The validity of an agreement between a certified tax accountant and a non-qualified person on the settlement of accounts that mutually distributes economic benefits from such business, upon termination of an invalid agreement between a tax accountant and a non-certified tax accountant (negative)

The legislative intent of Article 12-3 of the former Certified Tax Accountant Act (amended by Act No. 9348 of Jan. 30, 2009), Article 6(1) and Article 20(1) main text of the former Certified Tax Accountant Act (amended by Act No. 7032 of Dec. 31, 2003), Article 22(1)1 and Article 22-2 subparag. 1 of the former Certified Tax Accountant Act (amended by Act No. 6837 of Dec. 30, 2002), and Article 22-2 subparag. 1 of the former Certified Tax Accountant Act (amended by Act No. 6837 of Dec. 30, 200) is to establish a sound tax order, protect the legitimate rights and interests of taxpayers, and secure the appropriateness and fairness of the act of tax agent.

In addition to such legislative intent, the acts of providing tax agent services without qualifications and lending the name of a third party constitutes criminal acts subject to criminal punishment, and it is difficult to readily accept by social norms in light of the property rights of the people who can be subject to criminal punishment and the adverse effects on the government's financial revenue. The mere criminal punishment of the above acts of violation is not sufficient to prevent the invalidation of the Certified Tax Accountant Act enacted for the purpose of facilitating tax administration and promoting the proper performance of tax liability by establishing a tax accountant system, and thus, it is necessary to fundamentally prevent economic benefits arising from the act of violation. In full view of the above, each of the above provisions constitutes a mandatory law to prevent the smooth tax administration and the proper performance of tax liability when a person without qualifications carries out tax agent services. Accordingly, if an agreement between a certified tax accountant and an unqualified person is invalid, and if an agreement between a tax accountant and a non-qualified person on the sharing of economic benefits arising from the said business is settled beyond the simple return of investments, the legislative intent of each of the above provisions is null and void.

Article 12-3 of the former Certified Tax Accountant Act (Amended by Act No. 9348, Jan. 30, 2009); Article 6(1) and Article 20(1) main sentence of the former Certified Tax Accountant Act (Amended by Act No. 7032, Dec. 31, 2003); Article 22(1)1 and Article 22-2(1)1 of the former Certified Tax Accountant Act (Amended by Act No. 6837, Dec. 30, 2002); Article 22-2 subparag. 1 of the former Certified Tax Accountant Act

Plaintiff (Law Firm Green, Attorneys Lee Jong-il et al., Counsel for the plaintiff-appellant)

Defendant (Attorney Seo-won, Counsel for the defendant-appellant)

Seoul High Court Decision 2012Na54692 decided May 3, 2013

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Article 12-3 of the former Certified Tax Accountant Act (amended by Act No. 9348 of Jan. 30, 2009) provides that no certified tax accountant shall allow another person to provide tax agent services using his/her name or trade name, or lend his/her certificate of qualification or registration to another person. Subparagraph 1 of Article 22-2 of the former Certified Tax Accountant Act (amended by Act No. 6837 of Dec. 30, 2002) provides that where a person who has passed a qualifying examination for tax agent services intends to provide tax agent services, he/she shall be punished by imprisonment for not more than one year or by a fine not exceeding 10 million won, and that Article 6(1) of the former Certified Tax Accountant Act (amended by Act No. 7032 of Dec. 31, 2003) provides that where a person who has passed the qualification examination for tax agent services intends to enter into the tax agent services, the latter shall be punished by imprisonment with prison labor for not more than 30 years or by a fine not more than 20.

In addition to such legislative intent, the acts of providing tax agent services without a qualification as a tax accountant and lending a name to another person constitutes criminal acts subject to criminal punishment, and it is difficult to be easily acceptable under the generally accepted social norms in light of the property rights of the people who can be subject to criminal punishment and the adverse effects on the government's financial revenue. The mere criminal punishment of the above acts of violation merely requires to prevent the invalidation of the Certified Tax Accountant Act enacted for the purpose of facilitating tax administration and promoting the proper implementation of tax liability by establishing a tax accountant system, and thus, it is necessary to fundamentally prevent economic benefits arising from such violation. In light of the above, each of the above provisions constitutes a mandatory law to prevent the smooth tax administration that may result in a case where a person who is not qualified as a tax accountant conducts tax agent services, and serious risks in the proper performance of tax liability. Accordingly, if a tax agent's partnership services and profit distribution agreement between a certified tax accountant and a person who is not qualified as a tax accountant were invalid, and if the tax agent mutually distributes economic benefits arising from such acts beyond the simple return of investments, it is null and void as the legislative intent of each provision.

2. According to the reasoning of the judgment below, the court below dismissed the plaintiff's claim on the ground that the agreement on a partnership with the tax accountant's office concluded by the plaintiff who is a certified tax accountant and the defendant who is not qualified as a certified tax accountant was null and void in violation of Article 12-3 and Article 20 (1) of the former Certified Tax Accountant Act, which is a mandatory law, and that the part of the defendant's performance of the contract in this case's letter of contract execution was null

In light of the above legal principles and records, the above judgment of the court below is just and acceptable, and there were no errors by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal principles on the former Certified Tax Accountant Act.

Meanwhile, the Plaintiff asserted to the effect that the loan Nos. 1 and 2 should be returned to the Defendant as unjust enrichment when the Plaintiff paid the Defendant under the agreement to operate the business. However, this cannot be a legitimate ground for appeal as it first raised in the final appeal.

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Shin (Presiding Justice)