[1] Whether an administrator of inherited property may interpret the provisions of Articles 16(1) and 17(1) of the former Local Tax Act as a provision succeeding to the heir's tax obligation (negative)

[2] The case holding that in a case where Party B’s single inheritance due to Party B’s death, but the court of the second inheritance due to Party B’s death immediately appointed Party B as an administrator of inherited property on the ground that the existence of the heir was unknown, and the competent administrative agency succeeded to Party B’s duty to pay acquisition tax due to the second inheritance pursuant to Articles 16(1) and 17(1) of the former Local Tax Act on the ground that Party B succeeded to Party B’s duty to pay acquisition tax, etc. on an apartment owned by Party B inherited, the above disposition was unlawful on the ground that Party C did not have any duty to pay acquisition tax, etc. due to the second inheritance

[1] Article 16(1) of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010; hereinafter the same) provides that “The amount of money collectible by a local government imposed on, or to be paid by, an ancestor is limited to the property acquired by inheritance” (Article 16(1) of the former Local Tax Act also refers to the succession to tax liability due to inheritance). Article 16(1) of the former Local Tax Act does not include a provision that succeeds to the liability to pay money collectible by a local government imposed on, or to be paid by, an ancestor, not the money collectible by, the ancestor. Article 17(1) of the former Local Tax Act also provides on the premise of “Article 16(1) of the former Local Tax Act”. Thus, the foregoing provision cannot be construed as a provision that succeeds to the heir’s tax liability.

[2] The case holding that in a case where Party B imposed acquisition tax, etc. on an apartment house inherited to Party B on the ground that Party B succeeded to the first inheritance due to Party B’s death, but the court appointed Party B as an administrator of inherited property on the ground that Party B’s heir’s existence or absence was unknown, the competent administrative agency imposed imposition of acquisition tax, etc. on Party B on the ground that Party B succeeded to the heir’s liability to pay acquisition tax due to the second inheritance pursuant to Articles 16(1) and 17(1) of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010; hereinafter the same shall apply), on the ground that Party B’s heir succeeded to the heir’s liability to pay acquisition tax, etc. on the apartment house acquired due to Party B’s death and Party B’s heir’s death did not have a duty to pay acquisition tax, etc. on the ground that Party B did not have a duty to pay taxes.

[1] Articles 16(1) and 17(1) of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010; see current Article 42(1) of the Framework Act on Local Taxes) / [2] Articles 16(1) and 17(1) of the former Local Tax Act (wholly amended by Act No. 1021, Mar. 31, 201; see current Article 43(1) of the Framework Act on Local Taxes)

The deceased non-party 1’s administrator of inherited property

The head of Gangnam-gu Seoul Metropolitan Government (Law Firm Sejong, Attorney double-luminous)

Seoul Police Agency Decision 2012Guhap22614 decided August 24, 2012

February 27, 2013

1. The part of the judgment of the court of first instance against the Plaintiff, which orders the revocation below, shall be revoked. The part of the disposition imposing penalty tax of KRW 12,623,00 against the Plaintiff on February 24, 2012, which was imposed by the Defendant on the Plaintiff on KRW 8,216,512 and penalty tax of KRW 1,262,30 with respect to special rural development tax, shall be revoked.

2. The defendant's appeal is dismissed.

3. All costs of the lawsuit shall be borne by the defendant.

1. Purport of claim

The Defendant’s disposition of imposition of additional tax of KRW 12,623,00 and additional tax of KRW 1,262,300 on the acquisition tax imposed on the Plaintiff on February 24, 2012 and the special rural development tax of KRW 1,262,30 is revoked (the “acquisition tax for March 2012,” written in the written complaint, appears to be erroneous in the acquisition tax).

2. Purport of appeal

A. Plaintiff: As set forth in paragraph (1) of this Article.

B. Defendant: The part against the Defendant in the first instance judgment is revoked, and the Plaintiff’s claim corresponding to the revoked part is dismissed.

1. Details of disposition;

A. The deceased non-party 2 died on March 1, 2009 (hereinafter “the deceased non-party 2’s inheritance”). The deceased non-party 1, a sole heir, died on March 2, 2009 (hereinafter “the deceased non-party 1’s inheritance”) with the mother of the deceased non-party 2.

B. On May 27, 2010, Nonparty 3 asserted that he/she is the deceased Nonparty 1’s substitute Nonparty 1’s substitute Nonparty 1 filed an application for appointment of an administrator of inherited property with the Seoul Family Court (2010 Ma 4467). On November 4, 2010, the Seoul Family Court rendered a decision to appoint the Plaintiff as an administrator of inherited property on the ground that the existence of the deceased Nonparty 1’s parent or sibling is unknown and the existence of the heir is unknown.

