Defendant

Defendant

Lee Jae-deok

Law Firm Barun, Attorneys Park Jae-soo et al.

Seoul Central District Court Decision 2009Gohap768 Decided June 17, 2010

The defendant's appeal is dismissed.

1. Summary of grounds for appeal;

A. misunderstanding of facts and misapprehension of legal principles

"Fraud and other unlawful acts" referred to in Article 9 (1) of the former Punishment of Tax Evaders Act (amended by Act No. 9919, Jan. 1, 2010; hereinafter the same shall apply) refers to deception and other active acts that make it impossible or considerably difficult to impose and collect taxes, and it does not constitute a mere failure to report under the tax law or making a false report.

However, the Defendant entered the details of actual sales through the computer system in full, and did not prepare and keep separate disguised books. The Defendant’s business registration by lending the name of relatives, etc. and opened an account was inevitable due to the characteristics of the printing business operated by the Defendant, and the Defendant did not intend to evade tax. The Defendant did not report the so-called dumping type because it did not receive the purchase tax invoice in order to live in the price competition, and did not receive a false purchase tax invoice. The reason why the Defendant did not properly perform the duty of withholding tax on the employees was that the Defendant was aware that he would be able to perform the duty of withholding tax only for the regular employees because he did not perform the duty of withholding tax.

In full view of the above circumstances, the Defendant did not simply submit a tax return under the tax law or submit a false tax return, but did not engage in deceptive scheme or other active acts that make it impossible or considerably difficult to impose and collect taxes.

Nevertheless, the court below recognized that the defendant committed the "Fraud or other unlawful act" under Article 9 (1) of the former Punishment of Tax Evaders Act. Thus, the court below erred by misunderstanding of facts and misunderstanding of legal principles, which affected the conclusion of the judgment.

B. Unreasonable sentencing

The punishment of the lower court (two years and six months of imprisonment, the suspension of execution of four years, and fine of 4.8 billion won) is too unreasonable.

2. Determination on the grounds for appeal

A. As to the assertion of mistake of facts and misapprehension of legal principles

(1) In the crime of tax evasion provided for in Article 9 of the former Punishment of Tax Evaders Act and Article 8 of the Act on the Aggravated Punishment, etc. of Specific Crimes, the term “Fraud or other unlawful act” means an act which enables the tax evasion and which is recognized as unlawful by social norms, i.e., a deceptive scheme or other unlawful act which makes it impossible or considerably difficult to impose and collect taxes. It does not constitute mere failure to report under tax law or making a false report without accompanying any other act (see, e.g., Supreme Court Decision 2001Do3797, Feb. 14, 2003). However, in addition to the failure to report or underreporting of taxable items, it does not constitute a fraudulent act or an unlawful act that causes tax evasion or another unlawful act (see, e.g., Supreme Court Decision 200Do5416, Aug. 23, 2007).

(2) We examine the instant case in accordance with the aforementioned legal doctrine.

(A) According to the evidence duly adopted and examined by the court below, it is recognized that the defendant did not have any false statement that he managed the current status of actual sales and sales proceeds through the customer management program and did not prepare and manage other separate books. The purchase and sales details reported by the defendant do not have any false statement, but only some purchase and sales were omitted, and the fact that it was difficult to grasp the total sales of the company operated by the defendant while conducting the tax investigation of this case at the tax office.

(B) On the other hand, however, according to the above evidence, the following facts can be acknowledged.

1) Although the Defendant, while operating one printing plant, was running one printing business, he was registered as business by lending the name of Nonindicted 1, Nonindicted 2, and Nonindicted 3, who is the wife of the Defendant, and is the wife of the Defendant, and then reported the tax to each business title as if he actually runs the business (the Defendant stated that Nonindicted 1, 2, and 3 actually runs the business, but it is difficult to find any data to recognize that he had separate business place or invested operating funds, and that his employee stated that there was no business order issued by Nonindicted 1 or Nonindicted 2. In addition, in the case of the printing business as argued by the Defendant, it is difficult to recognize that a number of business registrations are necessary to secure and maintain customers. Meanwhile, Nonindicted 2 and 3 stated that they were actually operating the place of business at the time of the instant tax investigation, but they subsequently lent the name of the public official in charge, etc. based on the relevant data, and subsequently lent it to the investigation by the public official in charge.

