Income Tax Act

If grounds as set forth in the items of Article 23, paragraph (1) (Requests for Reassessment) of the Act on General Rules for National Taxes arise due to the occurrence of a fact as prescribed in Article 63 (Special Provisions on Necessary Expenses In the Event of a Business Closure) or Article 64 (Special Provisions on the Calculation of Income If Payment for Transferred Assets Become Uncollectible) involving Income in Each Class in the year of a Tax Return or a determination, or due to the occurrence of a fact prescribed by Cabinet Order as being equivalent thereto, the Resident (or the heir of a Resident) filing the Tax Return or subject to the determination may file a request with the district director for the Reassessment, under Article 23, paragraph (1) of that Act, of an amount as set forth in Article 120, paragraph (1), item (i) or items (iii) through (v) (Filing Income Tax Returns), Article 122, paragraph (1), items (i) through (iii) (Filing a Return to Receive a Refund), or Article 123, paragraph (2), item (i), item (v), item (vii), or item (viii) (Filing Tax Returns Showing Losses) which has been indicated in the return or which was subject to the determination (or of any such amount following the filing of an Amended Return or a Reassessment, if an Amended Return has been filed or a Reassessment has been made), but only within two months from the day after the fact occurs. In such a case, the written request for Reassessment must indicate the date that the fact occurred, in addition to giving the information prescribed in Article 23, paragraph (3) of that Act.

If circumstances come to fall under a case set forth in either of the following items due to the filing of an Amended Return or a Reassessment or determination involving an amount as set forth in Article 120, paragraph (1), item (i) or items (iii) through (v) (Filing Income Tax Returns), Article 122, paragraph (1), items (i) through (iii) (Filing a Return to Receive a Refund), or Article 123, paragraph (2), item (i) or items (v) through (viii) (Filing Tax Returns Showing Losses) which is required to be entered in a Tax Return, the Resident (or the heir of a Resident) that submitted the Amended Return or was subject to the Reassessment or determination may file a request with the district director for a Reassessment, under Article 23, paragraph (1) (Requests for Reassessment) of the Act on General Rules for National Taxes (referred to as a "request for Reassessment" in the following Article through Article 153-6 (Special Provisions on Requests for Reassessment If a Person Who Has Made a Departure from Japan Returns to Japan or in Similar Cases, and Related Provisions), Article 159 (Refunding Taxes Withheld, Based on Reassessment or Similar Decision), and Article 160 (Refunding of Prepaid Taxes Based on Reassessment or Similar Decision)), of the amount prescribed in the relevant item, but only within two months from the day following that on which the Resident submits the Amended Return or is notified of the Reassessment or determination. In such a case, the written request for Reassessment must indicate the date that the Resident submitted the Amended Return or was notified of the Reassessment or determination, in addition to giving the information prescribed in Article 23, paragraph (3) of that Act:

an amount as set forth in Article 120, paragraph (1), items (iii) through (v) for a year for which a determination has been made, in or after the year subsequent to that of the Amended Return, Reassessment, or determination (or any such amount following the filing of an Amended Return or a Reassessment, if an Amended Return has been filed or a Reassessment has been made), is now overstated;

an amount as set forth in Article 122, paragraph (1), item (ii) or item (iii) or Article 123, paragraph (2), item (vii) or item (viii) for a year for which a determination has been made, in or after the year subsequent to that of the Amended Return, Reassessment, or determination (or any such amount following the filing of an Amended Return or a Reassessment, if an Amended Return has been filed or a Reassessment has been made), is now understated.

A person who has filed a Tax Return, or has been subject to a determination, for the income tax for the year that includes the date of a departure from Japan as prescribed in Article 60-2, paragraph (1) (Special Provisions on Capital Gains and Similar Income upon Departure from Japan) (including that person's heir) may file a request for Reassessment with the district director within four months from the date on which a case set forth in any of the items of paragraph (6) of that Article arises, if the circumstances come to fall under either of the following cases with regard to the income tax for that year because the gross income for the year of the Tax Return or determination includes the amount of income from transfers of Securities and similar interests as prescribed in paragraph (6) of that Article to which the main clause of paragraph (6) of that Article (including when applied pursuant to paragraph (7) of that Article) applies:

if the amount set forth in Article 120, paragraph (1), items (iii) through (v) (Filing Income Tax Returns) (or any such amount following the filing of an Amended Return or a Reassessment, if an Amended Return has been filed or a Reassessment has been made) becomes overstated;

if the amount set forth in Article 122, paragraph (1), items (i) through (iii) (Filing a Return to Receive a Refund) or Article 123, paragraph (2), item (i) or items (v) through (viii) (Filing Tax Returns Showing Losses) (or any such amount following the filing of an Amended Return or a Reassessment, if an Amended Return has been filed or a Reassessment has been made) becomes understated.

