KBS “Lawsuit against Television Fees”

After winning its lawsuit against the National Tax Service, KBS is set to receive 200 billion won in wrongfully levied taxes once the ruling is finalized. However, it was found that KBS submitted a request to the judge asking to adjust its lawsuit to receive 50 billion won.

Mr. Lee, lawyer for KBS, explained, “We did not win completely this time, and we thought this adjustment would be more advantageous during the appeal.”

Mr. K, former lawyer for KBS who is now off the legal team for the appeals due to his opposition of the request, stated, “By requesting for an adjustment in the amount, KBS is giving up the 200 billion won in corporate and value added taxes that it is closer to receiving since winning the lawsuit.”

According to people in the legal community, on August 24, KBS submitted a written statement in Mr. Lee’s name to the Seoul High Court, the appellate court for its case against the Yeongdeungpo Tax Office.

In the statement, KBS stated that if the tax office returned 50.6 billion won (including interest), the money that was additionally paid during the tax investigation in 2001, KBS will withdraw all lawsuits (total of 10) concerning the reimbursement of corporate and value-added taxes.

KBS filed a lawsuit against the tax service in 1999 when the tax office levied annual corporate and value-added taxes, considering television fees were charges for broadcasting services. KBS won this lawsuit August 13 of last year.

The Seoul Administration Court, based on the rulings of the Constitutional Court and the Supreme Court, ruled that television fees were not charges for broadcasting services, and ordered the tax office to return the 200 billion won KBS paid in taxes.

Since KBS (a non-profit enterprise) did not differentiate television fees and advertising fees in its accounting books, the tax service should not levy taxes based on the total revenues. The tax service appealed.

During this process, KBS asked its lawyer since 1994, Mr. K, to file an “adjustment request” numerous times.

However, Mr. K declined to do so, and KBS hired another lawyer as co-counsel to submit its opinion on its behalf.

Mr. K stated to KBS, “If you withdraw your lawsuit and make adjustments, then everything will go back to square one, to before the Supreme Court ruling. The question of the nature of KBS and television fees will come up again.”

He argued, “If you settle the case in this way, you are giving up $200 billion you can receive after the final judgment. You will have to pay billions of won each year, money you don’t have to pay, with the people’s television fees.”

Mr. Lee replied, “We may have won in the first trial, but we have not won completely. Even if we do win in the end, we will have to differentiate between non-profit and profit businesses in accounting, so we decided to take the adjustment route.”

Ji-Seong Jeon woogija@donga.com verso@donga.com