Examination Income 2009-0097 (2010.02.09)

If a person with only earned income has a disposition to pay taxes, the exclusion period for national taxes

Where a person with only earned income is subject to a disposition for recognition, the exclusion period of national tax shall not be applied for seven years since he/she fails to submit a final return on tax base

1. The Defendant’s disposition of imposition of global income tax of KRW 98,176,384 against the Plaintiff on April 20, 2009 shall be revoked.

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

The same shall apply to the order.

1. Details of the disposition;

A. AAA Co., Ltd. (hereinafter referred to as "AA") is an enterprise operating gold bullion (in the form of raw materials, such as iron sheet, net gold sheet, no less than 9.5% gold bullion, and gold metal wholesale and retail, etc.), and it was established around November 17, 199 and mainly engaged in the business in Jongno-gu Seoul Metropolitan area, and was relocated to the Seoul Jongno-gu Seoul Metropolitan Government business on June 16, 2004, and was disposed of ex officio closure on the grounds of unauthorized expulsion on July 14, 2004. The Plaintiff was working as the representative director from the establishment of AA to June 17, 2004.

B. From Jun. 19, 2006 to Jul. 14, 2006, the director of the Korea Tax Office found that the target year was from Jan. 1, 2001 to Dec. 31 of the same year with respect to the CC Co., Ltd. (hereinafter “CC Co., Ltd.”), which operated gold wholesale business, such as gold bullion from Ddong-gu Ddong from Ddong-gu, and that the data tracking investigation was conducted from Jan. 1, 2001 to Dec. 31 of the same year. As a result of the investigation, the lower court determined that the CC Co., Ltd.’s sales declaration amount (hereinafter “CC Co., Ltd.”) was the full amount of the CC Co., Ltd.’s sales declaration amount (hereinafter “Plaintiff Co., Ltd.”) and the purchase declaration amount (hereinafter “18,260,000,000 won”) and the processing declaration amount (10,000 won, 201, 2000,000 won).

C. On May 201, 2001, the Defendant issued AA with the sales tax invoice of KRW 199,989,000 (excluding value added tax) issued by the CC company to the AA as of June 2001, received from the head of the D Tax Office a notice that the purchase tax invoice of KRW 199,989,00 (excluding value added tax) was a processing tax invoice that was conducted without a real transaction. On October 2007, the Defendant imposed the AA as a bonus for the Plaintiff, who was the representative director, by adding the above supply price to deductible expenses, and by adding the corporate tax of 2001 business year to deductible expenses. As above, the amount of

D. On April 20, 2009, the Defendant issued a disposition imposing global income tax on the Plaintiff based on the above bonus disposition (hereinafter “instant disposition”).

E. On July 20, 2009, the Plaintiff appealed to the instant disposition and filed a request for examination with the Commissioner of the National Tax Service, but the request for examination was dismissed on February 9, 2010.

Facts without dispute over the basis of recognition, Gap evidence 1, 2, Eul evidence 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The primary argument

AAA had actually purchased gold bullion as in the first half of 2001, and there was no manipulation in the books, and even if he operated the books, this does not aim at evading the income tax to be attributed to the Plaintiff. Thus, the exclusion period of imposition of global income tax on the Plaintiff is not ten years since it did not constitute a case of evading national taxes by fraudulent or other unlawful act, and the Plaintiff did not have any other income than that paid by AA during 2001, and the period of exclusion of imposition of global income tax on the Plaintiff does not apply to a case where AA had withheld labor income tax and filed a return with the tax authority on the global income tax, and thus, the exclusion period of imposition of national tax is not applicable to a case where AA had already been filed. Accordingly, the instant disposition was made five years after the exclusion period of imposition of global income tax

2) Preliminary assertion

A) Since AA actually purchased gold bullion from theCC company, the instant disposition made on a different premise is unlawful.

B) Since the instant disposition became final and conclusive as a whole through a value-added tax investigation on the first to second period of 2001 of AA in 2001, the instant disposition was unlawful as it is not consistent with the administrative disposition.

(b) Related statutes;

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

C. Determination

We examine the plaintiff's primary argument.

According to Article 26-2 (1) of the Framework Act on National Taxes, national taxes can not be imposed after the expiration date of the exclusion period for imposition prescribed in the same paragraph. We examine whether the plaintiff's global income tax in 2001 falls under any of the 10 years, 7 years and 5 years prescribed in the same paragraph.

First, as to whether the exclusion period of 10 years is applied, even if the first transaction between the public health department, the snowa, and theCC company in 2001 was processed, it can be deemed that the taxpayer received a false tax invoice from theCC company and reported it to the deductible expenses for the business year 2001 corporate tax of the AA in order to evade the corporate tax by concealing the income of the AA. As such, it is difficult to view that the Plaintiff was paid to evade the income tax to be imposed because it was anticipated that the concealed income of the AA was out of the company and the person to whom it was recognized as the representative of the AA because it was not known, the taxpayer could not be deemed to fall under the case where the taxpayer evaded the national tax by fraudulent or other unlawful acts" as provided in Article 26-2 (1) 1 of the Framework Act on National Taxes. Accordingly, the exclusion period of imposition cannot be deemed to have been ten years.

Then, comprehensively taking account of the purport of the entire argument as to whether the exclusion period of seven years is applied to the plaintiff, AA shall pay 13,800,000 won to the plaintiff in 201, and it may be recognized that the plaintiff withheld 41,140 won of earned income tax on the above amount and reported and paid it to the defendant. There is no evidence to deem that the plaintiff has any income other than earned income paid by AA. As long as AA reported and paid the plaintiff's earned income tax to the defendant, the plaintiff may not make a final return on the tax base of global income tax on the global income tax for 2001 pursuant to Article 73 (1) 1 of the Income Tax Act. As such, even if the original taxpayer who has no income other than earned income did not submit the final return on tax base on his/her own because he/she reported and paid it to the taxpayer without any income other than the earned income, it shall not be deemed that the taxpayer did not return and pay the tax base to the plaintiff within the statutory period of return and payment.

Ultimately, in principle, the exclusion period for imposition of global income tax for 201 shall be deemed five years pursuant to Article 26-2 (1) 3 of the Framework Act on National Taxes. According to Article 26-2 (3) of the Framework Act on National Taxes and Article 12-3 (1) 1 of the Enforcement Decree of the Framework Act on National Taxes, in cases of a national tax, such as global income tax, on the date following the due date of the due date of filing a report on the tax base and amount of tax of the relevant national tax, can impose national tax. According to Article 70 (1) of the Income Tax Act, the due date of filing a report on global income tax is until May 31 of the year following the relevant taxable period. Thus, the five-year exclusion period for imposition of global income tax for 201 shall begin on June 1, 2002. Accordingly, it is reasonable to deem that the exclusion period for imposition of total income tax for the Plaintiff has expired on June 1, 2007.

If so, the plaintiff's primary argument is reasonable and the disposition of this case was made after the exclusion period, and without examining the remaining arguments of the plaintiff, the disposition of this case must be revoked as unlawful.

3. Conclusion

The plaintiff's claim shall be accepted with due reason.