Seoul Administrative Court-2015-Gu Partnership-70737 (Law No. 11, 2016)

Cho-2015-west-1427 (Law No. 13, 2015)

If an audit official has conducted on-site verification as a follow-up measure for the tax office of the Commissioner of the National Tax Service, it is not subject to a duplicate investigation

On-site inspections conducted by the Commissioner of the National Tax Service as follow-up measures for the comprehensive audit of the tax office by the Commissioner of the National Tax Service are distinct from the tax investigation in which the authority to ask questions is exercised.

Article 97 (Calculation of Necessary Expenses for Transfer Income)

Article 81-4 (Prohibition of Abuse of Right of Tax Investigation)

2016Nu62513 Revocation of Disposition of Imposing capital gains tax

The United States of America

BB Director of the Tax Office

Seoul Administrative Court Decision 2015Guhap70737 decided August 11, 2016

May 17, 2017

June 28, 2017

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The imposition of capital gains tax of 000 won (including additional tax) accrued to the plaintiff on November 3, 2014 by the defendant against the plaintiff on November 3, 2014 shall be revoked.

1. Quotation of judgment of the first instance;

The reasoning of this Court’s explanation concerning this case is as follows. Thus, this Court’s reasoning is identical to the reasoning of the judgment of the court of first instance except for the dismissal as follows. Thus, this Court’s reasoning is cited in accordance with Article 8(2) of the Administrative Litigation Act and the main text of Article

○ 8th parallel 4 to 14th parallel are as follows.

“B) As a form of an administrative investigation to realize the State’s right to impose taxes, a tax investigation refers to an inquiry to determine or correct the tax base and amount of national taxes and any act of inspecting, investigating, or ordering the submission of books, documents, and other articles. In the case of a tax investigation for which the tax authority’s right to ask questions to a taxpayer or a person, etc. who is deemed to have a transaction with the taxpayer (hereinafter “taxpayer, etc.”) bears the legal duty to ask questions and to allow the tax official to inspect for the purpose of collecting the taxation data. Meanwhile, a repeated tax investigation for the same tax item and taxable period may seriously infringe not only on the taxpayer’s freedom of business or legal stability, etc., but also lead to the abuse of the authority to impose taxes. Therefore, it is necessary to be prohibited except in exceptional cases that seriously contravene

In light of the nature and effect of such tax investigation, the purport of prohibiting duplicate tax investigations, etc., where a tax official’s investigation practically affects taxpayers’ freedom of business by having taxpayers answer questions and undergo an inspection, etc., it shall be deemed a “tax investigation prohibited from re-audit” even if it follows the procedure of “local confirmation” as stipulated by the former Regulations on the Management of Investigations, which is the instructions of the National Tax Service. However, in cases where all investigation conducted by the tax authority for the collection of taxation data or for the verification of accuracy of the details of the investigation constitutes a tax investigation prohibited from re-audit, the tax authority should always initiate a regular tax investigation in sufficient cases only with the confirmation of facts, and the taxpayer, etc. must also respond to an unnecessary tax investigation. Thus, it does not constitute a “tax investigation prohibited from re-audit” even if the taxpayer, etc. does not have any duty to answer or accept, and the taxpayer, etc. is not a “tax investigation” prohibited from re-audit

In addition, whether an investigation conducted by a tax official constitutes a "tax investigation prohibited by re-audit" shall be determined individually in specific cases by comprehensively taking into account the purpose and details of the investigation, the object and method of the investigation, the materials acquired through the investigation, the scale and period of the investigation, etc. In addition, it is difficult to regard it as a "tax investigation" in principle where it is anticipated that a taxpayer, etc. can easily respond to the investigation, or there is no substantial impact on the taxpayer's freedom of business, etc., but it is difficult to regard it as a "tax investigation" in cases where the investigation conducted by a tax official directly contact the taxpayer, etc. on a considerable period of time in the office, workplace, factory, or residence of the taxpayer, etc., and inquires the taxpayer, or inspects and investigates books, documents, goods, etc. for a certain period of time, barring special circumstances (see Supreme Court Decision 2012Du3684, Mar. 16, 2017).

C) Comprehensively taking account of the following facts: (a) Nos. 5, (b) Nos. 7-1 through 4, (c) Nos. 8 through 12, and (d) 14 through 17 and the testimony of HaCC witness at the trial, the Commissioner of the National Tax Service first visited the Defendant through BB DoD, etc. during the comprehensive audit period for the Plaintiff, and then sent several opinions to the Plaintiff that he would wish to express necessary expenses; (b) a public official of the National Tax Service, who was in charge of audit and inspection at the time, sought the Plaintiff’s explanation of the expenses and necessary expenses after the discussion with the head of the audit team; and (c) a public official of the National Tax Service, including the above HaCC, received an order of business trip (on-site verification) from the National Tax Service to verify the contents of the Plaintiff; and (d) the Defendant visited the Plaintiff’s neighboring land to verify the status of the Plaintiff’s land free of charge on April 29, 2014; and (c) the Defendant visited 214.

According to the above facts, the above investigation by the public officials belonging to the National Tax Service seems to have been conducted as follow-up measures of comprehensive audit conducted by the National Tax Service, and the above investigation by the public officials belonging to the National Tax Service or the defendant is merely merely a mere fact confirmation or a simple incidental question, and it is not likely to have a significant impact on the plaintiff's freedom of business. Thus, it is difficult to view such investigation as constituting "tax investigation" under the former Framework Act on National Taxes.

○ 10 is the second chapter of the Income Tax Act (amended by Act No. 14389, Dec. 20, 2016).

2. Conclusion

Therefore, the judgment of the first instance court is legitimate, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.