C. The Defendant, on August 12, 201, issued a notice of imposition of acquisition tax (including additional tax) 47,498,40 won and special tax (including special tax) 4,749,840 won on the instant apartment (hereinafter “the first disposition”) to the Plaintiff on August 12, 2011, on the ground that “The Plaintiff succeeded to the net Nonparty 1’s liability to pay acquisition tax due to the first inheritance based on Article 16(1) of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010; hereinafter the same) since it acquired and died the apartment (hereinafter “instant apartment”) 120,00 Dong-gu, Seoul, which was owned by the deceased Nonparty 2 by the deceased Nonparty 2 by the first inheritance.

D. In addition, on February 24, 2012, the Defendant imposed and notified the Plaintiff of KRW 37,280,000 acquisition tax on the instant apartment and additional tax on KRW 12,623,00 for acquisition tax, KRW 3,728,00 for special rural development tax, and KRW 1,262,30 for special rural development tax (hereinafter “second disposition”) on the ground that “the deceased Nonparty 1 died, but it is unclear whether an heir exists or not,” and that the Plaintiff succeeded to the liability to pay acquisition tax on the secondary inheritance pursuant to Articles 16(1) and 17(1) of the former Local Tax Act, and that the Plaintiff imposed and notified the Plaintiff of KRW 37,28,00 for acquisition tax on the instant apartment, and KRW 1,262,300 for special rural development tax (hereinafter “special rural development tax”) by adding the imposition of additional tax to “instant disposition”, and Article 3 subparag. 5 of the Acquisition Tax and Special Rural Development Tax Act.

E. The Plaintiff dissatisfied with the instant disposition and filed a petition with the Tax Tribunal for an inquiry on March 16, 2012, but the Tax Tribunal dismissed the petition on June 28, 2012.

[Reasons for Recognition: Unsatisfy, Entry of Evidence A Nos. 1 through 4, 16 (including a provisional number; hereinafter the same shall apply), the purport of the whole pleadings]

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The Plaintiff is not liable to pay acquisition tax, etc. following the second inheritance. Therefore, the instant disposition based on the premise that the Plaintiff is liable to pay acquisition tax, etc. is unlawful.

2) Even if the Plaintiff is liable to pay acquisition tax, etc., there is a justifiable reason not to mislead the Plaintiff’s neglect of tax liability, such as acquisition tax, on the ground that there is a de facto or legal impairment in investigating and verifying the deceased Nonparty 1’s inherited property or paying taxes and public charges, such as acquisition tax. Therefore, the instant disposition is unlawful.

3) The instant disposition was unlawful on the ground that the instant disposition was defective at the time of the instant disposition.

B. Relevant statutes

[Attachment] The entry is as follows.

C. Determination as to whether the Plaintiff is liable to pay taxes, such as acquisition tax following the second inheritance

It cannot be deemed that the Plaintiff, as an administrator of inherited property of the deceased non-party 1, is liable to pay the special rural development tax based on the acquisition tax and the principal tax of the deceased non-party 1’s heir due to the second inheritance. Therefore, the instant disposition based on a different premise is unlawful (the assertion that there is justifiable reason for not paying acquisition tax, etc. among the Plaintiff’s assertion, is premised on the existence of liability to pay acquisition tax, etc.). The reasons are as follows.

1) Acquisition tax is imposed on a purchaser of real estate, etc. (Article 105(1) of the former Local Tax Act), and where real estate, etc. is acquired by inheritance, each inheritor shall be deemed to have acquired an object of taxation to be inherited (Article 105(9) of the former Local Tax Act). Article 120(1) of the former Local Tax Act provides that a person who acquired an object of taxation to be acquired is merely liable for return and payment (Article 120(1) of the former Local Tax Act), and the former Local Tax Act does not provide that a person who is not an acquisitor shall be deemed a taxpayer.

2) Article 16(1) of the former Local Tax Act provides that “Any inheritor or any administrator of inherited property under the provisions of Article 1053 of the Civil Act, where an inheritance has commenced, shall be liable to pay impositions levied on the inheritee or impositions levied on a local government to be paid by an inheritee or to be paid by an inheritee within the limit of the property acquired by inheritance.” Article 17(1) provides that “Where the existence of an inheritor is not ascertained in the case of Article 16(1), any notification, demand and other necessary matters to be paid by an inheritor shall be given to an administrator of inherited property.”

