[1] In a case where a tax authority rejects a correction of a request for correction filed after the lapse of the period for filing a request for correction under Article 45-2 (2) of the former Framework Act on National Taxes, whether such correction may be deemed a rejection disposition subject to appeal (negative)

[2] Whether the grounds for the change in the interpretation of the statutes at the time of initial report, decision, or revision are included in the grounds for subsequent request for correction as prescribed by Article 45-2(2) of the former Framework Act on National Taxes (negative), and where a taxpayer files a request for correction on the grounds of existence of grounds for subsequent request for correction, the starting point

[1] Article 45-2(2) of the former Framework Act on National Taxes (amended by Act No. 13552, Dec. 15, 2015) provides that "Any person who has received the determination of the tax base and amount of national taxes may file a request for correction within two months from the date on which he/she becomes aware of the occurrence of any of the grounds falling under any of the following subparagraphs." Thus, a request for correction filed after the lapse of the period for filing a request for correction is unlawful and the tax authority does not have any duty to determine or rectify the tax base and amount of tax or to refuse the correction. Thus, even if the tax authority refuses the correction,

[2] Since a subsequent request for correction is made on the grounds of post-declaration that did not exist at the time of the initial return or taxation, the grounds such as whether a transaction or act, which is the basis of the calculation of the tax base and the amount of tax, exists after the statutory due date of return of the relevant national tax, or where the legal effect varies, can be included in the subsequent reasons prescribed in Article 45-2(2), etc. of the former Framework Act on National Taxes (amended by Act No. 13552, Dec. 15, 2015); however, the grounds for statutory interpretation change from the time of the initial return, determination, or correction do not include the grounds

As can be seen, inasmuch as a change in interpretation of statutes does not constitute grounds for ex post facto request for correction, if a taxpayer files a request for correction on the grounds of existence of grounds for ex post request for correction rather than on the grounds of change in interpretation, the starting point of calculating the period for filing a request for correction shall be deemed “the date on which the relevant grounds have occurred,” barring special circumstances,” and it shall not be deemed “the date on which the precedents regarding whether the relevant grounds constitute grounds for filing

[1] Article 45-2(2) of the former Framework Act on National Taxes (Amended by Act No. 13552, Dec. 15, 2015) / [2] Article 45-2(2) of the former Framework Act on National Taxes (Amended by Act No. 13552, Dec. 15, 2015)

[1] Supreme Court Decision 2012Du27183 Decided December 11, 2014 (Gong2015Sang, 143), Supreme Court Decision 2014Du44830 Decided March 12, 2015 (Gong2015Sang, 581) / [2] Supreme Court Decision 2012Du28254 Decided November 27, 2014 (Gong2015Sang, 75)

Plaintiff (Law Firm Suwon, Attorneys Kim-Hy-hwan et al., Counsel for the plaintiff-appellant)

Goyang Tax Office (Attorney Cho Jae-ho et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2016Nu59203 decided February 15, 2017

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Article 45-2(2) of the former Framework Act on National Taxes (amended by Act No. 13552, Dec. 15, 2015; hereinafter the same) provides that “Any person who has received the determination of the tax base and amount of national taxes may file a request for correction within two months from the date on which he/she becomes aware of the occurrence of any of the grounds falling under any of the following subparagraphs.” Thus, a request for correction filed after the lapse of the period for filing the request for correction is illegal and the tax authority does not have a duty to either determine or rectify the tax base and amount of tax or to refuse the correction, and thus, even if the tax authority refuses correction, such request shall not be deemed a rejection disposition subject to an appeal (see, e.g., Supreme Court Decision 2014Du4830, Mar.

Such later request for correction is made on the grounds of post-declaration that had not existed at the time of the initial return or taxation. Thus, the grounds such as whether a transaction or act, which is the basis of the calculation of the tax base and the amount of tax, exists after the statutory due date of return of the relevant national tax, or the legal effect thereof vary may be included in the latter reasons stipulated in Article 45-2(2) of the former Framework Act on National Taxes, but the grounds that the statutory interpretation of the statutes differs from the time of the initial return, determination or correction are not included therein (see Supreme Court Decision 2012Du28254, Nov. 27, 2014).

As can be seen, inasmuch as a change in interpretation of statutes does not constitute grounds for ex post facto request for correction, if a taxpayer files a request for correction on the grounds of existence of grounds for ex post request for correction rather than on the grounds of such change in interpretation, the starting point of calculating the period for filing a request for correction shall be deemed “the date on which the relevant grounds have known the occurrence,” barring special circumstances,” and it shall not be deemed “the date on which the precedents regarding the relevant grounds for filing a request

2. Review of the reasoning of the lower judgment and the record reveals the following facts.

A. On January 16, 2014, the Plaintiff rendered a judgment of additional collection for committing a crime, such as taking property in breach of trust, etc. and paid the additional collection charge on July 14, 2014 as the said judgment became final and conclusive on July 14, 2014.

B. On March 16, 2015, the Defendant: (a) deemed that the money and valuables received by the Plaintiff as a result of the crime of taking property in breach of trust as other income of the Plaintiff; and (b) rendered the instant disposition imposing a comprehensive income tax on the Plaintiff in 2007.

C. Meanwhile, Supreme Court en banc Decision 2014Du5514 Decided July 16, 2015 (hereinafter referred to as "the Supreme Court en banc Decision 2014Du5514 Decided July 16, 2015") revised the previous precedents to the effect that " even if a liability for tax payment was established once it satisfies the taxation requirements for control and management of illegal income, it shall be subject to the Income Tax Act even if the possibility of loss of economic benefits inherent in the illegal income, such as confiscation or collection, has occurred after the possibility of loss of economic benefits, and thus becomes final and conclusive as not realized, barring special circumstances, a taxpayer shall be deemed to have escaped from the burden of tax liability by filing a subsequent request for correction as stipulated in Article 45-2(2) of the former Framework Act on National Taxes, barring any special circumstance."

D. After August 19, 2015, the Plaintiff filed the instant subsequent claim for correction on the ground that the Plaintiff fully paid a surcharge to the Defendant. On October 19, 2015, the Defendant rejected the instant claim for correction on the ground that the said claim for correction is unlawful.

3. Examining the above facts in light of the aforementioned legal principles and records, the circumstance that the Plaintiff paid a surcharge on the income acquired as a crime of taking property in breach of trust falls under the grounds for ex post facto request for correction as prescribed by Article 45-2(2) of the former Framework Act on National Taxes, but the subsequent request for correction of the instant case is unlawful since it is obvious that the subsequent request for correction was filed after the lapse of 2 months from the date on which the relevant grounds were known, and thus, the instant reply cannot be deemed as a rejection disposition subject

Nevertheless, on the grounds as indicated in its reasoning, the lower court determined that the period for filing a subsequent claim for correction was lawful, which was filed prior to the lapse of the period for filing a request for correction, based on the grounds as indicated in its reasoning. In so doing, the lower court erred by misapprehending the legal doctrine on the period for filing a subsequent claim for correction, thereby adversely affecting the conclusion of the judgment. The Defendant’s ground of

4. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ko Young-han (Presiding Justice)