early 2010west2950 ( December 29, 2010)

In order to establish a set-off, there must be not only a set-off but also an indication of intent of set-off.

In order for a set-off to be established, not only must the offset but also must state the intention of set-off. Among the presidents of the accounts of the non-party company, the non-party company withdrawn the amount equivalent to the global income tax and resident tax for the omitted amount of the plaintiff's sales from the item of provisional deposit and accounted as substitute for the same amount as the item of deposit received. However, the non-party company cannot be deemed to have expressed its intention of set-off against the plaintiff, and it cannot be deemed to have offset the amount of the provisional deposit and the amount of the tax withheld.

2011Guhap10317 global income and revocation of disposition

Park XX

Samsung Head of Samsung Tax Office

October 26, 2011

November 16, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of global income tax of KRW 261,229,550 for the Plaintiff on June 1, 2010, imposed global income tax of KRW 540,148,140 for the year 207, and imposed global income tax of KRW 271,143,00 for the year 208, respectively.

1. Details of the disposition;

A. On May 13, 1994, the Plaintiff, a representative director, was a corporation established for the purpose of trading and distributing fishery products, and filed a report on discontinuance of business on December 18, 2009.

B. From May 14, 2009 to July 8, 2009, the director of the Seoul Regional Tax Office collected 2,814,753,943 won (697,886,508 won for the business year of 2005 to 697,86,508 won, 1,410,291,054 won for the business year of 2007 to 2007 to 706,576,381 won for the business year of 2008 to 706,576,381 won) from the non-party company as the representative director, and disposed of the non-party company to the director of the Songpa District Tax Office, and

C. On September 20, 2009, the non-party company withdrawn 1,023,07,170 won (249,594,140 won, 2005, 513,950 won, 257,89,080 won, 207, and 257,89,080 won, 2007, 2007, 2009, 2009, 257,99,080 won, which was reverted to 2,814,753,9,99,080 won) from the director of the Seoul Regional Tax Office on the same day upon receipt of the notice of change of income amount from the director of the Seoul Regional Tax Office, and submitted a revised statement of change of payment of withholding tax on the amount of the above recognized bonus to the director of the Song District Tax Office on October 10, 2009.

D. On November 30, 2009, the Plaintiff submitted a revised return of global income tax base after deducting the withholding tax amount for the above recognized bonus amount as the already paid tax amount. On November 30, 2009, the Plaintiff additionally paid the global income tax amount of KRW 8,234,690 ( KRW 5,881,110 reverted to year 205 + KRW 1,870,50 reverted to year 2007 + KRW 483,080 reverted to year 2008).

E. On September 1, 2009, the head of the Songpa District Tax Office issued a disposal of the total amount of KRW 1,010,296,341, including the corporate tax, which was determined and notified to the non-party company on December 28, 2009, on the ground of the non-property on December 28, 2009. On December 8, 2009, the head of the Song District Tax Office decided and notified the non-party company of the withholding tax amount for the amount of the above recognized bonus, but revoked the decision on January 5,

F. On June 1, 2010, the Defendant issued a revised and notified the Plaintiff of the global income tax of KRW 261,229,550 (including additional tax of KRW 34,325,770) for the year 2007, global income tax of KRW 540,148,140 (including additional tax of KRW 73,096,860) for the year 2007, global income tax of KRW 271,143,00 (including additional tax of KRW 35,010,410) for the year 208, on the ground that the non-party company did not actually pay the withholding tax and did not actually withhold the withholding tax (hereinafter “each disposition of this case”).

G. On August 25, 2010, the Plaintiff filed an appeal with the Tax Tribunal on each of the instant dispositions, but was dismissed on December 29, 2010.

[Ground for Recognition: absence of dispute, Gap evidence 1, 6-1 through 3, Gap evidence 2-1 through 6, Gap evidence 3-5, Gap evidence 12, 13, 16, Eul evidence 1, 4, 5-1 through 4, Eul evidence 6-1 through 7-8, and the purport of whole pleadings]

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

The non-party company has already collected withholding tax on the above recognized bonus amounting to KRW 2,814,753,943, by offsetting the claims held by the plaintiff against the non-party company and the claims equivalent to the withholding tax amount of KRW 2,814,753,943, which it had against the plaintiff. Thus, even if the non-party company did not pay it at the tax office, the plaintiff could deduct the amount equivalent to the above amount of withholding tax at the time of filing a return on global income tax

(b) Related statutes;

As shown in the attached Table related Acts and subordinate statutes

C. Determination

1) Even though Class A earned income is a source tax, if the income is to be reported by adding it to the global income tax base under the Income Tax Act, and the source tax was omitted, it may be imposed on the income earner as global income tax (see, e.g., Supreme Court en banc Decision 79Nu347, Sept. 22, 1981). However, after the source tax was collected by a withholding agent, it may not be imposed again on a taxpayer on the ground that the source tax obligor did not pay it at the tax office (see, e.g., Supreme Court Decision 80Nu288, Oct. 13, 1981).

