Whether the exclusion period of the disposition of this case constitutes 10 years

The plaintiff's act constitutes "Fraud and other unlawful acts" as stipulated in Article 26-2 (1) 1 of the Framework Act on National Taxes, such as deceptive schemes or other active acts which make it impossible or considerably difficult to impose and collect taxes.

Article 26-2 of the National Tax Basic Act

revocation of revocation of imposition of corporate tax, etc., Suwon District Court 2017Guhap7162

AA

BB Director of the Tax Office

August 23, 2018

September 20, 2018

1. The plaintiff's claims against the defendants are all dismissed.

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

1. Details of the disposition;

A. The Plaintiff is a company that runs a joint wholesale business from March 2, 2000 until then.

B. From September 21, 2016 to January 16, 2017, the director of the regional regional tax office of the defendant Jungbu Regional Tax Office shall conduct an integrated investigation of the plaintiff with respect to the plaintiff (the conversion into a tax offense investigation) from September 21, 2016 to January 16, 2017. The plaintiff received 8,967,138,000 won from the plaintiff's business director and the representative's Dong KimCC account (hereinafter referred to as "the account of this case") for the period from 2006 to 2015, and notified the director of the tax office of the

C. Accordingly, by deeming that the Plaintiff unfairly reduced corporate tax and value-added tax by “Fraud or other unlawful acts”, the head of the tax office imposed the Plaintiff a disposition of imposition (including each additional tax; hereinafter referred to as “instant disposition of imposition”) by correcting the total amount of KRW 117,05,690 in the business year from 2006 to 2015 and the total amount of KRW 969,810,850 in the business year from 2006 to 2015 as follows; and the five-year exclusion period from imposition under Article 26-2(1)3 of the Framework Act on National Taxes in the instant disposition of imposition (hereinafter referred to as “the instant disposition of imposition”).

D. On March 2, 2017, the director of the regional tax office of the FF regional tax office notified the Plaintiff of the change in the amount of income that the amount omitted from the return on the sales was disposed of as the bonus of the Plaintiff’s representative KimD (hereinafter “the notification of the change in the amount of income of this case”). Of the notification of the change in the amount of income of this case, the attached Table 2, the exclusion period of imposition of five years under Article 26-2(1)3 of the Framework Act on National Taxes

'Notification of Changes in the Amount of Income in this case'.

E. On the other hand, the head of the defendant EE tax office considers that the plaintiff unfairly reduced corporate tax and value-added tax by "Fraud or other unlawful acts" in the disposition of this case, and thus, the head of the defendant EE tax office imposed the penalty tax for unlawful underreporting as stated in the attached Table 3 "the disposition of imposing the penalty tax for this case" and "the disposition of imposing the penalty tax for this case exceeding "the amount of the justifiable tax" listed in the attached Table 3 "the disposition of imposing the penalty tax for this case" among the disposition of imposing the penalty tax for this case. In addition, "the notice of the change in income amount of this case and the disposition of imposing the penalty tax for this case" are "the each disposition of this case."

F. The Plaintiff filed an appeal with the Tax Tribunal against each of the instant dispositions, but the Tax Tribunal dismissed the appeal on September 14, 2017.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 through 4 (including each number; hereinafter the same shall apply), Eul evidence Nos. 1 through 10, the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

1) On October 197, KimD and KimCC opened and used the instant account for convenience at the time of opening and using the private business chain AA. Since around 2000, the Plaintiff’s employees and customers have recognized the instant account as the same as the Plaintiff’s corporate account even after the establishment of the Plaintiff by converting the Plaintiff into the corporation, the Plaintiff’s act of using the instant account as the Plaintiff’s business. Among the Plaintiff’s trading companies, small-scale business operators or business operators did not engage in business registration, and it is difficult for the Plaintiff to impose some of the Plaintiff’s tax revenue from the instant account without issuing tax invoices. Since it is difficult for the Plaintiff to impose and collect some of the Plaintiff’s tax revenue from the instant account because it was difficult for the Plaintiff to do so without issuing tax invoices, it cannot be seen that the Plaintiff’s act of imposing and collecting tax revenue from the instant account cannot be seen as having been easily used by the Plaintiff’s business entity’s bank account due to the omission of the Plaintiff’s revenue from the instant account. Meanwhile, the Plaintiff’s act of collecting tax revenue from the instant account cannot be seen to the Plaintiff’s account.

