early 2010 Heavy299 ( November 02, 2010)

In the event that the value of donated property is not reported, the penalty tax for underreporting shall be imposed.

Where the gift tax is not reported by adding up the primary donated property to the secondary donated property, because the reported tax base falls short of the tax base to be reported under the tax law, the disposition imposing additional tax on underreporting is lawful.

2011Revocation of disposition imposing gift tax, 4184

XX

O Head of tax office

June 23, 2011

July 14, 2011

1. The plaintiff's claim is dismissed.

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

Of the imposition of gift tax of KRW 16,52,250 against the Plaintiff on August 3, 2010, the imposition of penalty tax of KRW 5,565,689 shall be revoked.

1. Details of the disposition;

A. On December 16, 1999, the Plaintiff reported and paid KRW 48,461,403 of the gift tax calculated by adding the taxable value to KRW 349,230,018, as stated in the first report on the attached Table 1, on March 15, 200, after receiving a donation of a building located in 300-75 from the Seocho-gu Seoul AAdong 2, his father (hereinafter “the first donation”).

B. On June 26, 2009, the Plaintiff reported and paid KRW 3,647,666, which is calculated by adding the taxable value and tax base of the secondary donated property to the secondary donated property on July 3, 2009, after receiving a donation of 43-1,026 square meters of forest land in BB-Eup, BB-Eup, Gyeonggi-do (hereinafter “the secondary donated property”) from the SeoA on June 26, 2009, without adding them to those of the secondary donated property as stated in the attached Table 1.

C. On August 9, 2010, the Defendant decided and notified the Plaintiff of KRW 16,52,250 (i.e., gift tax amount of KRW 67,964,527 + additional tax of KRW 5,565,689 + additional tax of KRW 920,99 – KRW 57,898,965) due diligence, as indicated in the Defendant’s decision-making details in attached Table 1 list (hereinafter “the instant disposition”).

D. The specific grounds for the instant disposition cited by the Defendant are as follows.

1) In accordance with Articles 47(2) and 68(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter the same), the Plaintiff filed a return on the gift tax for the secondary donation, without adding up the tax base for the primary donated property, even though the sum of the first donated property is reported, the Plaintiff filed a return on the tax base of the primary donated property.

2) This is the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter the same)

Inasmuch as the reported tax base under Article 47-3(1) falls short of the tax base that should be reported under the tax laws, the Plaintiff should pay penalty tax for underreporting calculated under the above law (=calculated tax amounting to KRW 67,964,527 】 Standard 319,230,018 / Taxation Standard 389,82,638 x 10/100).

E. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on September 10, 2010, but the appeal was dismissed on November 2, 2010.

[Ground of recognition] Unsatisfy, Gap evidence 1, 2 (including additional number), Eul evidence 1, the purport of the whole legal theory

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff already voluntarily declared and paid gift tax on the primary donated property, and voluntarily declared and paid gift tax on the said donated property in accordance with the secondary donated property. However, at the time of reporting the gift tax pursuant to the secondary donated property, the Plaintiff did not report the taxable value and tax base of the primary donated property that was already reported, as it did not fall under the case where the tax base reported pursuant to Article 47-3(1) of the former Framework Act on National Taxes falls short of the tax base to be reported pursuant to the tax law, and thus, the instant disposition was unlawful.

(b) Related statutes;

Attached Form 2 is as shown in the relevant statutes.

C. Determination

1) Articles 47(2), 58(1), and 68(1) of the former Inheritance Tax and Gift Tax Act provide that in cases where the sum of donated property received from the same person (in cases where the donor is a lineal ascendant, including his/her spouse) within ten years prior to the date of the relevant donation is 10 million won or more, such value shall be added to the taxable value of donated property, and the person liable to pay the gift tax shall file a return on the tax base based on it, but in such cases, the amount calculated by applying the provisions of Articles 56 and 26 of the same Act, less the amount paid or to be paid for the value of the previous donated property

The purport of the above provision is to prevent the act of donation by dividing the number of real estate subject to progressive tax rates by the comprehensive taxation of the same person and dividing the number of real estate subject to progressive tax rates into one and the number of real estate subject to progressive tax rates by the comprehensive taxation of the same person, as it constitutes separate taxation requirements for each individual gift act.

2) As to the instant case, the Plaintiff received the first donation from the father Seo-gu on December 16, 199, and received the second donation from the Seo-gu on June 26, 2009, within ten years thereafter, and the sum of the first and second donated property is more than ten million won, as seen earlier. In this case, when the Plaintiff reported and paid the second donated property, he shall be liable to report the taxable value and tax base by adding the first donated property to the second donated property in accordance with the relevant provisions of the former Inheritance Tax and Gift Tax Act, as seen earlier, at the time of reporting and paying the second donated property, the Plaintiff shall be deemed to have the duty to report the taxable value and tax base of the second donated property. Since the Plaintiff did not report the first donated property despite the duty to report it, the reported tax base under Article 47-3 (1) of the former Framework Act on National Taxes falls short of the tax base to be reported under the tax law. Therefore, the above Defendant may impose the additional tax on underreporting basis.

In light of the contents and legislative intent of Articles 47-2(8)2 and 47-3(3) of the Framework Act on National Taxes newly enacted by Act No. 10405, Dec. 27, 2010, the Plaintiff asserts that in interpreting Article 47-3(1) of the former Framework Act on National Taxes prior to the above amendment, it is reasonable to deem that the provision on additional tax for underreporting under the former Framework Act on National Taxes is not applicable to the donated property for which the aggregate report has not been filed. However, even according to the newly established provision of the above revised Framework Act on National Taxes, the value of donated property for which the return was already filed and the obligation to aggregate has not been performed after the payment of gift tax is excluded from the "amount equivalent to underreporting under Article 47-3(1) of the above amended Framework Act on National Taxes" itself. Thus, the Plaintiff’s aforementioned assertion on the premise

3) Therefore, the instant disposition is lawful.

3. Conclusion

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