[1] In case where a taxpayer of capital gains tax fails to pay the tax amount paid by the scheduled return deadline for the tax base of capital gains by the scheduled return deadline, whether the tax authority may collect the unpaid tax even before the final return deadline for

[2] In a case where a taxpayer of capital gains tax files a final return on the tax base of capital gains with the same content after filing a preliminary return on the tax base of capital gains, whether the disposition taken based on the above preliminary return becomes invalid

[3] In a case where a taxpayer who was not subject to the application of the tax credit for a preliminary return on a tax base of transfer income but failed to pay the tax amount, made a final return and payment of tax base of transfer income differently from the tax amount voluntarily paid, whether it can be deemed that the final return

[4] In a case where Party A, who transferred golf membership, did not pay the tax base return after making a preliminary return of tax base of transfer income, and the tax authority issued a transfer income tax notice to Party A, and thereafter Party A did not apply the tax base return of transfer income and the calculated tax amount to the same effect as the preliminary return and paid the tax amount by filing a final return of tax base of transfer income, the case affirming the judgment below that the said tax notice based on the preliminary return is not extinguished

[1] In full view of the legislative purport of Articles 105(1), 106(1), and 116(1) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter “the Act”), the legislative purpose of the preliminary return for tax base of transfer income (hereinafter “preliminary return”) is to ensure the tax source early and to promote the efficiency of collection, prevent the cumulative tax burden, and Article 114(1) of the Act provides that the head of the district tax office having jurisdiction over the place of tax payment shall determine the tax base of transfer income and the amount of tax if the person liable for preliminary return fails to pay all or part of the tax amount to be paid by the scheduled return deadline, the unpaid tax amount may be collected even before the deadline for final return for tax base of transfer income expires.

[2] The main text of Article 110 (4) of the former Income Tax Act (amended by Act No. 9897 of Dec. 31, 2009) provides that a person who has made a preliminary return of tax base of transfer income (hereinafter “preliminary return”) may, in principle, not make a final return of tax base of transfer income on the pertinent income (hereinafter “final return”). In cases where a taxpayer made a final return of the same content after a preliminary return, there is no substantial difference between the cases where a final return is not made after a preliminary return was made, and there is no substantial difference between the cases where a final return was made, and the tax base and tax amount that are determined provisionally by a preliminary return are finally determined by a preliminary return. Comprehensively taking account of the following: (a) where a taxpayer made a preliminary return and made a final return of the same content, the tax base and tax amount determined provisionally by a preliminary return are not automatically absorbed into the final tax base and tax amount determined by a final return, and thus, no disposition taken on the basis of a preliminary return shall become invalid.

[3] Considering that Article 105(1) and Article 110(1) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter “the Act”) stipulate the subject of the preliminary return on the tax base of transfer income (hereinafter “preliminary return”) and the final return on the tax base of transfer income (hereinafter “final return”) as “tax base of transfer income”, and Article 108(1) of the Act provides that the tax credit on the preliminary tax return under Article 108(1) of the Act applies only where the preliminary return is made and the tax amount is actually voluntarily paid, and any change is not caused in the tax base of transfer income, calculated tax amount, and calculated tax amount, etc. on the tax base and calculated tax amount that have not been paid are different from the tax amount to be voluntarily paid when the preliminary return was made, the final return shall be deemed to have been made with the same content as the preliminary return.

[4] In a case where Party A, who transferred golf membership, did not pay the tax amount of the preliminary return after the preliminary return of tax base of transfer income (hereinafter “preliminary return”), and the tax authority issued a transfer income tax notice to Party A to the effect that the tax authority should pay the tax amount excluded from the preliminary return of transfer income tax base in addition to additional dues, etc. in a case where Party A did not pay the tax amount; thereafter, Party A made a final return of tax base of transfer income (hereinafter “final return”) on the grounds that the tax base of transfer income and the calculated tax amount of transfer income are the same as the preliminary return and was not subject to the application of the tax credit of preliminary return, the case affirming the judgment below holding that the said tax return based on the preliminary return does not become invalid on the ground that the said preliminary return and the final return were filed again after the preliminary return,

[1] Articles 105(1), 106(1), 114(1), and 116(1) of the former Income Tax Act (amended by Act No. 9897 of Dec. 31, 2009) / [2] Article 110(4) of the former Income Tax Act (amended by Act No. 9897 of Dec. 31, 2009) / [3] Articles 105(1), 108(1)(current deleted) and 110(1) of the former Income Tax Act (amended by Act No. 9897 of Dec. 31, 2009) / [4] Article 22 of the former Framework Act on National Taxes (amended by Act No. 991 of Jan. 1, 2010); Article 10(1) of the former Income Tax Act (amended by Act No. 10150 of Apr. 18, 2014; Act No. 10197 of Apr. 197, 2019)

[3] Supreme Court Decision 96Nu7816 delivered on December 20, 1996 (Gong1997Sang, 439)

Plaintiff

The Head of Gangnam District Tax Office et al.

Seoul High Court Decision 2009Nu9286 decided November 13, 2009

All appeals are dismissed. The costs of appeal are assessed against the Plaintiff.

