Whether the exclusion period of imposition can be applied to 10 years by deeming that it constitutes fraud or other unlawful acts, in cases where land has been sold under title trust for non-registration.

Since title trust is held in the name of the insolvent person, and a false report of capital gains tax is deemed to have been committed by fraudulent means or other active acts that make it impossible or considerably difficult to impose and collect capital gains tax, it is reasonable to view that such act is a case of evading national taxes through fraudulent or other unlawful acts.

Article 26-2 (Period for Excluding Assessment of National Taxes)

2018Guhap13921 Invalidity of a disposition imposing capital gains tax

the United Nations A

Head of Namyang District Tax Office

1, 2019.04

.04.25

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On April 25, 2016, the Defendant confirmed that the imposition of capital gains tax of KRW 867,460,603 (including additional tax) for the Plaintiff for the year 2005 is null and void.

1. Details of the disposition;

(a) Change of ownership of real estate;

(1) On October 20, 2003, the Plaintiff (former name No. 15-12) completed the registration of ownership transfer on October 1, 2003 with respect to 3,871 square meters of ○○○○○○-dong 155-8 Miscellaneous land, and 1,257 square meters of 155-8 Miscellaneous land on June 3, 2004 (hereinafter referred to as “155-8 land”), the same 155-12 miscellaneous land and 025 square meters (hereinafter referred to as “15-12 land”), each of the above 205-15-13 miscellaneous land and 25-25 miscellaneous land divided into five 15-25 miscellaneous land (hereinafter referred to as “15-13 miscellaneous land”), and each of the above 15-25 miscellaneous land into five miscellaneous land and five 15-25 m25 m25 m25 m27.

3) Since then, the registration of ownership transfer was completed with respect to each of the instant lands to KimCC, KimD, and Yellow E (hereinafter referred to as "GlaCC, etc.") as follows.

Objects

Owners

The date of registration of relocation;

Grounds for Registration

155-8 Land

CC Kim

September 15, 2005

August 1, 2005

155-12 Land

D Kim D Kim

December 21, 2005

November 20, 2005

155-13 Land

Yellow E

January 2, 2006

November 30, 2005

B. Plaintiff’s report, tax investigation, etc.

1) On May 27, 2006, the Plaintiff filed a transfer income tax report with the purport that the Plaintiff transferred each of the instant lands in KRW 418 million to JungB.

2) On or around December 2010, the head of the Gangnam Tax Office, as a result of the investigation of capital gains tax on JungB, notified the Plaintiff of the results of the investigation to the head of the tax office, the head of the tax office having jurisdiction over the tax office at the time of the Plaintiff and the head of the Gangnam Tax Office, the head of the tax office having jurisdiction over the tax office at the time of the Plaintiff on February 2011, deeming that the actual owner of each of the instant lands sold each of the instant lands to the JungF to have not sold it to KimCC, etc. in amount to KRW 1.836 billion.6 billion.

3) On June 1, 2011, the head of this tax office: (a) conducted a survey of FF, etc. and deemed that the Plaintiff sold the instant land to FF in KRW 450 million; (b) notified the Plaintiff of KRW 21,558,916 of the transfer income tax for the year 2005; and (c) notified the Plaintiff of the results thereof.

4) After investigating the difference in the transfer value of 1 billion won or more as the result of the investigation by the two tax offices, the head of the Gangnam Tax Office determined that the Plaintiff’s transfer value was 1.45 billion won as the Plaintiff’s investigation of the Gangwon Tax Office. Accordingly, the transfer value of each of the instant land was determined as the transfer value of 1.836 billion won, and the transfer value was determined as the transfer value of 1.45 billion won, and the acquisition value was 1.455 billion won, and the transfer income tax was imposed on ○○ Tax Office around August 2012. In addition, it was confirmed that the Plaintiff’s transfer value was less than 1.45 billion won and that the Plaintiff’s transfer value was less than 1.45 billion won, and thus, the Plaintiff’s transfer income tax was corrected.

