National High Court Decision 2006No2761 (Law No. 10, 2008)

A notice of tax payment following the failure to pay the withholding tax after the notice of change in the amount of income is not subject to a lawsuit for appeal.

A notice of tax payment of wage and salary income tax on the portion of failure to withhold after the notice of change in amount of income does not constitute an administrative disposition subject to a prior trial or appeal litigation independently from the collection disposition. Therefore, the revocation lawsuit against the duty payment notice shall be dismissed

The contents of the decision shall be the same as attached.

1. The instant lawsuit shall be dismissed.

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

The Defendant revoked each disposition of imposition of KRW 76,619,740 on June 1, 2006 against the Plaintiff of KRW 766,197,40 on earned income for the year 2004 as well as KRW 76,619,740 on the same day.

1. Details of the disposition;

A. On March 31, 2005, the Plaintiff reported the tax base and amount of corporate tax for the business year 2004 to the Defendant, and submitted a final settlement statement with the following contents.

B. On July 7, 2005, the Plaintiff: (a) included 83,276,265 won of the disposal loss in deductible expenses; (b) filed a request for correction as to KRW 9,01,489 of the corporate tax due to such inclusion; (c) on August 19, 2005, the Defendant decided to refund according to the above request for correction on August 19, 2005.

C. Around March 2006, the Commissioner of the National Tax Service revealed the following facts: (a) the Plaintiff sold 2,11,359,319 won in total and 112,523,895 won in securities during the business year of 2004 and 2,123,883,214 won in total, including 2,123,883,214 won in securities and investment securities; and (b) the amount was reverted to the Plaintiff’s representative director, the Plaintiff’s company; (c) however, it was discovered that the processed assets were appropriated as processed assets in the securities and investment securities account (However, the processed securities were 2,011,359,319 won in total and 113,227,752 won in total and 2,124,587,071 won in total and 2,523,895 won in total and 2,38,214 won in total.

D. On March 27, 2006, the Defendant adjusted the amount of processed assets in the calculation of earnings and losses (reserve) in accordance with the official land register of the Commissioner of the National Tax Service, and then disposed of KRW 2,130,94,132 as bonus to the Plaintiff, the representative director of the Plaintiff, and notified the Plaintiff of the change in the amount of income (hereinafter “the notice of change in the amount of income”).

E. On June 1, 2006, the Defendant issued a tax payment notice of KRW 766,197,40 (hereinafter “instant tax payment notice”) to the Plaintiff as well as resident tax of KRW 76,619,740 (hereinafter “instant tax payment notice”).

F. On July 21, 2006, the Plaintiff filed a request for adjudgment with the Director of the National Tax Tribunal, but was dismissed on January 10, 2008.

[Ground of recognition] Facts without dispute, Gap 1, 5, 76 evidence, Eul 1 and 2 evidence (including each number), the purport of the whole pleadings

2. Determination on the legitimacy of the instant lawsuit

A. Defendant’s defense prior to the merits

The Plaintiff’s obligation to pay tax on earned income subject to withholding was automatically established and finalized by the notice of change in the amount of income in this case, and the subsequent notice of tax payment in this case constitutes a collection disposition seeking the performance of the Plaintiff’s tax obligation established and finalized, and thus does not constitute a disposition subject to revocation lawsuit

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Disposition of the notice of change in the income amount of this case

In cases where the tax authority’s disposition of income and the notice of change in the amount of income accrued therefrom are given, the corporation that is the withholding agent shall be deemed to have paid the amount to the person to whom the income recorded in the notice was given on the date of receipt of the notice of change in the amount of income, and at the same time the liability to pay the withheld income tax is established, and the corporation that is the withholding agent shall pay the withholding tax according to the details of the disposition of income recorded in the notice of change in the amount of income to the head of the competent tax office by the 10th day of the following month. If the person fails to pay it, it shall be subject to penalty and criminal punishment. In light of the above, it is reasonable to deem that the notice of change in the amount of income in this case is a tax disposition directly affecting the tax liability of the corporation that is the withholding agent (see Supreme Court en banc Decision 200

(2) Disposition of the instant duty payment notice

The obligation to pay the income tax withheld at the time when the plaintiff is deemed to have paid the corresponding income to Dog, which is deemed to belong to 2,130,94,132 won as stated in the notice at the time of the notice of change in the income amount of this case. At the same time, the obligation to pay the income tax withheld at the time of establishment of the obligation to pay the withheld income. The plaintiff, who is the withholding agent, shall pay the withholding tax to the defendant by the 10th day of the following month in accordance with the details of the disposition of income recorded in the notice of change

On the other hand, in order for the Plaintiff to notify the Plaintiff of the fulfillment of his tax obligation that was established and confirmed as above by the above time limit, the Defendant issued the instant tax payment notice to the Plaintiff. Thus, the Plaintiff’s actual entity as a withholding agent of the instant tax payment notice cannot be deemed an administrative disposition subject to a prior trial procedure or appeal litigation independently from the collection disposition of the instant tax payment notice (or, the Plaintiff sought revocation of the portion of the additional dues among the instant tax payment notice, but the additional dues or increased additional dues under Articles 21 and 22 of the National Tax Collection Act naturally occur without the confirmation procedure of the tax office, and thus, the notification of the additional dues or increased additional dues cannot be deemed a disposition subject to an appeal litigation (see Supreme Court Decision 2000Du2013, Sept. 22, 200).

(3) Sub-determination

Therefore, the instant lawsuit is unlawful.

3. Conclusion

Therefore, since the lawsuit of this case is unlawful, it is decided to dismiss it. It is so decided as per Disposition.