early 2012west0313 (Ob. 28, 2012)

No one house for one household shall be owned for more than three years, and the preparation of a double contract shall be subject to the exclusion period for imposition of ten years.

Even if acquired from the same member of the household, it does not constitute one house non-taxation for one household because it does not own more than three years, and it is legitimate to apply the exclusion period for 10 years as it falls under fraudulent or other unlawful acts.

2012Gudan1237 Revocation of Disposition of Imposing capital gains tax by rectification.

United StatesA

Head of the tax office;

September 4, 2013

October 16, 2013

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax OOOO on November 1, 2011 is revoked (the “OOOOO” stated in the head of the office and the written application for modification of the purport of the claim is deemed to be written in writing).

1. Details of the disposition;

A. Regarding OOO-gu OO-dong 445-22 large 496 square meters, the plaintiff acquired 1/3 shares among them on May 2, 2003 (hereinafter referred to as "the shares in this case"), 1/3 shares among them on May 26, 200, and 11/3 shares among them on June 8, 1991, and 11/3 shares of OCC. Meanwhile, on March 29, 1995, the above B completed the registration of initial ownership of a detached house on the ground of the above site (hereinafter referred to as "the real estate in this case").

B. On November 2, 2004, the Plaintiff, JeonB, and ChoCC transferred the instant real property.

C. The Plaintiff reported that there was no capital gains tax on the transfer of the instant shares, on the premise that the transfer value of the instant real estate is an OOO won, and ② “one house for one household” constitutes a non-taxation requirement for capital gains tax (OOO only). The Defendant pointed out only the error in the calculation, and subsequently corrected and imposed capital gains tax on the Plaintiff in February 4, 2005 for the year 2004.

D. After that, the Defendant discovered the fact that the Plaintiff prepared a double contract and falsely reduced the transfer value.

E. On November 1, 2011, the Defendant revised and imposed the transfer value of the instant real estate to the Plaintiff (hereinafter “instant disposition”) by adding OOO of the capital gains tax for the year 2004, on the premise that the Plaintiff’s actual transfer value of the instant real estate reaches KRW OO, and ② the Plaintiff’s actual transfer value of the instant real estate did not fall under the requirement for non-taxation of the capital gains tax for one household because the Plaintiff’s ownership period falls short of three years.

F. The Plaintiff underwent the pre-trial procedure.

[Reasons for Recognition] Unsatisfy, Gap 1-5, 1-1, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) The Plaintiff acquired the instant shares from the formerB, a member of the same household, and the total period of possession of the Plaintiff and the formerB exceeds three years. As such, the transfer of the instant shares satisfies the non-taxation requirement of capital gains tax for one household.

(2) On February 4, 2005, the Defendant did not point out that it constitutes non-taxation requirement of capital gains tax for one household at the time of correcting and notifying the Plaintiff on February 4, 2005. The Plaintiff trusted that the transfer of shares in this case constitutes non-taxation requirement and did not report and pay capital gains tax. Therefore, there is a justifiable reason in neglect of its duty. Accordingly, the part on imposition of OOO for the instant disposition is unlawful.

(3) The Defendant issued the instant disposition after the lapse of the five-year period for exclusion of national taxes. Accordingly, the instant disposition should be revoked as it is unlawful.

B. Relevant statutes

Attached Form is as shown in the attached Form.

C. Determination

(1) Whether the Plaintiff can be deemed to hold the instant shares for at least three years

According to ○○ 4-1, the Plaintiff acquired the instant shares from JD on May 2, 2003 and transferred them on November 2, 2004. Thus, the Plaintiff did not hold the instant shares for at least three years.