C. Defendant’s correction and notification of capital gains tax

1) On January 21, 2016, the Defendant confirmed that the transfer value of each of the instant lands was KRW 1.45 billion, and thus, notified the Plaintiff of the pre-announcement of taxation to change the transfer income tax for each of the instant lands in KRW 2005 to KRW 867,460,603. Accordingly, the Plaintiff filed a request for pre-assessment review with the Defendant on March 2, 2016, but the Defendant decided not to adopt the transfer income tax on each of the instant lands on April 20, 2016, deeming that the Plaintiff’s request was groundless.

2) On April 25, 2016, the Defendant issued a correction and notification of KRW 874,169,370 (including additional tax) for the transfer income tax of 2005 to the Plaintiff (hereinafter “instant disposition”).

[Reasons for Recognition] Each entry of Gap evidence Nos. 1-5, Eul evidence Nos. 1, 2, 5, 7, 9, 10, 13, and 14 (including each number; hereinafter the same shall apply) and the purport of the whole pleadings

2. The plaintiff's assertion

A. The Plaintiff jointly purchased JungG and completed the registration of ownership transfer in the future of the Plaintiff, and thereafter, the Plaintiff, as the proposal of JungG, held a title trust of each of the instant lands to Jung Jong-B in order to prevent the Plaintiff from voluntarily disposing of each of the instant lands. After that, the Plaintiff sold each of the instant lands to JungF in KRW 450 million, and the fixedF sold it to JungF in the amount of KRW 450 million.

B. As such, the Plaintiff did not title trust each of the instant land for the purpose of tax avoidance, and did not have any active act, such as underreporting the transfer value, and preparing a false sales contract. In addition, in the course of tax investigation, the FF merely reversed the false statement or statement for its own interest, and did not make a false statement for the Plaintiff’s final purpose.

C. Therefore, even though the Plaintiff could not be deemed to have evaded national taxes due to fraud or other unlawful act, the Defendant issued the instant disposition after five years of the exclusion period of national tax assessment. Since the instant disposition, which was taken after the exclusion period expired, is deemed to have been null and void due to significant and apparent defects, the Plaintiff’s invalidity is sought.

3. Relevant statutes;

The entries in the attached Table-related statutes are as follows.

4. Whether the disposition is lawful.

(a) Facts of recognition;

1) The Plaintiff, while holding a title trust of each of the instant lands to JungB, completed the registration of ownership transfer in the name of Jung due to trade, and the Plaintiff sold each of the instant lands to JungF, and the fact that JungF sold the instant land to JungF, which was unregistered to KimCC, etc. is not disputed by the Plaintiff.

2) Furthermore, if Gap evidence Nos. 1 and Eul evidence Nos. 2 and 26 are added to the purport of the whole pleadings, the following facts may be acknowledged:

A) As to each of the instant lands, each sales contract (or a "contract (or a contract)" is prepared in the following sequences as of the date of the contract:

No.

Land:

Date of contract

Seller

(Agent)

Buyer

(Agent)

Sales proceeds;

Evidence

1-1

155-8

May 16, 2005

H

700,000,000

B 25

1-2

June 15, 2005

(F)

CC Kim

960,000,000

B 16

1-3

July 1, 2005

F. F

CC Kim

936,000,000

B 17

2

155-13

September 1, 2005

EB

(F)

Yellow E

40,000,000

B 19

3

155-12, 13

November 3, 2005

EB

(Plaintiff)

Yellow E

(F)

650,000,000

B 21

4

155-12

November 9, 2005

EB

(F)

D Kim D Kim

460,000,000

B 26

Aggregates 1-3, 2, and 4

1,836,00,000

B) On the other hand, on the other hand, on December 5, 2003, the registration of the establishment of a neighboring mortgage with the party II as a mortgagee was cancelled on August 9, 2005.