2) While the Defendant was well aware of the current status of the actual sales and sales proceeds through a customer management program, he requested a tax accountant to file a tax return, and requested a tax accountant to prepare a book suitable for the issuance of a tax invoice except for the portion of the data entered in the said program, but not issuing a tax invoice.

3) In the event that the Defendant purchases so-called “dumping-type” from those who have not received the name cards, he was aware of the fact that it is difficult for him to treat it as a cost because he did not issue a tax invoice, and manufactured and sold the name cards, etc., but did not issue a tax invoice for the significant part of the sales.

4) In doing financial transactions with the trading partner, the Defendant used 14 accounts opened in the name of Nonindicted 4, 5, 6, and 7, a business titleholder, in addition to the accounts in the name of Nonindicted 1, and 2, in addition to the accounts in the name of Nonindicted 4, 5, and 6, and 7. Nonindicted 3 continued to use the accounts in the name of Nonindicted 3 even after reporting the closure of business with respect to the business place in the name of Nonindicted 3, 3, and the sum deposited into 14 accounts, such as the above Nonindicted 4, etc., who is not the business titleholder, reaches KRW 69.6 billion in total.

5) In the case of benefits, the Defendant was well aware of the fact that when filing a report with the tax office, the tax amount would be reduced and exempted, and the number of regular employees in the workplace they operated is about 15, and the number of regular employees in the workplace who ordinarily worked is about 40 to 50, but did not perform the withholding duty for daily employment. In the case of regular employees, the Defendant did not withhold for the remaining portion except for some allowances. The sum of the wages for which the Defendant did not withhold for 2004 to 2007 reaches 6.65 billion won.

(C) The above facts and the following circumstances revealed by the defendant, namely, ① the sales revenue omitted at the time of tax return reaches about 62% of the total sales revenue without issuing a tax invoice; ② If multiple accounts were required for efficient team management like the defendant’s assertion, the defendant and the non-indicted 1, and the non-indicted 2, who used the name of the business title, opened a loan account in the name of the non-business title despite the fact that several accounts could have been opened and used in the name of the non-business title; ③ the defendant who purchased a large amount of dumping cost of about 70% of the expenses not issued with the purchase tax invoice, purchased a large amount of inputs without the purchase tax invoice in the name of the non-business title in order to reduce the tax amount, was not recognized as having the tax office’s approval of the expenses paid in order to reduce the tax amount. In full view of the various circumstances revealed in the argument of this case, it appears that the defendant’s act of borrowing the name of the business title and non-indicted 1, and it appears to have been recognized as having the actual tax evasion and other sales revenue.

(3) Therefore, the court below's decision of conviction against the defendant in the same purport is just, and there is no error of misconception of facts or misunderstanding of legal principles as alleged by the defendant, and there is no ground for misapprehension of facts or misapprehension of legal principles

B. As to the assertion of unfair sentencing

In order for the defendant to live in a strong competition with other printing companies, the crime of this case is committed by the defendant, the defendant paid 878,259,310 won out of the evaded tax amount through the delinquent procedure, etc., and the apartment house, the only property of the defendant, is seized and it seems that additional taxes are collected in accordance with the delinquent procedure in the future. It is recognized that the defendant closes all the printing companies operated by the defendant due to this case, and that the defendant has no particular criminal history.

However, the crime of this case is committed by the defendant through active means such as non-issuance of tax invoices, disguised business registration, use of borrowed account, etc. for a number of years, and the defendant evaded income tax and value-added tax of KRW 5,406,713,00, and did not perform withholding duty of KRW 71,754,00 in the process. In light of the method of the crime and the amount of evaded tax, the crime is not committed, and the crime is not committed, and it is highly necessary to strictly punish the defendant as it disturbs the national tax collection order and seriously damages the tax justice. The amount of evaded tax is not paid in full until now, and the sentencing conditions indicated in the argument of this case, such as the defendant's age, character, conduct, environment, circumstances of the crime, means and result, etc., are difficult to defer the sentence of a concurrent fine as well as the suspension of the execution of imprisonment. Thus, the court below's judgment against the defendant is reasonable and unreasonable, and it is not justified.

3. Conclusion

Therefore, the defendant's appeal is without merit, and it is dismissed in accordance with Article 364 (4) of the Criminal Procedure Act. It is so decided as per Disposition.

Judges Lee Sung-ho (Presiding Judge)