Effect of a notice on change in income amount delivered to an individual by disposal of income.

If a disposition of income is made without regard to the establishment of the obligation to withhold taxes from the disposition of income, the Plaintiff, who is the source of the income, incurs the liability to pay global income tax. Therefore, the reason that the notice of change in the amount of income was not notified to the relevant corporation does not affect the establishment of the obligation to pay global income tax on the person to whom the income accrued. Therefore,

Article 21 of the Framework Act on National Taxes establishing Time of Tax Liability

1. The plaintiff's claim is dismissed.

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

The Defendant’s rejection of correction of KRW 511,624,590 of global income tax for the year 1997 against the Plaintiff on June 4, 2005 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is serving as the representative director of △△△ corporation (hereinafter referred to as “△△△”) located in ○○○○○○○○○○, ○○-dong, ○○○○, ○○-dong, from April 21, 1988.

B. The director of ○○○ Regional Tax Office, after conducting a tax investigation with respect to △△ on March 26, 2003, received processed tax invoices of KRW 1,279,061,497 in the business year 197 and deemed that the above amount was included in deductible expenses and corrected corporate tax by adding the total amount of the above amount to deductible expenses, while disposing of the income as bonus to the Plaintiff who is the representative director. However, on the ground that the period for exclusion of imposition expires on February 10, 2003, the head of ○○ Regional Tax Office issued a notice of direct change of income to the Plaintiff, who is the person to whom the income accrued on March 26, 2003, and the Plaintiff received it was additionally voluntarily reported and paid KRW 1,61,624,590 in addition to the existing earned income for the income as stated in the notice of income amount on April 30, 2003.

C. The Plaintiff did not notify the head of ○○○ Regional Tax Office of the change in the amount of income to △△△, a withholding agent, so the global income tax paid by the Plaintiff is overpaid or erroneously paid without any cause without establishing the tax liability, and thus, the Plaintiff should refund the said amount of KRW 511,624,590. On April 28, 2005, the Defendant filed a request for correction to the Defendant on June 23, 2005. Accordingly, on June 23, 2005, the Plaintiff filed a request for correction with the Defendant on the grounds that the period under Article 45 of the Framework Act on National Taxes expired. Even after the expiration of the period for exclusion of the period for exclusion of the tax withholding tax on the amount of bonus disposal, the Plaintiff rendered the “instant disposition” disposition rejecting the Plaintiff’s request for correction on the grounds that there was no reason to rectify the Plaintiff’s comprehensive income tax.

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the National Tax Tribunal on July 7, 2005. On November 1, 2006, the National Tax Tribunal dismissed the Plaintiff’s claim for refund of erroneous or erroneous payments even though it acknowledged that the Plaintiff’s claim for correction was legitimate within the statutory deadline.

[Grounds for recognition] Class B 1-5 Evidence, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

51,624,590 won of the tax amount additionally reported and paid by the Plaintiff is calculated as taxable income subject to withholding. Earned income is established and finalized at the time when a withholding agent pays the amount of income pursuant to Articles 21 and 22 of the Framework Act on National Taxes. According to Article 192 of the Enforcement Decree of the Income Tax Act, the amount disposed of to the representative of a corporation pursuant to the Corporate Tax Act is deemed to have been paid at the time when the notice of change in the amount of income is notified to the relevant corporation. △△△△ is operating normally at the time of the tax investigation by the head of ○○ Regional Tax Office and at the same time of the investigation by the head of ○○ Regional Tax Office, and it does not fall under any of the causes under the proviso of Article 192(1) of the Enforcement Decree of the Income Tax Act, such as the full payment of corporate tax determined and notified as a result of the tax investigation by the △△△△△△△, and thus, it is unlawful for the Defendant to return and pay the said tax by voluntary report.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

Even if income to be withheld is omitted, the income tax may be imposed on the said income earner (see, e.g., Supreme Court en banc Decision 79Nu347, Sept. 22, 1981; Supreme Court Decision 2000Du10649, Dec. 27, 2001; Supreme Court Decision 2004Du4504, Jul. 13, 2006). In a case where the income tax authority deemed that the additional amount of the income released out of the country was reverted to the officer or employee, and the income was disposed of as bonus, the tax withholding obligation is established on the date when the notice of change in the income amount was delivered to the relevant corporation (see, e.g., Supreme Court Decision 135(4) (amended by Act No. 814, Dec. 30, 206); Article 135(1) of the Income Tax Act; Article 21(2)1 of the Enforcement Decree of the Income Tax Act, which is the date of disposal of income generated from the corporation.