C) The Plaintiff did not comply with any investigation in the initial Gangnam Tax Office, and the FF stated to the effect that “I transferred each of the instant lands to KimCC, etc., and received KRW 1.836 million, and paid KRW 1.450 million among them to the Plaintiff.” However, the FF changed the statement that “I acquired each of the instant lands from the Plaintiff at KRW 450 million” when undergoing an investigation in the Egyptian, “I acquired each of the instant lands from the Plaintiff.” In other words, when undergoing an investigation in the Egyptian, I stated to the effect that “I would have again concluded a sales contract of KRW 80 million on the condition of land category change after concluding the 1-1 contract, I would have acquired each of the instant lands at KRW 155-12,130,000,000 for KRW 650,000,000 for KRW 1,450,000,000 for KRW 1.365,000.

D) Based on the above statement of the FF, each of the above sales contracts, and the amount of money paid by FF to the Plaintiff et al., the Plaintiff determined that the land of this case was transferred to FF in KRW 1.45 million and notified the Defendant of taxation data as seen earlier.

E) On the other hand, at the time of the call for an investigation in the Gangwon Tax Office, the JungB could not have a conversation with a astronomical disease with heavy symptoms (a diagnosis certificate issued by a diagnosis of heavy symptoms around November 2005), and did not notify the place of stay at the address without residing. The JungB merely confirmed the details of small amount of financial transactions, but did not have any income or assets, and did not have any real estate acquired or transferred other than each of the instant lands.

F) On July 2012, 2012, the JJ, which served as a broker for KimCC, purchased the land 155-8 from the dueF, has prepared a written confirmation to the effect that “IF knows that IF would have obtained approximately KRW 100 million capital gains in relation to the land 155-8.” and submitted it to the Gangwon-General.

(b) Whether the national tax has been evaded by a deceitful or other unlawful act;

1) Relevant legal principles

Article 26-2(1) of the former Framework Act on National Taxes (amended by Act No. 8139 of Dec. 30, 2006) provides that the exclusion period of the imposition of national taxes shall be five years from the date on which the national taxes can be imposed, in principle: Provided, That in cases where a taxpayer evades a national tax, or obtains a refund or deduction due to a fraudulent or other unlawful act, it shall be ten years from the date on which the national taxes can be imposed. "Fraud or other unlawful act" in the above provision refers to a deceptive scheme which makes it impossible or considerably difficult to impose and collect taxes, or other active act which makes it difficult to do so, and it does not constitute a mere failure to report under the tax law or a false report without accompanying any other act.

Meanwhile, even if income is obtained through a disguised name, if it is not related to tax evasion, the disguised fact alone does not constitute "Fraud or other unlawful acts" under Article 26-2 (1) 1 of the former Framework Act on National Taxes. However, if the disguised name comes from the purpose of tax evasion, such as avoidance of progressive tax rates, distribution of revenue, application of special cases of exemption and reduction, use of the name of insolvent person who does not pay taxes, etc. Furthermore, if the disguised name comes into existence for the purpose of tax evasion, such acts include false payment of the cost of preparation of a false sales contract and false payment, false return of capital gains tax, false registration, false registration, preparation and keeping of a false account book, etc., such acts constitute "Fraud or other unlawful acts that make it impossible or considerably difficult to impose and collect taxes (see Supreme Court Decision 2013Du7667, Dec. 12, 2013).

1) Determination

A) Comprehensively taking account of the following facts and circumstances that can be acknowledged by adding the aforementioned facts acknowledged and the overall purport of the evidence revealed earlier, the Plaintiff may be deemed to have entrusted the title of each of the instant land to JungB for the purpose of tax avoidance.

(1) If the Plaintiff had decided to sell each of the instant lands to F. 5, the Plaintiff appears to have concluded a title trust agreement with F. 2 for the following reasons: (1) the Plaintiff agreed to sell each of the instant lands to F. 1 on February 28, 2005 (However, the Plaintiff failed to sell each of the instant lands to F. 1; (2) the Plaintiff appears to have concluded a title trust agreement with F. 1 by stating that each of the instant lands would have been sold to F. 5, and that each of the instant lands would have been sold to F. 3, the Plaintiff’s name was indicated as the seller’s agent, and that each of the instant lands was sold to F. 5,00,00,000 to F. 1, the Plaintiff appears to have entered the title trust agreement with F. 5,00,000,000 to F. 2, the name of F. 1, which was indicated as the seller’s name and sale to F. 3,005.

