Supreme Court: "Depriving Taxpayer of Pre-Assessment Review Without Just Cause Is Unlawful"
...First Legal Principle Established
The Supreme Court has ruled that if a tax authority unjustifiably delays the process of imposing a tax and only issues a tax notice right before the expiration of the statute of limitations, then immediately proceeds with the tax assessment, such an assessment is procedurally unlawful. The Supreme Court's Criminal Division 2 (Presiding Justice Park Youngjae) dismissed the defendant's appeal on June 5 in the final appeal trial (2025Du33014) filed by taxpayer A against the head of the Dongjak Tax Office seeking cancellation of a capital gains tax assessment, thereby upholding the lower court's ruling, which partially favored the plaintiff. This is the first case in which the Supreme Court has explicitly established legal principles regarding 'procedural defects when a tax authority, without just cause, issues a tax notice near the end of the assessment period, depriving the taxpayer of the opportunity for a pre-assessment review.'
[Facts]
The Dongjak Tax Office issued a capital gains tax notice to A on May 2, 2022, less than a month before the expiration of the national tax assessment period on May 31, 2022. Without conducting a pre-assessment review, which is a prior examination procedure, the office immediately imposed the capital gains tax on May 9, just one week later. The Dongjak Tax Office had received the relevant tax data for this case on August 3, 2012. A filed a lawsuit seeking cancellation of the tax assessment, citing procedural defects in the assessment process.
[Issue]
The key issue was whether there was a procedural defect in the subsequent tax assessment when the tax authority, without just cause, neglected its tax administration for an extended period and only belatedly issued a tax notice near the expiration of the assessment period, thereby depriving the taxpayer of the opportunity for a pre-assessment review.
[Lower Court Rulings]
The court of first instance ruled against the plaintiff, but the appellate court found that the tax assessment was both procedurally and substantively unlawful, ruling in favor of the plaintiff. The appellate panel noted, "The defendant, citing the fact that less than three months remained until the expiration of the national tax assessment period, issued a tax notice without conducting a pre-assessment review and proceeded with the assessment just one week later." The panel also pointed out, "The defendant received the relevant tax data on August 3, 2021, and issued the tax notice on May 2, 2022, but there is no evidence that the defendant reviewed whether to impose capital gains tax on the plaintiff or investigated relevant facts during that period." The court continued, "Considering there was no further investigation to be conducted, it appears the defendant delayed the subsequent procedures without any particular reason, and there is no evidence of a justifiable cause for the delayed tax notice." The court concluded, "The assessment in this case is unlawful due to a procedural defect that deprived the taxpayer of the opportunity for a pre-assessment review."
[Supreme Court Ruling]
The Supreme Court affirmed the lower court's decision, stating, "There is no error in the lower court's interpretation and application of the National Tax Basic Act, the statute of limitations for assessment, or the allocation of the burden of proof."
An Jaemyoung, Law Times Reporter
※This article is based on content supplied by Law Times.
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