Kim Jeong-gyu, chairman of Tire Bank, who was sentenced to three years in prison on appeal on charges of tax evasion totaling 3.9 billion won by disguising dealership names, will face a new judgment. The reason is that the statute of limitations has expired for some tax evasion charges.
The Supreme Court's First Division, presided over by Justice Shin Suk-hee, on the 8th overturned the lower court ruling that sentenced Chairman Kim to three years in prison and a fine of 14.1 billion won for violating the Act on the Aggravated Punishment, etc. of Specific Crimes (taxes) and other charges, and sent the case back to the Daejeon High Court.
Prosecutors brought Kim to trial on charges of reducing business income by disguising his personally owned Tire Bank dealerships as if they were operated by employees or relatives, thereby evading a total of 3.9 billion won in comprehensive income tax. Kim's side argued that the "name disguise" was a new business model called a "headquarters investment franchise model," but the court did not accept it.
In addition, Kim is accused of receiving labor from consignment shop owners but making it appear as if he received consignment sales services, thereby falsely issuing and receiving tax invoices, and of evading about 90 million won in capital gains tax on stock transfers.
In Feb. 2019, Kim was found guilty of tax evasion at the first trial and was sentenced to four years in prison and a fine of 10 billion won.
Kim's side then filed an administrative suit, saying it would determine the scope of the tax claim. As a result, the amount of tax evasion was reduced from 8 billion won to 5.5 billion won, and after submitting supporting materials, it was reduced again to 3.9 billion won.
Kim was later sentenced in July last year on appeal to three years in prison and a fine of 14.1 billion won. The appellate court also found guilty the portion regarding the issuance of false tax invoices that the trial court had acquitted. Kim was taken into custody in court after the appellate ruling.
The appellate court noted, "When the defendant came under a tax audit, the defendant tried to destroy evidence of tax evasion by locking the bathroom door for three hours and destroying income tax ledgers, thereby obstructing the tax officials' legitimate audit."
The Supreme Court on this day sent the case back, finding that the statute of limitations had expired for part of the tax evasion and entering a judgment of dismissal. Of the total 3.9 billion won in comprehensive income tax evasion attributable to 2008–2015, 840 million won for 2009 and 2010 is affected.
However, it rejected the other grounds of appeal and found the lower court's judgment to be correct. Kim's side argued regarding the charge of issuing false tax invoices that "since the consignment shop owners supplied a service called 'labor,' the tax invoices are not false," but the argument was not accepted.
The Supreme Court said, "At a minimum, when comprehensively considering such factors as whether the supply price and items listed on the issued tax invoice are identical or similar, it must reach the level at which, under social norms, the transaction can be deemed to be validly represented as actually conducted as stated on the tax invoice."
The vice chairman and employees of Tire Bank, who were indicted on the same charges as Kim, will also face a new appellate judgment. On appeal, the vice chairman was sentenced to two years and six months in prison and a fine of 14.1 billion won, while four employees were sentenced to two to two and a half years in prison, suspended for four to five years. Tire Bank, indicted under the joint penalty provision related to the issuance of false tax invoices, received a finalized fine of 100 million won.