Article 16(1) of the former Local Tax Act stipulates that “The amount of money collectible by a local government imposed on, or to be paid by, an ancestor to, an ancestor shall be limited to the property acquired by inheritance” (Article 16(1) of the former Local Tax Act refers to succession to tax liability due to inheritance). Article 16(1) of the former Local Tax Act does not include a provision that succeeds to tax liability for “amount collectible by a local government imposed on, or to be paid by, an heir,” rather than money collectible by a local government that is imposed on, an ancestor or money collectible by an ancestor to be paid by, an ancestor.” Since Article 17(1) of the former Local Tax Act assumes the premise of “Article 16(1) of the former Local Tax Act”, the foregoing provision

In this case, where inheritance commences due to the death of deceased non-party 1, who is the deceased non-party 1, the deceased non-party 1, the deceased non-party 2, was succeeded to the acquisition tax, etc. to be paid for the acquisition of the apartment of this case, which was acquired by the first inheritance due to the death of the deceased non-party 2. In other words, if the deceased non-party 1's heir exists as a result of the death, the deceased non-party 1 does not succeed to the liability to pay acquisition tax

3) In order for an administrator of inherited property to bear the tax liability of an heir, other than an ancestor, the provisions on the joint and several tax liability existing concurrently and jointly with the heir, or the provisions on the secondary tax liability of an heir, should be separately prescribed by the Act. The former Local Tax Act only contains provisions on the joint and several tax liability on the jointly and severally owned property (Article 18), a liquidator, etc., a liquidator, an investor, a corporation, or a business transferee (Articles 20, 22, 23, and 24), and there is no provision on the joint and several tax liability or the secondary tax liability on the administrator of inherited property.

4) Acquisition tax arising from the acquisition of inherited property by an inheritor is a tax obligation to be borne by each inheritor, and thus, it is not the nature that the acquisition tax should be paid as an inheritor’s proprietary property or as an inherited property.

5) If there is no heir, the possibility that the acquisition tax liability due to inheritance will not be established cannot be ruled out. In such a case, requiring the administrator of inherited property to report and pay the acquisition tax to the administrator of inherited property is a tax for which the tax liability has not been established. Therefore, it is unlawful in itself (in this case, it is different from the establishment of the lost Nonparty 1’s tax liability due to the first inheritance

D. Determination as to the assertion that there is a defect in a tax payment notice

1) When a single tax notice imposes both a principal tax and a penalty tax, the separate tax amount and the basis for calculation of the respective principal tax and the penalty tax shall be stated in the tax notice. In a case where multiple kinds of penalty taxes are imposed together, the separate tax amount and the basis for calculation, etc. for each type of penalty tax shall be stated in the separate tax amount and the basis for calculation. As such, in a case where a taxpayer is naturally able to know the details of taxation by itself, the imposition of penalty tax is deemed unlawful (see Supreme Court en banc Decision 2010Du12347, Oct. 18, 2012).

2) In full view of the facts without dispute, Gap evidence Nos. 2 and 17, the following facts may be acknowledged in light of the purport of the entire pleadings:

① On February 21, 2012, the Plaintiff reported to the Defendant the principal tax of acquisition tax on the instant apartment by second inheritance, KRW 37,280,00,000, the principal tax on the acquisition of the instant apartment, and KRW 3,728,00,00, but requested that the Plaintiff pay acquisition tax, etc. following the second inheritance, while the Plaintiff did not have an obligation to pay additional tax.

② Accordingly, on February 24, 2012, the Defendant sent to the Plaintiff a tax payment notice (Evidence A 2; hereinafter “instant tax payment notice”) issued on March 12, 2012 with the due date for reporting and payment, which was the second disposition, including the instant disposition, on March 24, 2012.

③ Of the instant disposition, KRW 12,623,00 as additional tax on acquisition tax was added to KRW 7,456,00 for additional tax on negligent tax returns and KRW 5,167,00 for additional tax on additional tax on default, and KRW 1,262,30 for additional tax on special tax for rural development was calculated by adding KRW 745,60 for additional tax on negligent tax on default and KRW 516,700 for additional tax on default.

④ However, the tax payment notice of this case does not distinguish between the additional tax on negligent tax returns and the additional tax on negligent tax, but does not stipulate the basis for calculation of additional tax.

According to the above facts, the instant tax payment notice did not contain any error of omission in the matters to be stated in the tax payment notice, nor did it be deemed that the defect was corrected or cured. Thus, the instant disposition was unlawful.

E. Sub-committee

The instant disposition is deemed to be a single mother or unlawful.

3. Conclusion

Of the judgment of the first instance, the part against the plaintiff is revoked and accepted as a claim of the plaintiff corresponding to the revoked part. The defendant's appeal is dismissed.

[Attachment] Relevant Statutes: omitted

Judges Choi Jong-ho (Presiding Judge) Kim Tae-ho