In case where penalty tax is already imposed on the donated property added to the taxable amount of inheritance tax due to failing to report the gift tax on the donated property, whether the unreported or under-reported amount, which serves as the basis for calculating the additional tax on the inheritance tax, is included in

In cases where additional taxes are already imposed due to a failure to report the gift tax, and where additional taxes are not imposed on the same donated property which is to be added to the taxable amount of inheritance tax at the time of filing the inheritance tax return, it is a result of imposing double burdens on the taxpayer, and where additional taxes are imposed on the same donated property due to a failure to report the gift tax, the value of donated property shall not be included in the "amount not reported or falling short of the tax base to be reported" under Article 26 (1) of the former Inheritance Tax Act (amended by Act No. 4662 of December 31, 1993) which provides the basis for calculating the additional taxes on the inheritance

Articles 4 (See current Article 13) and 26(1) (see current Article 78(1)) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993)

Plaintiff 1 and six others

Head of Dong Daegu Tax Office

Daegu High Court Decision 95Gu7186 delivered on September 13, 1996

Of the part against the plaintiffs in the judgment below, the additional tax portion shall be reversed, and this part of the case shall be remanded to the Daegu High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate brief).

Article 26(1) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993) provides that "in case where the director of the tax office fails to report inherited property (including donated property added to inherited property under Article 4) by the due date for report under Article 20, or makes a report below the due date for report, an amount equivalent to 20/100 of the amount calculated by multiplying the ratio of the amount not reported to the tax base determined pursuant to Article 25 or the ratio of the insufficient amount to the tax base to be reported, by the calculated inheritance tax amount, shall be added to the calculated inheritance tax amount." Thus, in case where the additional tax is already imposed on the same donated property due to the failure to report the inheritance tax amount due to the failure to report the inheritance tax amount due to the failure to report the donated property to be added to the calculated inheritance tax amount due to the failure to report the inheritance tax amount due to the failure to impose double burden on the taxpayer, it is reasonable to deem that the additional tax is not included in the tax base.

Nevertheless, even if the gift tax was imposed on the donated property at the time of imposing the gift tax, if the plaintiffs did not report on the donated property at the time of filing the inheritance tax return, the court below held that the donated property includes the “amount not reported or short of the tax base to be reported” under the above provision, which serves as the basis of calculation of the additional tax on negligent tax on inheritance, which is erroneous in the misunderstanding of legal principles as to the calculation of the additional tax on negligent tax on inheritance,

Therefore, without further proceeding to decide on the remaining grounds of appeal, the part of the judgment below against the plaintiffs is reversed, and this part of the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Yong-hun (Presiding Justice)