According to Article 127 of the Income Tax Act (amended by Act No. 9897 of Dec. 31, 2009), a person who pays income amount or class amount is obligated to withhold income tax. Although there is no express provision in law, a withholding agent has a right to allow a taxpayer to pay the tax amount at source, it does not refer to a right to allow a set-off as an exercise of public authority, but a right to indemnity or a right to advance reimbursement. Accordingly, as long as a withholding agent has paid income tax, a withholding agent has a duty to accept or pay a set-off the tax amount regardless of whether the source tax has been paid or not, it is reasonable to view the relationship between the withholding agent and the taxpayer as a pure private law claim and a liability relationship (see, e.g., Supreme Court en banc Decision 2006Da49789, Apr. 21, 1964; 63Da843, Apr. 21, 1964).

2) In light of the following circumstances, it is difficult to view that the Plaintiff paid KRW 1,023,30,170 on September 20, 209 that the Plaintiff submitted a set-off declaration to the non-party company on the following grounds: (a) the above acknowledged facts; (b) evidence Nos. 7 through 16, Eul’s evidence Nos. 1 through 5, Eul’s evidence Nos. 6-1 through 4, and Eul’s evidence Nos. 7-1 through 8; and (c) the Plaintiff paid KRW 1,023,30,170 in total to the non-party company on September 20, 2009, when the Plaintiff asserted that the non-party company had declared a set-off declaration, or actually expressed its intention of set-off. Accordingly, it is insufficient to deem that the Plaintiff paid the non-party company the total amount of withholding taxes for KRW 2,814,753,943.

A) According to the Plaintiff’s assertion, it is doubtful whether the source of the provisional amount claimed by the Plaintiff is true and not only because the Plaintiff’s sales claim incurred in running a business prior to the incorporation of the non-party company was collected after the non-party company was established and deposited in the corporate account of the non-party company, the Plaintiff’s personal borrowed money into the corporate account of the non-party company, and the non-party company’s business employees were deposited in the non-party company’s corporate account. The Plaintiff did not disclose the specific amount of each of the above money, and the Plaintiff did not submit data that the Plaintiff borrowed personal money, and the amount that the business employees of the non-party company received from the customer is owned by the non-party company. Thus, it cannot be deemed that the Plaintiff has a claim for the provisional amount.

B) The president of the account of the non-party company stated that the Plaintiff and the non-party company traded more than KRW 1 billion each month from January 2003 to September 2009, except in June 2009. However, in the corporate tax return of the non-party company, the non-party company was established from January 1994 to 2007, and the non-party company continued to receive the provisional payment from the Plaintiff from 1994 to 2007. Therefore, it is doubtful that the provisional payment transaction from 1994 to 2007, which is entered in the ledger of the above account, is true.

C) The non-party company stated that the president of the account of the non-party company and the non-party company engaged in 2008 and 2009 in the amount similar to the previous bank transactions. The account president of the non-party company stated that the Plaintiff deposited the provisional deposit in the account of the non-party company and the details of deposit in the non-party company's account are inconsistent. Thus, there is doubt as to whether the provisional deposit transactions in 2008 and 2009, as stated in the account ledger of the above account, were true.

D) Although the non-party company did not pay the tax withheld amounting to KRW 2,814,753,943 of the above recognized bonus amount to the tax authority, if the non-party company paid KRW 15,054,00,000 for employees’ wage from July 2009 to December 2, 2009, it is doubtful that the non-party company actually offsets the above recognized bonus amount and the claim for provisional payment.

E) In order to establish a set-off, there must be not only a set-off but also an expression of intent of set-off. Of the president of the account on September 20, 2009, the non-party company withdrawn KRW 1,023,307,170, which is the sum of the Plaintiff’s tax evasion amounting to KRW 2,814,753,943, and the amount equivalent to the Plaintiff’s global income tax and the resident tax, from the provisional revenue item, from the revenue item on September 20, 2009, and accounts as substitute for the same amount as the deposit item, or the non-party company cannot be deemed to have expressed its intent of set-off against the Plaintiff on October 10, 209, and there is no other data supporting this.

3. Conclusion

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