Cho High Court Decision 2014west0464 ( September 24, 2014)

Even if there are other earned income omitted from the year-end tax settlement, it is reasonable to view that the exclusion period is five years.

Where a resident with only earned income has paid the income tax by year-end settlement, even if there are other earned income omitted from the year-end settlement, the exclusion period for imposition of such income tax shall be five years unless there are any special circumstances.

Article 26-2 of the Framework Act on National Taxes, Article 12-3 of the Enforcement Decree thereof, Articles 70, 73, and 138 of the Income Tax Act

2014Guhap9370 global income and revocation of disposition

Yellow AA

The director of the tax office of Luxembourg

October 7, 2014

November 25, 2014

1. The Defendant’s imposition of global income tax of KRW 3,875,650 against the Plaintiff on September 10, 2013 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. In 2007, the Plaintiff had worked for 2 months at BB Medical Center and 10 months from AAAA Foreign Department and earned a total of 115,582,550 won. The year-end adjustment was made only with AA Foreign Department.

B. On September 10, 2013, the Defendant imposed global income tax of KRW 3,875,650 on the Plaintiff on September 10, 2013, on the ground that the Plaintiff did not make a year-end tax settlement or final tax return on global income of 2007 (hereinafter “instant disposition”).

Facts that there is no dispute over recognition, Gap evidence 1, 2, Eul evidence 1 and 2, the whole pleadings, and the whole pleadings

Purport

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The plaintiff's assertion

In fact, it is true that the Plaintiff did not file a final return on global income tax on the earned income belonging to year 2007. However, considering that the year-end tax settlement was made with AA foreign countries at the time, and the BB medical center also withheld, it is reasonable to regard the Plaintiff as “non-report” but “underreporting.” Therefore, regarding the above global income tax, the exclusion period of imposition for five years under Article 26-2(1)3 of the former Framework Act on National Taxes (amended by Act No. 8830, Dec. 31, 2007; hereinafter the same shall apply) shall be deemed as applicable, and accordingly, the instant disposition was made after the lapse of the exclusion period of imposition.

(2) The defendant's assertion

Article 73 (1) of the former Income Tax Act (amended by Act No. 8825, Dec. 31, 2007; hereinafter the same) provides that the case where a final return on tax base under Article 70 of the former Income Tax Act may not be filed. However, the main sentence of Article 73 (2) of the former Income Tax Act provides that the case where Article 73 (1) of the former Income Tax Act does not apply, and the proviso of Article 73 (2) of the former Income Tax Act provides for exceptions. However, since the Plaintiff cannot be deemed to have made a year-end settlement under Article 138 of the former Income Tax Act, it cannot be deemed to be a "person who has paid the income tax by the year-end settlement under the proviso of Article 73 (2) of the former Income Tax Act", the Plaintiff is obligated to make a final return on tax base under Article 70 of the former Income Tax Act. Accordingly, since the Plaintiff failed to perform its duty despite its duty to report, there is no error

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) First, for the following reasons, the Plaintiff is obligated to make a final return on the global income for the year 2007 pursuant to Article 70 of the former Income Tax Act as alleged by the Defendant. In other words, in light of the aforementioned relevant laws and regulations, it is questionable that the main text of Article 73 (2) of the former Income Tax Act excluding the application of Article 73 (1) of the former Income Tax Act, which excludes the cases where the Plaintiff may not make a final return on the tax base pursuant to Article 70 of the former Income Tax Act, as it falls under a person other than daily workers

Meanwhile, the proviso of Article 73 (2) of the former Income Tax Act provides that a person who has paid income tax through a year-end tax settlement under Article 138 of the former Income Tax Act, which is a provision for the year-end tax settlement for reemployment as a ground for exception to the application of the main sentence of the same Article, but the above provision provides that the year-end tax settlement under the above provision shall be aggregated with the earned income accrued from the former place of business and the income accrued from the current place of business. In full view of the purport of the entire arguments, the Plaintiff cannot be deemed to have made the year-end tax settlement under Article 73 (2) of the former Income Tax Act, since the Plaintiff received

(2) However, since the Plaintiff is liable to file a final return on the tax base, the exclusion period for imposition of seven years is not immediately applied as alleged by the Defendant.

Article 26-2 (1) of the former Framework Act on National Taxes is understood to treat without filing a return and underreporting differently. Thus, Article 26-2 (1) 2 of the Framework Act on National Taxes, which provides for the exclusion period for 7 years, shall apply to a return without filing a tax return despite a duty to file a final return on tax base, and in cases of underreporting, the exclusion period for 5 years shall apply pursuant to Article 26-2 (1) 3 of the Framework Act on National Taxes. In addition, in cases where a resident falling under any subparagraph of Article 70 (1) of the former Income Tax Act pays income through withholding or year-end tax settlement, even if the income is omitted, it conforms to the purport of Article 70 (1) of the Income Tax Act, which provides for the exception to the final return on tax base to promote simplified payment of income tax and convenience of taxation, even if there are other earned income omitted from the year-end tax settlement, the exclusion period for imposition of income tax shall be 5 years, unless there are special circumstances (see Supreme Court Decision 2015Du513515, May 25135, 2013).

Articles 70(1) and 73(1) of the former Income Tax Act are exempted from the obligation on the final tax base return in cases where a person having only earned income has paid the income tax through a year-end settlement, and the purport of this Article is that a resident having only earned income is determined and collected by the Government through withholding the relevant labor income tax and then making a tax payment after having the said person pay it through a year-end settlement, and thus there is no substantial need for the person to report the relevant income. Therefore, in such a case, a taxpayer’s convenience is ensured by granting a tax withholding by exempting the relevant employee from the final tax base return procedure. Therefore, if a withholding agent has paid the income tax after withholding the relevant employee’s labor income tax and completing the year-end settlement, even if there is another earned income omitted in the above year-end settlement process, it is reasonable to view that the said

Therefore, as seen earlier, it is reasonable to view that the exclusion period for taxation is five years, even if there are other earned income omitted in the year-end tax settlement.

However, pursuant to Article 26-2(4) of the former Framework Act on National Taxes and Article 12-3(1)1 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 21316, Feb. 6, 2009) in cases of national taxes, such as global income tax, on which the day following the due date for which the tax base and tax amount of the relevant national tax can be imposed, and in cases of Article 70(1) of the former Income Tax Act, the due date for filing a report on global income tax is the date of May 31 of the year following the following taxable period. As such, the due date for filing a report on global income tax for the Plaintiff’s global income tax for the year 2007 shall begin to run from June 1, 2008. The period for filing the instant disposition was as seen earlier.

Therefore, the disposition of this case was made after the expiration of the exclusion period of imposition, and is unlawful.

3. Conclusion

Thus, the plaintiff's claim of this case is reasonable, and it is so ordered as per Disposition.

shall be ruled.