Cho-2017-Divisions-2689 (Law No. 26, 2017)

Whether the statute of limitations has not expired or the right to collect has not been expired;

It is reasonable to view the exclusion period of imposition as 10 years, since the period of extinctive prescription of the right of collection is to be calculated from the day following the due date for payment, and it is clear that the five years have not elapsed since the extinctive prescription of the right of collection is to be calculated from the date following the due date for payment, by preparing a double sales contract which is different from the actual transaction and submitting it to

Article 26-2 of the Framework Act on National Taxes, the period for exclusion from national tax imposition, and extinctive prescription

2017Guhap3855 Revocation of Disposition of Imposing capital gains tax

KimA

○ Head of tax office

March 16, 2018

April 6, 2018

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 335,269,038 against the Plaintiff on January 1, 2016 is revoked.

1. Details of the disposition;

A. On September 23, 2004, the Plaintiff acquired the instant land at KRW 3,100,000,000 from NoBB (hereinafter “instant land”). On June 18, 2007, the Plaintiff and NoBB sold the instant land at KRW 3,10,000,00,000 to CC Housing Co., Ltd. (hereinafter “transferee”).

B. At the time of the above sales contract for the instant land, the Plaintiff and TradeB first transferred the instant land ownership to the assignee for the smooth progress of the business, and the Plaintiff and TradeB agreed to take over the assignee’s obligation in lieu of the sales price, and the remainder of KRW 1,000,000,000,000, and KRW 900,000,000, which were loaned each of the instant land in the name of the Plaintiff as security for the instant land, in lieu of the sales price, for the purpose of the smooth progress of the business.

C. On June 2, 2008, the Plaintiff: (a) filed a preliminary return of capital gains tax amounting to KRW 1,075,030,000 on the Plaintiff’s share in the instant land; (b) the transfer value of KRW 1,00,00,00,000; and (c) necessary expenses; and (c) the transfer margin of KRW 54,123,570; and (d) the transfer margin of KRW 129,159,653; (b) filed a preliminary return of capital gains tax with the Defendant on the instant land, wherein the purchase price was reduced to KRW 2,00,000,000, and submitted a sales contract that was

D. On December 1, 2016, the Defendant investigated whether the transfer value of the instant land is appropriate, and subsequently notified the Plaintiff as the payment deadline on December 31, 2016, on the ground that the actual transfer value of the instant land was confirmed to be KRW 3,100,000,000, the transfer value of the Plaintiff’s share was confirmed to be KRW 1,550,000,000.

E. The Plaintiff filed an appeal with the Tax Tribunal on May 4, 2017 upon receipt of an objection on January 4, 2017, but the Tax Tribunal dismissed the Plaintiff’s appeal on July 26, 2017.

Facts without dispute over the basis of recognition, Gap evidence 1 to Gap evidence 3, Eul evidence 1 to Eul evidence 8, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Although the Plaintiff and TradeB sold the instant land to the assignee in KRW 3,100,000,000, the Plaintiff and TradeB asserted to the effect that, at the time, the assignee reported the transfer income tax on behalf of the Plaintiff and TradeB by lowering the purchase price to KRW 2,00,000,000, and that the instant disposition that the Defendant did not investigate it and for which five years have elapsed since the exclusion period of imposition was excessive, or that it was unlawful as a disposition of imposition after the completion of the extinctive period of imposition or the extinctive period of national tax collection (the Plaintiff asserted that the extinctive period has expired, but it is also disputed with the intention of the exclusion period of imposition along with the completion of the extinctive period

B. Relevant statutes

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

C. Determination

1) As to the Do and argument of exclusion period of imposition

A) Article 26-2(1) of the Framework Act on National Taxes (amended by Act No. 8830 of Dec. 31, 2007) provides for the exclusion period for the imposition of national taxes. Article 26-2(1) of the Income Tax Act provides for the exclusion period for ten years from the date on which the national tax is assessable if a taxpayer evades, obtains a refund or deduction by fraudulent or other unlawful means (Article 10); seven years from the date on which the national tax is assessable if a taxpayer fails to file a tax base return within the statutory due date of return; five years from the date on which the national tax is assessable if he/she falls under subparagraphs 1 and 2 (Article 12-3(1)1 of the Enforcement Decree of the Framework Act on National Taxes (Article 12-3(1)1 of the Enforcement Decree of the Framework Act on National Taxes). Article 10(1) of the Income Tax Act provides that a resident shall file a tax base return from May 31, 2009 to the head of the competent tax office having jurisdiction over the competent tax office for the corresponding year.

"Fraud and other unlawful acts" under Article 9 (1) of the Punishment of Tax Evaders Act refers to fraudulent or other active acts that make it impossible or considerably difficult to impose and collect taxes. In addition to the declaration of acquisition value, the preparation and submission of a false contract along with the corporate account books that contain less sale price in order to keep credibility and conceal the actual transaction price constitutes "Fraud and other unlawful acts that make it considerably difficult to impose and collect taxes as active deceptive acts" (see Supreme Court Decision 2004Do2391, Jun. 11, 2004). In light of the above legal principles, the Plaintiff’s assertion that it is difficult to confirm the sale price of the instant land or that it is difficult for the transferee to arbitrarily report the transfer of the instant land under the above circumstances, namely, the Plaintiff’s transfer income tax should be determined by taking account of the circumstances leading up to the disposition of the instant case and the evidence mentioned above, and the Plaintiff’s assertion that the transferee of the instant land was obligated to pay the transfer income tax to the transferee as the transfer price of the instant land.

C) Therefore, it is reasonable to view that the exclusion period of imposition of capital gains tax following the transfer of the instant land shares is ten years, and it is clear that the instant disposition was made before the lapse of ten years from June 1, 2008, when the date on which capital gains tax from the transfer of the instant land shares can be imposed. Therefore, the Plaintiff’s assertion on this part is without merit.

2) As to the expiration of the statute of limitations of collection right

A) Under the premise that the tax liability is specifically determined, the extinctive prescription of the right to collect taxes means that the tax cannot be collected if the tax authority fails to take measures to collect delinquent taxes within a certain period of time. Article 27(1) of the Framework Act on National Taxes provides that “The extinctive prescription of the State’s right to collect national taxes shall be completed if it is not exercised for five years from the time it is possible to exercise such right.” Article 12-4(1)1 of the Enforcement Decree of the Framework Act on National Taxes provides that “The date following the statutory due date for payment of the tax return shall be the national tax for which the tax base and tax amount are determined by the return of the tax base and tax amount is determined, and Article 12-4(1)2 provides that the State’s right to collect national taxes may be exercised for the relevant

B) In light of the above relevant Acts and subordinate statutes, the instant disposition was conducted from June 1, 2008 to 10 years prior to the expiration of the exclusion period for imposition of transfer income tax on the transfer of the instant land, and thus, the period of extinctive prescription of the collection right is calculated from the day following the payment period for the instant disposition. As such, the payment period for the instant disposition was December 31, 2016, as seen earlier. Therefore, it is apparent that the statute of limitations for the collection right on the instant disposition was in progress from January 1, 2017, or that five years have not passed thereafter, and thus, the Plaintiff’s assertion on this part is without merit.

3. Conclusion

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