(2) Although the Plaintiff agreed to sell each of the instant lands to Periodical on February 2005, the Plaintiff asserted that Periodical failed to resell the pertinent land, and thereafter, it was difficult to accept the Plaintiff’s assertion for the following reasons. However, it is difficult to understand that the Plaintiff’s arbitrary disposition was an issue in the situation where Periodical already concluded a resale contract. In the case of land 155-8, it is difficult to understand that there was a special circumstance that may arise between 155-12 and 13, the Plaintiff’s failure to verify the joint purchase of each of the instant land, and that the Plaintiff’s purchase of the instant land was merely an objective material, such as financial data to verify the existence of the purchase price of the instant land, and that the Plaintiff’s new purchase of the instant land was made for the purpose of preventing the Plaintiff’s purchase of each of the instant land from being sold to Periodical, and that the Plaintiff’s purchase of the instant land was made only within 70G 270,000, 270, G27.

(3) A Party B, who held a title trust with each of the instant lands, was an insolvent person who had no capacity to pay taxes. A Party B did not report capital gains tax after the Plaintiff sold each of the instant lands to the FF, and the Plaintiff did not report capital gains tax or pay taxes under the name of Party B.

B) Furthermore, in addition to the aforementioned facts and the purport of the entire evidence duly admitted, it is reasonable to view that the Plaintiff committed an active act that significantly difficult to impose and collect taxes by preparing a false sales contract and filing a false report on capital gains tax as follows.

(1) In the following sense, the Plaintiff may be deemed to have sold each of the instant land to Periodical in KRW 1.45 billion. ① The Plaintiff’s complaint asserted that Periodical sold each of the instant land in KRW 1.450 million to Periodical. ② According to the financial data examined by ○○, etc., the amount paid by Periodical to the Plaintiff, etc. exceeds KRW 1.483 billion including succession to loans. ③ From the time of investigation by ○○, the Plaintiff stated that the Plaintiff purchased each of the instant land in KRW 1.45 billion in total, and the content of the sale and purchase agreement is consistent with the empirical rule to a certain extent (i.e., KRW 1-1 contract + KRW 6.5 billion in total, KRW 3 billion in total, KRW 400 billion in total, KRW 500 billion in total, KRW 4000 in total, KRW 50000 in total, KRW 50000 in total,000 in total,000 in each of the instant land transactions.

(2) As such, while the Plaintiff actually selling each of the instant lands in 1,450,000 won to FF, it reported the completion of the sale to FF as if it were sold to PB in 418,000,000 won. In such a way, the Plaintiff could have avoided the burden of capital gains tax on KRW 1,000,000,000, which is the difference between the actual purchase price and the transfer price reported.

(3) The Plaintiff asserts that, inasmuch as the title trust itself includes false content that the registered titleholder is different from the real name, and the transfer value was underreporting, it is difficult to regard it as an active act. However, since the Plaintiff sold each of the instant land to the FF, it is not underreporting the transfer value, but under reporting that the transfer value was reduced to at least one billion won while the Plaintiff sold each of the instant land to the FF, which is merely the Plaintiff’s title trustee, and thus, it is difficult to view it as an incidental act that is naturally incidental to the title trust.

(4) According to Article 169 Subparag. 1(d) and Article 173(2)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19254, Dec. 31, 2005), a copy of the contract for sale and purchase of the pertinent asset is required in cases where the preliminary return of transfer income tax and the final return of transfer income tax are made. The Plaintiff, even though the Plaintiff was merely a title trust with a fixedB, filed a transfer income tax return on the said assets, and thus, the sales contract was attached at the time of such return. The sales contract is a false sales contract which disguiseds the sales contract that was not concluded with the actual F, and that was concluded to conceal the transaction value.

C) In addition to the aforementioned facts and the purport of the entire evidence duly admitted, the Plaintiff may also be recognized as having made it difficult for the Plaintiff to impose and collect taxes due to the Plaintiff’s assertion or request by the FF, etc. of false statements as follows.