The preceding paragraph applies mutatis mutandis to an individual to whom Article 60-2, paragraph (8) (including as applied mutatis mutandis pursuant to paragraph (9) of that Article) applies. In such a case, the phrase "the main clause of paragraph (6) of that Article (including when applied pursuant to paragraph (7) of that Article)" in the preceding paragraph is deemed to be replaced with "paragraph (8) of that Article (including as applied mutatis mutandis pursuant to paragraph (9) of that Article)", and the phrase "the date on which a case set forth in any of the items of that paragraph arises" is deemed to be replaced with "the date of the transfer or settlement, or of the transfer by gift or inheritance with limited liability, prescribed in paragraph (8) or paragraph (9) of that Article".

Paragraph (1) applies mutatis mutandis to an individual to whom Article 60-2, paragraph (10) applies. In such a case, the phrase "the main clause of paragraph (6) of that Article (including when applied pursuant to paragraph (7) of that Article)" in paragraph (1) is deemed to be replaced with "paragraph (10) of that Article", and the phrase "the date on which a case set forth in any of the items of that paragraph arises" is deemed to be replaced with "the day on which five years have elapsed from that date (or the day on which 10 years have elapsed, if the person has been granted a tax payment grace period under paragraph (1) of Article 137-2 pursuant to paragraph (2) of that Article (Tax Payment Grace Period Where the Special Provisions on Capital Gains and Similar Income upon Departure from Japan Apply))".

A person who has filed a Tax Return, or has been subject to a determination, for the income tax for the year that includes the date on which Securities and similar interests as prescribed in Article 60-3, paragraph (1) (Special Provisions on Capital Gains and Similar Income If Assets Are Transferred to a Nonresident by Gift or Similar Means), or contracts for unsettled margin transactions or similar transactions as prescribed in paragraph (2) of that Article or unsettled derivatives transactions as prescribed in paragraph (3) of that Article, were transferred to a Nonresident by gift, inheritance, or bequest (including that person's heir) may file a request for Reassessment with the district director within four months from the date on which a case set forth in any of the items of Article 60-3, paragraph (6) arises, if the circumstances come to fall under a case set forth in either of the items of paragraph (1) of the preceding Article with regard to the income tax for that year because the gross income for the year of the Tax Return or determination includes the amount of business income, capital gains, or miscellaneous income from the transfer of those Securities and similar interests, the amount of business income or miscellaneous income from the settlement of those unsettled margin transactions or similar transactions, or the amount of business income or miscellaneous income from the settlement of those unsettled derivatives transactions, to which the first sentence of paragraph (6) of that Article (including when applied pursuant to paragraph (7) of that Article) applies.

The preceding paragraph applies mutatis mutandis to an heir with deferred tax prescribed in Article 60-3, paragraph (8), to whom paragraph (8) of that Article (including as applied mutatis mutandis pursuant to paragraph (10) of that Article) applies, and to an individual prescribed in paragraph (10), item (i) of that Article and a person set forth in item (ii) of that paragraph. In such a case, the phrase "the first sentence of paragraph (6) of that Article (including when applied pursuant to paragraph (7) of that Article)" in the preceding paragraph is deemed to be replaced with "paragraph (8) of that Article (including as applied mutatis mutandis pursuant to paragraph (10) of that Article)", and the phrase "the date on which a case set forth in any of the items of Article 60-3, paragraph (6) arises" is deemed to be replaced with "the date of the transfer or settlement, or of the transfer by gift or inheritance with limited liability, prescribed in Article 60-3, paragraph (8) or paragraph (10)".

Paragraph (1) applies mutatis mutandis to a donor granted a grace period, or the applicable decedent or similar person of an heir granted a grace period, as prescribed in Article 60-3, paragraph (11), to whom that paragraph applies. In such a case, the phrase "the first sentence of paragraph (6) of that Article (including when applied pursuant to paragraph (7) of that Article)" in paragraph (1) is deemed to be replaced with "paragraph (11) of that Article", and the phrase "the date on which a case set forth in any of the items of Article 60-3, paragraph (6) arises" is deemed to be replaced with "the day on which five years have elapsed from the date of the gift or the date of commencement of the succession (or the day on which 10 years have elapsed, if the donor granted a grace period or heir granted a grace period as prescribed in Article 60-3, paragraph (11) in connection with the gift, inheritance, or bequest has been granted a tax payment grace period under paragraph (1) or paragraph (2) of Article 137-3 pursuant to paragraph (3) of that Article (Tax Payment Grace Period Where the Special Provisions on Capital Gains and Similar Income If Assets Are Transferred to a Nonresident by Gift or Similar Means Apply))".