2) As such, the requirements to apply the latter part of Article 26-2(1) of the Framework Act on National Taxes to the Plaintiff are not established. As such, the exclusion period of the Plaintiff’s corporate tax, value-added tax, and notice of change in income amount is five years in accordance with the principle. In the case of value-added tax for the second time of 2006, the Plaintiff’s tax liability for the first time in the disposition of this case expired on January 25, 201. The Plaintiff’s tax liability for the second time in the first time in the disposition of this case expired on January 25, 2017, even value-added tax for the second time in the second time in the second time in the second time in the second time in the first time in the first time in the notice of imposition, which was the expiration date of the exclusion period, was extinguished on January 17, 2017 and March 6, 2017, the issue of this case, which was taken after the expiration of the exclusion period, is obviously unlawful and unlawful, and thus, the Plaintiff’s tax base of this case.

B. Determination

1) Determination on the instant disposition and the notice of change in the income amount at issue of the instant case

A) Relevant regulations and legal principles

According to Article 26-2 (1) of the Framework Act on National Taxes, national taxes may not be imposed after five years from the date on which the national taxes can be imposed (subparagraph 3): Provided, That where a taxpayer evades national taxes, obtains a refund or deduction by fraudulent or other unlawful means prescribed by Presidential Decree, it shall not be imposed after the lapse of ten years from the date on which the national taxes can be imposed (subparagraph 1). Article 12-2 (1) of the Enforcement Decree of the Framework Act on National Taxes provides that "any fraud or other unlawful acts prescribed by Presidential Decree in Article 26-2 (1) 1 of the Act means any act falling under any of the subparagraphs of Article 3 (6) of the Punishment of Tax Evaders Act, and Article 3 (6) of the Punishment of Tax Evaders Act provides that "any of the following acts makes it impossible or considerably difficult to impose and collect taxes" means any act falling under any of the following subparagraphs: 1. double entry in books, evidence or false documentation, preparation of books, false documents, or fabrication or omission of books and records, 3.4.

Such disposition taken after the limitation period of imposition of national taxes is null and void (see, e.g., Supreme Court Decision 2008Du10522, Dec. 23, 2010). “Fraud and other unlawful acts” under Article 26-2(1)1 of the Framework Act on National Taxes refer to acts which enable the evasion of tax, and which are recognized as unlawful under social norms, i.e., fraudulent means or other active acts which make it impossible or considerably difficult to impose and collect tax impossible or considerably difficult. Therefore, it does not constitute mere failure to file a tax return without accompanying other acts or making a false representation in filing a tax return under the tax law. However, where circumstances arise, such as failure to file a tax return or underreporting, and intentionally failing to enter revenues or sales in the account book, it may be recognized that the imposition and collection of tax can be deemed impossible or considerably difficult. In such a case, whether the active intent is objectively revealed, should be determined differently from the overall circumstances, such as the method of filing a tax return or sale, and the method and degree of filing a false report (see Supreme Court Decision 213).

B) In the instant case:

(1) The plaintiff's act constitutes fraud or other unlawful act

In light of the following circumstances, the facts acknowledged earlier, Gap evidence Nos. 1 through 9, and Eul evidence Nos. 1 through 15, the plaintiff's act of evading value-added tax and corporate tax by issuing a false tax invoice without reporting the price of goods deposited in the account of this case as sales amount, constitutes "Fraud or other unlawful act as stipulated in Article 26-2 (1) 1 of the Framework Act on National Taxes", which makes it impossible or considerably difficult to impose and collect taxes. The plaintiff's assertion to this different purport is rejected.

① In light of the fact that the Plaintiff’s representative KimD operated AA as a private business chain from October 16, 1997 to March 31, 200, and that it converted it into a corporation and operated the Plaintiff from March 2, 200 to December 8, 2017, it is determined that the Plaintiff was fully aware that the input tax amount of value-added tax would not be deducted if the necessary entries of the tax invoice were to be entered differently from the fact. Nevertheless, the Plaintiff used the instant account for the issuance of the tax invoice by filing a report on lowering sales after March 2, 200 or for receiving fees.

② The Plaintiff continued to use the instant account for about 15 years after its opening business year 2000. From 2000 to 15, the Plaintiff received tax invoices for about 16 years. From 2000 to 205, it is reasonable to view that the Plaintiff’s act of purchasing the instant account was 9,863,849,161 won (the price of supply was 8,967,135,601 won) without filing a tax return for KRW 90 to 200,00,000, the Plaintiff was 50,000,000 from 60 to 50,000 to 60,000,000 won were 50,000 won. If the Plaintiff did not actively withhold tax evasion, the Plaintiff did not report the amount of value-added tax and value-added tax imposed on the instant account from 60 to 80,000,000 won to 60,000 won.

