Whether the household expenses constitute fraud or other improper acts when it is appropriated as the necessary expenses (one-called "one-time book") at the end of the year.

The global income tax is determined by calculating the tax base and tax amount by the taxpayer himself, and the defendant is aware that the plaintiff has falsely appropriated necessary expenses in the course of the tax investigation against the plaintiff, so it is reasonable to regard the plaintiff's "water account book" act as fraudulent or other unlawful act.

The exclusion period for national tax assessment under Article 26-2 of the Framework Act on National Taxes

2017Guhap53733 Revocation of Disposition of Imposing global income tax, etc.

AA

BB Director of the Tax Office

July 20, 2018

September 7, 2018

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 imposing global income tax exceeding KRW 101,12,050, global income tax exceeding KRW 3,915,381 of global income tax for the year 2011, global income tax for the year 201, and global income tax exceeding KRW 3,915,381 of global income tax for the year 2012, exceeds KRW 2,177,970 of global income tax for the year 2013, and exceeds KRW 5,303,122 of global income tax for the year 2014, and the disposition of imposing global income tax exceeding KRW 392,371 of global income tax for the year 2014 is revoked.

1. Details of the disposition;

A. The Plaintiff worked in a bank from March 8, 1982 and retired on January 22, 2009 (class manager at the time of retirement). The Plaintiff is qualified as a credit analysis agent, a loan examination station, and a credit examination specialist.

B. From 2011 to 2015, the Plaintiff provided advisory services on the method of transferring schools and changing loans to Korea AAAA Technical Schools and BB, and received KRW 562 million. Of the income, the Plaintiff reported the amount of KRW 551 million (hereinafter “instant amount”) as business income as shown below [Attachment].

C. From April 13, 2017 to May 22, 2017, the Defendant requested the Plaintiff to submit documentary evidence of the amount appropriated as necessary expenses, while conducting a tax investigation with the Plaintiff, but the Plaintiff failed to submit relevant documentary evidence. The Plaintiff classified the instant amount into “other income” on April 18, 2017 during the period of the tax investigation, and filed a revised return by applying the necessary expenses of 80%.

D. On July 3, 2017, the Defendant: (a) deemed the instant amount as business income; (b) deemed the Plaintiff’s act constituted fraud or other unlawful act; and (c) imposed global income tax of KRW 101,112,050 (including additional tax of KRW 47,51,279); (b) global income tax of KRW 5,895,921; (c) global income tax of KRW 3,475,512; and (d) global income tax of KRW 9,172,907 for the year 2014; and (b) global income tax of KRW 928,155 for the global income tax of KRW 2015 for the year 2015 (the Plaintiff stated only the part disputing by the instant lawsuit; hereinafter collectively referred to as “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence 1, Eul evidence 2, 3, and 5, the purport of the whole pleadings

2. Relevant statutes;

It is as shown in the attached Form.

3. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

1) The primary argument

The fact that the plaintiff was not able to prove the necessary expenses at the time of the tax investigation is merely true.

The imposition of global income tax (including additional tax) for the year 201 is not subject to the exclusion period for imposition of five years, rather than the exclusion period for imposition of ten years. This part of the disposition is null and void after the exclusion period for imposition of global income tax for the year 2012 through 2015. The imposition of global income tax for the year 201 should be imposed on the general under-reported penalty tax rather than the unlawfully under-reported penalty tax.

2) Preliminary assertion

In 2011, the Plaintiff received KRW 314 million from the Korea AAA Technical School, Co., Ltd., Ltd. in the year 201, was the price for one-time and temporary services, and thus, it should be viewed as other income, not business income.

B. Determination

1) In full view of the following facts or circumstances acknowledged earlier, comprehensively taking into account the aforementioned facts, Gap evidence Nos. 5, 6, 7 and Eul evidence Nos. 4 and the overall purport of the pleadings, the fact that the Plaintiff calculated the amount not spent as necessary expenses by appropriating the amount not spent as necessary expenses and then reported and paid the comprehensive income tax can be acknowledged.

A) The Plaintiff failed to present documentary evidence related to the depreciation costs of 4,788,64 won in the year 2014, entertainment costs, 4,183,780 won in the book printing expenses, 822,743 won in the book printing expenses, 11,72,050 won in the vehicle maintenance expenses, 13,048,171 won in the vehicle maintenance expenses, 3,019,740 won in the advertisement expenses, 4,788,640 won in the vehicle, and the Plaintiff submitted a motor vehicle registration certificate, etc. with respect to the vehicle depreciation costs of 4,78,64 won in the calculation of depreciation costs, but there is no material to support that the vehicle was used in the course of its business, and since one vehicle was transferred in the name of another on August 2012, the Plaintiff’s argument cannot be accepted. In addition, the amount appropriated as the necessary expenses in the year 2014 is the “AAmABBDBD, DD (BD), 's, etc.

B) The Defendant demanded the Plaintiff to submit documentary evidence related to necessary expenses while conducting the tax investigation on the Plaintiff, and the Plaintiff divided the amount initially reported as business income during the tax investigation into other income and filed a revised return. The Plaintiff did not submit documentary evidence related to the amount spent as necessary expenses up to the date.

2) It is reasonable to view that the act of filing and paying the global income tax after calculating the amount not spent as the necessary expenses by appropriating it as the necessary expenses for the following reasons constitutes “Fraud or other unlawful act.” Therefore, it is reasonable to apply the exclusion period for imposition of ten years to the Plaintiff and impose the global income tax (including the additional tax) for 2011 and impose the penalty tax for unlawful underreporting.

A) The reduction of the tax amount to be declared and paid is to reduce the tax amount to be declared and paid by appropriating the necessary expenses not spent by making the classification of income as the business income, and such acts are special circumstances.

Unless otherwise, there is a purpose of tax avoidance.

B) If it is intended to report and pay the amount not spent as necessary expenses by appropriating it as the necessary expenses, the relevant books can be deemed an active act that significantly makes it difficult to impose and collect taxes due to the fact that the relevant books are written accordingly.

C) The global income tax is determined by the taxpayer’s tax base and tax amount by calculating the tax base and tax amount on his own, so it is difficult for the tax authority to impose tax if the taxpayer fails to faithfully report and pay the tax amount. The Defendant became aware that the Plaintiff fraudulently included necessary expenses in the course of the tax investigation with respect to the Plaintiff.

3) In full view of the facts acknowledged earlier, as well as the following facts and circumstances that may be recognized by the entry of Eul evidence No. 6 and the purport of the entire pleadings, it is reasonable to view the Plaintiff as business income in 201, KRW 314 million received from the Korean AAA Special School in 201.

Therefore, the defendant's business income is justified.

A) The Plaintiff served as a bank’s management position and retired from office around 2009. From around 2010 to around 2015, the Plaintiff provided advisory services on bank loans, etc. and received the instant amount from Korea AAAAAA technical school and U.S., Inc., Ltd., to be paid. In light of the period during which the Plaintiff provided services, remuneration therefor, etc., the Plaintiff may be deemed as continuous and repetitive activities for profit-making purposes.

B) At the time of filing a global income tax return, the Plaintiff reported not only the income in 2012 or 2015, but also the income in 2011 as business income. The Plaintiff asserted other income only after receiving a request from the Defendant to submit evidentiary documents as to necessary expenses.

4. Conclusion

The claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Judges Cho Jae-chul et al.

Judges Lee Jae-he

Judge Lee Lee-hee

The original shall be authentic.

September 11, 2018

Seoul Administrative Court

Professor Professor Kim Jin-ray