(1) When undergoing an investigation in the Gangwon Tax Office and the Gangwon Tax Office, the FF stated that the value acquired from the Plaintiff was KRW 1.45 billion, and the FF stated that the acquisition value was KRW 450 million only when the investigation is conducted in the Lee ○○ Tax Office. Accordingly, the FF stated to the effect that it would not be true due to the Plaintiff’s meeting or request when the investigation is conducted in the Gangwon Tax Office. ① The FF made a tax investigation for imposing taxes on the Plaintiff at the time of the investigation, ② as the acquisition value of the FF increased, the transfer value of the FF was increased, and the amount of the FF would incur economic benefit only by the Plaintiff, and there is credibility of the FF’s statement in light of the following: (a) the FF made a statement to the effect that it would have been false due to the Plaintiff’s meeting or request; (b) the FF made a tax investigation for imposing taxes on the Plaintiff at the time of the investigation; and (c) the acquisition value of the FF’s statement would not have any benefit from the Plaintiff only.

(2) The transfer income tax was corrected and notified by considering the transfer value as KRW 450 million prior to the instant disposition due to the FF’s false statement as above, and thereafter, the actual transfer value of the Plaintiff ought to be determined by re-audit in the Gangwon Tax Department.

(3) Meanwhile, the Plaintiff, upon receiving the notice of tax propriety for the instant disposition from the Defendant, submitted the notice of tax propriety review along with the FF’s confirmation document, and the confirmation document states to the effect that “the sale price shall be KRW 450 million, and when being investigated in the Gangwon Tax Office, the Plaintiff made a false statement that he interfered with the Plaintiff.” However, in light of the aforementioned circumstances, etc., it is difficult to believe the content of the above confirmation document as it is, and it is difficult to view that the Plaintiff was difficult to impose tax by preparing and submitting a false confirmation document even at the time of the Plaintiff’s request for the review of tax propriety.

3) Sub-decisions

Examining the above circumstances in light of the legal principles as seen earlier, since the Plaintiff could be deemed to have committed deceptive means or other active acts that make it impossible or considerably difficult to impose and collect capital gains tax, it is reasonable to deem that such act was a case of evading national taxes by fraud or other unlawful acts. Therefore, the exclusion period for imposition of capital gains tax for the year 2005 pertaining to each of the instant lands is 10 years

(c) Whether the exclusion period is expired;

1) Article 12-3(1)1 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 19461, Apr. 28, 2006) stipulates that the following day of the deadline for filing a return or the deadline for filing a return on the tax base and tax amount of the national tax when filing the tax base and tax amount shall be the date on which the national tax may be assessed pursuant to Article 26-2(6) of the Framework Act on National Taxes. Article 110(1) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009) provides that a resident with the amount of capital gains in the relevant year shall file a return on the tax base and tax amount with the head of the district tax office

2) Since the Plaintiff sold each of the instant land to Periodical around 2005, it is necessary to report the capital gains tax base to the Plaintiff by May 31, 2006. As such, the date on which capital gains tax may be imposed on the Plaintiff is June 1, 2006, which is the day following the said reporting deadline. Since the instant disposition was issued on April 25, 2016, it is apparent that the instant disposition was within 10 years, which is the exclusion period as seen earlier, from that time on April 25, 2016, it is difficult to deem that the instant disposition was made after the exclusion period.

5. Conclusion

Thus, the plaintiff's claim of this case seeking nullification is dismissed as it is without merit. It is so decided as per Disposition by the assent of all participating Justices on the bench, since the disposition of this case was made after the exclusion period of imposition.

1) Although the Plaintiff indicated that “the imposition of capital gains tax for the year 2005” was “the imposition of capital gains tax for the year 2005, according to the Plaintiff’s assertion, it is clear that the Plaintiff contests

2) The Plaintiff stated in the warden that he sold each of the instant lands in 1.45 billion won to Periodical, and argued to the effect that he/she thereafter contests the transfer value.