The grounds of appeal are examined.

l. As to grounds of appeal Nos. 1 and 4

Article 105(1) of the former Income Tax Act (amended by Act No. 9897 of Dec. 31, 2009; hereinafter “Act”) provides that a resident who transfers an asset subject to transfer income tax shall file a return on the tax base of transfer income (hereinafter “preliminary return”) within two months from the end of the month or quarter to which the transfer date belongs according to the type of asset, and Article 106(1) of the same Act provides that when a resident files a preliminary return, he/she shall pay the tax amount calculated by preliminary return under Article 107 to the competent district tax office, etc. having jurisdiction over the place of tax payment. The latter part of Article 116(1) provides that where a resident fails to pay all or part of the tax amount to be paid by preliminary return under Article 106, the unpaid tax amount shall be collected within three months from the date on which the due date expires.

In full view of the language and text of each provision, the legislative purport of the preliminary return and payment system, by requiring a resident to pay the tax amount in advance at the early stage of income generation, thereby contributing to securing tax sources early, promoting the efficiency of collection, preventing the accumulation of tax burden, and Article 114(1) of the Act provides that the head of the district tax office having jurisdiction over the place of tax payment shall determine the tax base of transfer income and the amount of tax if the person liable to make the preliminary return fails to do so, the head of the district tax office having jurisdiction over the place of tax payment may collect the unpaid tax amount even before the final return on tax base of transfer income (hereinafter referred to as the “final return on tax base”) is made

In the same purport, the court below is just in holding that the tax payment notice of this case, which was made before the final return was made by the head of Gangnam District Tax Office for the collection of the tax amount paid by the plaintiff on the basis that the plaintiff did not pay the tax amount paid by the scheduled return within the final return deadline, and there is no error

2. Regarding ground of appeal No. 2

The main text of Article 110(4) of the Act provides that, in principle, a person who has filed a preliminary return may choose not to file a final return on the relevant income; in cases where a taxpayer files a final return on the same content after a preliminary return and then files a final return on the same content, there is no substantial difference from the case where a taxpayer fails to file a final return after the preliminary return; thus, there is no substantial difference from the case where a final return is filed; and in cases of a final return on the same content as the preliminary return, the meaning of a final return on the same content is only that a provisional tax base and tax amount are finally determined by a preliminary return by ratification of the details of the preliminary return; and in cases where a taxpayer files a final return on the same content, it is reasonable to deem that the tax base and tax amount temporarily determined by a preliminary return on the preliminary return

Furthermore, considering the fact that Articles 105(1) and 110(1) of the Act stipulate the subject matter of the preliminary and final return as “tax base of transfer income”, tax credit for the preliminary return under Article 108(1) of the Act applies only to the case where the preliminary return is made and the tax amount is actually voluntarily paid as a result of the preliminary return (see Supreme Court Decision 96Nu7816, Dec. 20, 1996, etc.), the tax base of transfer income, calculated tax amount, and determined tax amount are not affected by any change in the tax base of transfer income, calculated tax amount, etc., the final return shall be deemed to have been filed with the same content as the preliminary return in cases where a taxpayer who did not pay the tax amount after the preliminary return was made but did not receive any tax credit for the preliminary return.

In full view of the adopted evidence, the lower court acknowledged the following facts: (a) on January 22, 2008, the Plaintiff transferred the instant golf membership at KRW 385,00,000 to the head of Gangnam Tax Office on January 31, 2008; (b) on January 31, 2008, the Plaintiff filed a preliminary return on the tax base of KRW 345,200,000, the calculated tax amount of KRW 112,572,00,200, the deducted amount of the paid tax for the preliminary return at KRW 11,257,200, the amount of tax to be paid at KRW 11,257,200, and the amount of tax to be paid by voluntary return at KRW 11,314,80, the Plaintiff did not apply to the tax base return and the calculated tax amount to be paid by voluntary return at KRW 112,572,00,000; and (c) on the same basis, determined that the instant preliminary return has not become invalid.

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the validity of duty payment notice based on preliminary return as alleged in the grounds

Supreme Court Decision 2006Du1609 Decided May 29, 2008, cited as the ground of appeal by the Plaintiff, is a matter concerning a taxpayer’s preliminary return and then a final return is filed with a different content, and it is not appropriate to invoke the case in this case as the case is different.

3. As to the third ground for appeal

Article 9(1) of the former National Tax Collection Act (amended by Act No. 10527, Apr. 4, 2011) provides that when the head of a tax office, etc. wishes to collect national taxes, he/she shall issue to taxpayers a written notice specifying the taxable year, tax item, tax amount, grounds for calculation, deadline for payment, and place of payment of national taxes. In cases of a tax item imposed on capital gains generated during a taxable period, such as capital gains tax, if the notice of tax payment clearly states the taxable year, the tax base for the pertinent year, the basis for calculation of the tax amount, and the basis for calculation of the tax amount, etc., it is sufficient if the notice of tax payment is given, and there is no basis to demand that the taxpayer state the substantial basis, route, and circumstances of calculating the amount of tax, such as the taxable

In the same purport, the court below is just in holding that the duty payment notice of this case cannot be deemed unlawful merely because the duty payment notice of this case does not contain a taxable object. There is no error in the misapprehension of legal principles as to the defect in the duty payment notice

4. Conclusion

Therefore, all appeals are 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 Min Il-young (Presiding Justice)