Where a corporation in receipt of the notice of change in amount of income under the Corporate Tax Act, after the year-end adjustment, has collected and paid income tax thereon again through the year-end adjustment within the payment period, and submits a payment record, the starting date of the period for filing a claim for correction pursuant to Article 45-2 (4) 1 of the former Framework Act on National Taxes (=the

In full view of the language and purport of Article 45-2(4)1 of the former Framework Act on National Taxes (amended by Act No. 8139, Dec. 30, 2006; hereinafter the same) and the legislative purport of Article 45-2(4)1 of the former Framework Act on National Taxes (amended by Act No. 8139, Dec. 30, 2006; hereinafter the same), in order for a corporation to withhold income tax and pay the amount treated as a bonus under the Corporate Tax Act by the 10th day of the following month from the date of receipt of the notice of change of income amount through withholding the income tax, the corporation must make a year-end tax settlement and submit the payment report. Such year-end tax settlement and the submission of payment report are also included in the scope of submission of the year-end tax settlement prescribed in Article 137 of the former Income Tax Act or the submission of payment report prescribed in Article 164 of the following month after the year-end tax settlement through the year-end tax settlement and withhold income tax after the payment report and submit the payment report.

Article 45-2 (1) and (4) 1 of the former Framework Act on National Taxes (amended by Act No. 8139 of Dec. 30, 2006), Article 20 (1) 1 (c) (see current Article 20 (1) 3), Article 128 (1), Articles 137 (1), and 164 (1) of the former Framework Act on National Taxes (amended by Presidential Decree No. 20618 of Feb. 22, 2008), Article 192 (2) (current deleted) of the former Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006)

Grand LSS Co., Ltd.

Head of Yeongdeungpo Tax Office

Seoul High Court Decision 2008Nu32791 decided November 12, 2009

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

The grounds of appeal are examined.

According to the provisions of Article 45-2 (1) and (4) 1 of the former Framework Act on National Taxes (amended by Act No. 8139, Dec. 30, 2006; hereinafter the same), where a withholding agent pays income tax on a person, etc. having only earned income (hereinafter “ earned income earner, etc.”) through a year-end settlement under Article 137 of the Income Tax Act, etc. and submits a payment record under Article 164 of the same Act within the due date, the relevant withholding agent, etc. may request the head of the competent tax office to determine or correct the tax base and tax amount entered in the withholding receipt within three years after the due date for payment of the year-end tax amount.

Meanwhile, Article 128(1) of the former Income Tax Act (amended by Act No. 8144, Dec. 30, 2006; hereinafter the same) provides that "A withholding agent shall pay withheld income tax by the 10th day of the month following the month in which the date of collection falls." Article 137(1) of the former Income Tax Act provides that "where a withholding agent at the principal workplace pays earned income for January of the following year in the corresponding year, he shall make a global income deduction from the earned income amount in the corresponding year according to the details reported pursuant to Article 140, he shall calculate the global income tax base after making the global income deduction, deduct the income tax withheld and paid during the corresponding year after deducting the difference from the global income tax base." Article 164(1) provides that "a person who pays income to an individual liable to pay income tax shall submit a written statement of payment corresponding to the earned income to the individual, by the end of February of the year following the corresponding year to which the date of payment belongs."

In full view of the language and purport of Article 45-2(4)1 of the former Framework Act on National Taxes, the corporation in receipt of the notice of change of income amount from bonus under the Corporate Tax Act after the year-end tax settlement is made, shall withhold income tax and pay it by the 10th day of the following month from the date of receipt of the notice of change of income amount. In order to do so, it is reasonable to deem that such year-end tax settlement and payment record are included in the scope of submission of the year-end tax settlement under Article 137 of the former Income Tax Act or the payment record under Article 164 of the former Income Tax Act. In light of the above, if the corporation in receipt of the notice of change of income amount from bonus under the Corporate Tax Act after the year-end tax settlement and pays income tax again after the year-end tax settlement and submits the payment record, the period for filing a request for correction under Article 45-2(4)1 of the former Framework Act on National Taxes shall be calculated from the day following the deadline for payment of income tax pursuant to

Nevertheless, the court below held otherwise on the premise that the period for filing a claim for correction under Article 45-2 (4) 1 of the former Framework Act on National Taxes, even in cases where a corporation, upon receipt of the notice of change in the amount of income as bonus under the Corporate Tax Act after the year-end settlement, collects income tax again after the year-end settlement within the payment period, and submits a payment record, the period for filing a claim for correction under the main sentence of Article 128 (1) and Article 137 (1) of the former Framework Act on National Taxes shall be calculated from the day after the beginning of the year-end settlement (20th of February of the year following the year in which the earned income belongs). However, on the ground that the defendant, on March 16, 2006, disposed of the amount equivalent to the foreign transport expense in this case as bonus for the representative of the corporation, and then notified the change in the amount of income to the plaintiff on April 10, 2006, which was within the payment period, and submitted the payment record.

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jeon Soo-ahn (Presiding Justice)