagraphs of Article 26-2(1) of this Act.

B. Relevant provisions and legal principles

The amount of income disposed of as a result of the recognition of the representative of a corporation pursuant to the provisions of the Corporate Tax Act shall be deemed to have been paid on the date when the corporation receives the notice of change in the amount of income in question, but it is merely deemed to have been paid to the representative in reality, and in order to establish the obligation to pay the source income of the corporation in receipt of the above notice of change in the amount of income, it shall be deemed to have been paid at the time when the original taxpayer receives the notice of change in the amount of income. If the original taxpayer's obligation to pay income tax has already ceased to exist due to the degree of the exclusion period for imposition of income tax, it shall not be established, and it shall be illegal (see, e.g., Supreme Court Decision 2007Du20959, Jan. 28, 2010). According to the provisions of Article 26-2 (1) of the former Framework Act on National Taxes, if the amount of income is deemed to have been disposed of for 20 years from the date when the taxation authority imposes national tax on the corresponding amount for 10 years.

(c) Whether the exclusion period for taxation is ten years or more;

According to the above facts, if BB received a false tax invoice in the course of purchasing goods from CCC and appropriated the purchase amount in excess of the Plaintiff’s account book, it is merely intended to conceal the fact that the embezzlement of this case was deducted, and it is difficult to view that it was intended to evade the income tax on bonus attributable to himself/herself because it was anticipated that the Defendant’s disposition of income should be made in the future with respect to the embezzlement of this case, and it is difficult to view that it was intended to evade the income tax (see, e.g., Supreme Court Decision 2007Du20959, Jan. 28, 2010). With respect to BB global income tax from the disposition of this case, the exclusion period for exclusion is ten years, and it cannot be deemed that the taxpayer under Article 26-2(1)1 of the former Framework Act on National Taxes, which considers the exclusion period for exclusion as 10 years, constitutes “where the taxpayer evades national tax

(d) Whether the exclusion period of imposition is seven or five years;

In addition, Articles 70(1) and 73(1) of the former Income Tax Act are exempted from the obligation to file a final tax base return if a person with only earned income has paid income tax through a year-end tax settlement, and a resident with only earned income is determined and collected by the Government through a year-end tax settlement after withholding the relevant earned income tax and making the said tax payment through a year-end tax settlement, and thus, there is no substantial need for the person to whom the relevant income accrued to make a separate return. In such a case, it is intended for a withholding agent to ensure convenience of a taxpayer by granting a exemption from the final tax base return procedure, in view of the fact that a withholding agent is seeking to withhold the relevant employee’s earned income tax in accordance with the procedures prescribed by the relevant Acts and subordinate statutes, such tax shall be deemed to have the same effect as that of the relevant employee’s implementation of the final tax base return procedure. Therefore, if a resident with only earned income has paid income tax through a year-end tax settlement, barring special circumstances (see Supreme Court Decision 2013Du55555, Jul. 1113).

However, this legal principle, in light of the relevant laws such as Article 73 (1) of the former Income Tax Act, cannot be applied in cases where there are business income other than earned income, and in cases where the relevant employee has business income other than earned income, it shall be deemed that the final return procedure for global income tax base is exempted even if he paid the global

shall not be effective.

In this case, the above facts and evidence No. 1 were comprehensively taken into account, and BB paid income tax through withholding and year-end tax settlement on wage and salary income accrued in 2005, while BB received support allowances from DD in 2005 as the passbook in its name, and these facts are confirmed as the business income belonging to BB in 2005 as the result of inquiries into the integrated national tax system, and BB did not submit the assessment standard of global income tax for 2005 (including evidence No. 5-1 through 3) within the statutory reporting period (including evidence No. 5-1 through No. 3) alone. In addition, even if BB received support allowances as the passbook, it is not sufficient to accept the plaintiff's assertion in light of the facts and evidence that it actually performed business under the substance over form principle, and it cannot be viewed as income of BB.

Therefore, even if BB having business income, other than earned income, paid the comprehensive income tax by withholding and year-end settlement, it is obligated to perform the procedure for filing a final return on the tax base of global income accrued in 2005, and as long as the obligation is not fulfilled, it is reasonable to view that the exclusion period for imposition of notice of change in the amount of income

Meanwhile, 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. 19461, Apr. 28, 2006) in cases of national taxes, such as global income tax, on which the day following the due date for which the tax base and tax amount of the relevant national tax can be imposed can be the date on which the due date for which the tax base and tax amount of the relevant national tax can be reported, and under Article 70(1) of the former Income Tax Act, the due date for which the due date for filing the global income tax to be reported is until May 31, 2005 of the year following the relevant taxable period, the period for exclusion of seven years for global income tax of BB shall begin to run from June 1,

Unlike this, the Plaintiff’s assertion cannot be accepted.

3. Conclusion

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.