④ Corporate tax and value-added tax are taxes determined by a taxpayer by voluntarily filing a tax base and amount of tax. The Plaintiff received a disguised sales from the corporate account with the intent to evade value-added tax and corporate tax, and subsequently returned the instant tax invoice through the instant account or received cash into the instant account and issued a false tax invoice on the said portion. As can be seen, the Plaintiff appears to have attempted to avoid the tax investigation conducted by the tax authority while issuing a tax invoice different from the fact that the Plaintiff omitted revenue sales and did not process the corresponding purchase and personnel expenses at the expense, and issued a false tax invoice. Of the sales omitted through the instant account, the Plaintiff was unable to impose and collect taxes on the portion accrued between five years and 2005, for which the exclusion period of imposition was exceeded, and the Plaintiff actually obtained a result of tax evasion on that portion.

⑤ The Plaintiff’s representative, KimD was indicted only for violating the Punishment of Tax Evaders Act by failing to issue tax invoices or by failing to receive tax invoices (U.S. District Court 2017 order****), and was punished (the Plaintiff’s representative, KimD’s failure to report the sales amount deposited in the instant account for the purpose of tax evasion) does not interfere with recognizing that the Plaintiff omitted the Plaintiff’s report on the sales amount

(2) The instant disposition and the notice of the change in the income amount of the instant case are lawful.

As seen above, insofar as the Plaintiff’s act of evading value-added tax and corporate tax by using the instant account constitutes “Fraud or other unlawful act” under Article 26-2(1)1 of the Framework Act on National Taxes, the 10-year exclusion period should be applied to the Plaintiff. As such, the disposition of this case and the notice of change in the income amount of this case, which was conducted within the exclusion period, are legitimate. The Plaintiff’s assertion to this effect is without merit.

2) Determination on the imposition of additional tax on the issue of this case

A) Relevant regulations and legal principles

According to Article 47-3 (2) 1 of the Framework Act on National Taxes, where the tax base is underreported by fraud or other unlawful act (hereinafter referred to as "Fraud or other unlawful act"), the sum of the amounts (an amount equivalent to 40/100 of the under-reported tax amount, etc. due to such unlawful act - an amount equivalent to 10/100 of the amount obtained by subtracting the under-reported tax amount, etc. due to such unlawful act from the under-reported tax amount, etc.) calculated under each of the items of the same subparagraph shall be the penalty tax; and pursuant to Article 26-2 (1) 1 of the same Act and Article 12-2 (1) of the Enforcement Decree of the Framework Act on National Taxes, the term "unlawful or other unlawful act" means an act falling under any of the following subparagraphs, which makes it impossible or considerably difficult to impose and collect taxes, such as preparing double-entry books, etc.; preparing a false tax invoice or a false tax invoice or a false tax invoice or a false tax invoice or a false tax invoice, or a false tax invoice or a document;

In light of the legislative structure of Article 47-3 of the former Framework Act on National Taxes (amended by Act No. 911, Jan. 1, 2010); the text and content of Article 27(2) of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 22038, Feb. 18, 2010); and the legal nature of penalty taxes for underreporting, where Article 47-3(2) of the former Framework Act on National Taxes imposes penalty taxes for an unlawful underreporting, the reason behind imposing penalty taxes is that: (a) where all or part of the facts that serve as the basis for calculating the tax base or the amount of national taxes are concealed or pretended, it is impossible or considerably difficult to impose penalty taxes much higher than that of “in order to induce a taxpayer to faithfully report the tax base; and (b) where the former Enforcement Decree of the Framework Act on National Taxes can be seen as an “unfair method”, Article 27(2) of the former Enforcement Decree of the Framework Act on National Taxes provides for an “unfair underreporting method” as one of Article 27(3).3).

B) In the instant case:

As seen earlier, the Plaintiff did not report the corporate tax and value-added tax on the portion of the omission of cash sales for several years after the opening of the business on March 2, 2000, and omitted necessary expenses such as personnel expenses corresponding to the omission of sales. If the account of this case was used for business purposes, the Plaintiff reported the cash sales amount by omitting the cash sales amount even though the sales amount should have been reported as the revenue amount. In this case, in the tax payment method by the Defendant’s tax investigation, the imposition of taxes exceeding KRW 2 billion was practically impossible if the omission of sales was not verified by the Defendant’s tax investigation, and the Plaintiff’s act of reporting the sales amount and necessary expenses entirely less than the actual sales amount by concealing the actual sales amount constitutes “the concealment of assets, manipulation of income, profit, and transaction” (Article 27(2)5 of the Enforcement Decree of the Framework Act on National Taxes, Article 3(6)4 of the Punishment of Tax Evaders Act, and Article 27(2)7 subparag. 36(3) of the Enforcement Decree of the Framework Act on National Taxes).

Ultimately, the imposition of the penalty tax of this case against the plaintiff is legitimate, and the plaintiff's assertion to this different purport is without merit.

3. Conclusion

Thus, the plaintiff's claim against the defendants is dismissed as it is without merit.