[1] The timing when resident tax liability to conduct special collection is established

[2] The deadline for payment of resident tax to be specially collected

[3] The case holding that even if a taxpayer violated a withholding duty under tax law, the taxpayer's assertion that the resident tax claim was extinguished as a reorganization claim, cannot be deemed as violating the principle of trust and good faith

[1] Articles 21(2)1 and 22(2)3 of the former Framework Act on National Taxes (amended by Act No. 5579 of Dec. 28, 1998); Articles 29(2)1 and 179-3(1) of the former Local Tax Act (amended by Act No. 6060 of Dec. 28, 199); Articles 179-3(2) and (3) of the Local Tax Act / [2] Article 179-3(2) of the Local Tax Act

The administrator of Sejong-do Co., Ltd. (Attorney Kim Chang-soo et al., Counsel for the plaintiff-appellant)

Head of Bupyeong-gu Incheon Metropolitan City (Law Firm Law, Attorneys Jin-young et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2002Nu14241 delivered on July 8, 2003

The appeal is dismissed. The costs of appeal are assessed against the defendant.

1. Regarding ground of appeal No. 1

According to Articles 29(2)1 and 179-3(1) of the Local Tax Act and Articles 21(2)1 and 22(2)3 of the Framework Act on National Taxes (amended by Act No. 5579 of Dec. 28, 1998), resident tax to be specially collected shall be established at the time of withholding the income tax which serves as the tax base. For withholding income tax, the tax liability shall be established at the time of withholding the income tax, and in cases of withholding the income tax under the Income Tax Act, the tax withholding agent shall make such special collection at the same time as income tax shall be calculated by applying the tax rate under Article 176(2) of the Local Tax Act to the income tax to be withheld, and in cases of withholding the income tax under the Income Tax Act, the resident tax withholding agent shall make such special collection at the same time as income tax to be collected at the time of paying the income tax to be the tax base to be collected by the withholding agent. In full view of the above provisions, the resident tax to be collected by withholding shall be established.

After finding the facts as stated in its reasoning, the court below determined that the resident tax to be imposed on wage and salary income tax or interest income tax for the year 1995 through 197 among the resident tax of this case constituted tax liability between 195 and 197, when the mother corporation, a withholding agent, paid the amount of income or income, and that the tax liability was not established only on December 15, 1998 when the tax authority notified the liquidation company of decision on collection of wage and salary income tax and interest income tax, and therefore, the defendant's resident tax claim of this case constitutes reorganization claim as a property claim arising before the commencement of reorganization proceedings as of February 18, 198 against the mother corporation, and since the defendant did not report it to the court until the third party meeting as of February 25, 1999, the defendant did not report it to the court until the third party meeting as of February 25, 199.

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the timing of establishment of resident tax specially collected and the forfeiture of reorganization claim as otherwise alleged in the ground of appeal, and the payment period of resident tax specially collected under Article 179-3 (2) and (3) of the Local Tax Act shall be interpreted as the 10th day of the month following the month in which the person liable for special collection has collected or is to collect the specially collected tax amount at the same time as income tax. Thus, the resident tax claim of this case had already expired at the time of commencement of reorganization procedure, and thus does not constitute public-interest claim under Article 208 subparagraph

2. Regarding ground of appeal No. 2

After finding the facts as indicated in its holding, the lower court determined that the Plaintiff’s assertion that the said taxation claim was extinguished as a reorganization claim on the ground that the Defendant did not report the instant resident tax claim arising before the third party meeting was held, on the ground that, even though the Plaintiff violated the withholding obligation under the tax law, such as imposition of additional tax, punishment, compulsory procedure under the National Tax Collection Act, etc., the Plaintiff’s assertion that the said taxation claim was extinguished as a reorganization claim, cannot be said to go against the principle of trust and good faith.

In light of the relevant statutes and records, the above judgment of the court below is just and acceptable, and there is no error in the misapprehension of legal principles as to the principle of good faith as otherwise alleged in the ground of appeal.

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jack-dam (Presiding Justice)