As above, in a case where a disposition of income is made without regard to the establishment of a corporation’s obligation to withhold income from the disposition of income, the Plaintiff, who is the source of income, incurs global income tax liability. Thus, the reason why the notice on change of income did not affect the establishment of global income tax liability of the source of income. Therefore, the imposition of global income tax imposed on the Plaintiff based on the disposition of income is justifiable. As such, the Defendant did not have the obligation to return KRW 511,624,590 of global income tax additionally reported and paid by the Plaintiff to the Plaintiff, and the Plaintiff’s assertion based on the premise that the additional payment by the Plaintiff

3. Conclusion

Thus, the defendant's disposition of this case is legitimate and the plaintiff's claim seeking its revocation is rejected as it is without merit.

Related Acts and subordinate statutes

Any bonus disposed of under the Corporate Tax Act pursuant to Article 135 (4) (amended by Act No. 8144 of Dec. 30, 2006) of the former Income Tax Act shall be deemed to be paid on the date determined by the Presidential Decree.

Article 192 (Fictitious Payment Date of Dividend, Prize, and Other Incomes Obtained by Disposal of Income)

(1) When the head of a tax office or the director of a regional tax office determines or revises the corporate income amount under the Corporate Tax Act, he/she shall notify the corporation concerned by a notice of change in the income amount as prescribed by the Ordinance of the Ministry of Finance and Economy within 15 days from the date of the determination or correction of the corporate income amount: Provided, That where the location of the corporation concerned is not clear or it is impossible to serve the notice, or where the corporation concerned falls under the provisions of Article 86 (1) 1, 2 and 4 of the National Tax Collection Act, he/she shall notify the relevant stockholder and the resident who has received the disposition

(2) In the case of paragraph (1), the dividend, bonus and other income shall be deemed to have been paid or recovered on the date when the notice is received.

(3) In filing a return on the income amount of a corporation, the dividend, bonus and other incomes disposed of pursuant to the provisions of Article 106 of the Enforcement Decree of the Corporate Tax Act shall be deemed to have been paid by the relevant corporation on the date of declaration

Article 21 of the Framework Act on National Taxes

(1) (Omission)

(2) Notwithstanding the provisions of paragraph (1), the obligation to pay the following national taxes shall accrue at the following time:

1. For the withheld income or corporate tax, when the income or income amount is paid;

Article 20 of the Income Tax Act

(1) Employment income shall be the following incomes generated in the current year:

1. Class A:

(a) b.(Omission)

(c) The amount treated as a bonus under the Corporate Tax Act;

Article 39 (Accretion Year, etc. of Gross Income and Necessary Expenses)

(1) The year in which the total income amount and the necessary expenses of a resident accrue shall be the year to which the date when the necessary expenses are determined belongs.

Article 49 (Receipt Date of Earned Income)

(1) The receipt date of the total labor income shall be the following dates:

1. 2. (Omission)

3. Any officer or employee of a corporation, or any other person who has made a report on the amount of income in the business year concerned or in decision or rectification by the chief of the tax office.

The day on which labor is provided during the current business year.

Article 21 (Establishment Date of Liability for Tax Payment)

(1) A liability to pay national taxes shall accrue at the following time:

1. For the income tax or corporate tax, when the taxable period is terminated: Provided, That for the corporate tax on the liquidation income, when the corporation concerned is dissolved (including dissolution due to a division or merger through division) or merged;

Article 70 (Final Return of Global Income Tax)

(1) Any resident having global income amount in the current year shall file a return on the tax base of global income with the chief of the tax office having jurisdiction over the place of tax payment from May 1 to 31 of the year following the current year, as prescribed by

Article 134 (Voluntary Payment by Additional Report)

(1) In case where a corporation files a return on the tax base of the global income under the Corporate Tax Act after the due date of the final return of the global income, or the head of a tax office makes a determination or correction of the corporate tax base by disposing of dividend, bonus or other income, and thus no liability for the final return of the global income exists, a person who is not required to make the final return of the global income under the tax-related Acts, or a person who files the final return of the tax base of the income tax is required to additionally pay the income tax, if the relevant corporation (where a resident is notified under the proviso to Article 192 (1), the relevant resident) pays the additional return by the end of the month following the month to which the notice of change in the amount of income under Article 192 (1) belongs (where the amount of