○○ Accordingly, the Plaintiff asserted that the said JD is merely a title trustee or mortgagee of BB with respect to the instant shares, and thus, the Plaintiff should be deemed to have acquired the instant shares from BB. However, it is insufficient to recognize the fact of title trust or transfer of security solely on the basis of Party B’s 2, 6, and 8, and rather, according to Party B-1, Party B-1, Party B-5, and 6, the fact that the former B-B reported and paid the transfer income tax on the said shares to JD on May 27, 200, while making the transfer registration on the instant shares.

(2) Whether there is a justifiable reason for failure to perform the duty to report and pay capital gains tax

In a case where there is a justifiable reason that is not attributable to the failure of the taxpayer to perform his/her duty, such as when there are circumstances that make it unreasonable for the taxpayer to be unaware of his/her duty to report and pay taxes, or when it is unreasonable to expect the party to perform his/her duty, etc., the penalty tax under tax law may not be imposed (see, e.g., Supreme Court Decision 2002Du4761, Dec. 11, 2003).

In this case, the plaintiff filed a return on the premise that the transfer of the shares of this case constitutes one house for one household (600 million won or more). The defendant pointed out only the error at the time of correction on February 4, 2005, but did not constitute one house for one household only after November 1, 201, as seen above. However, the principle of trust and good faith, which serves as the basis for exemption from additional tax, applies only to the cases where there are special circumstances deemed that the taxpayer's trust is consistent with the concept of justice even if the taxpayer's duty of tax exemption was sacrificed by sacrificeing the principle of legality, and thus, it is difficult for the tax authority to additionally impose additional tax on the ground that it was difficult for the taxpayer to file a return on the ground that there was no additional tax exemption for the reason that it was difficult for the taxpayer to file a return on additional tax exemption on the ground that it did not have any influence on the taxpayer's duty of tax exemption.

(3) Whether the disposition of this case is unlawful after the exclusion period of imposition expires

○ In a case where a taxpayer evades a national tax, or receives a refund or deduction due to a fraudulent or other unlawful act, the exclusion period of imposition of the relevant national tax is ten years from the date on which the relevant national tax can be imposed (Article 26-2(1)1 of the Framework Act on National Taxes). As seen earlier, the Plaintiff’s evasion of the transfer income tax on the transfer of equity in this case by falsely reporting the transfer value by means of unlawful preparation and submission of double contract. As such, the exclusion period of imposition of the transfer income tax on the transfer of equity in this case is 10 years from the June 1, 2005 (the date on which the transfer income tax on the transfer of equity in this case may be imposed for the year 2004). Accordingly, the instant disposition was made on November 1, 201 within the said period.

The plaintiff asserts that since the exclusion period of capital gains tax is five years in principle, the exclusion period of 10 years should apply only to the portion of tax evaded by unlawful act. Since the plaintiff's unlawful act did not affect the judgment as to whether it constitutes "one house for one household", the defendant cannot make the disposition of this case on the ground that it corresponds to "one house for one household" after the exclusion period of 5 years expires.

However, the principle of strict interpretation, which is presented as the ground for the above argument, means that: (a) facts requiring taxation under the principle of no taxation without the law, facts or non-taxation, and the strict interpretation of tax laws and regulations should be made (see, e.g., Supreme Court Decision 83Nu680, Jun. 26, 1984). It does not mean that clear tax regulations should be limited and interpreted favorably to taxpayers; (b) in light of the language and text of Article 26-2(1)1 of the Framework Act on National Taxes, even if a fraudulent or other unlawful act exists, if it does not lead to evasion of national taxes, the ten-year exclusion period can not be applied (see, e.g., Supreme Court Decision 2007Du16974, Dec. 24, 2009). However, if a taxpayer evades the imposition of national taxes by unlawful act, it cannot be viewed that the period of 10-year exclusion from the imposition of national taxes is against the above provision, and (c) it does not constitute a false or unlawful act.

(4) Conclusion

Inasmuch as the Plaintiff’s above assertion is without merit, the instant disposition made on the same premise is lawful.

3. Conclusion

The plaintiff's claim is dismissed on the ground that it is without merit.