Local Tax Act

When the head of a local government intends to collect the local government levies of a taxpayer or special collection agent from a person who has secondary tax liability under the following Article through Article 11-10 or Article 12-2, paragraph (2) or (3) (hereinafter referred to as a "secondary taxpayer"), the head of the local government must notify that person by a written notice of payment or remittance stating the amount to be paid or remitted, the time limit for payment or remittance, the place of payment or remittance, and other necessary matters.

When a secondary taxpayer does not pay local government levies in full by the time limit for payment or remittance referred to in the preceding paragraph, the head of the local government must, except in the case of advance collection under Article 13-2, demand payment by issuing a written reminder for payment or remittance within 20 days after that time limit.

Realization of the property of a secondary taxpayer may be carried out only after the property of the taxpayer or special collection agent referred to in paragraph (1) has been put up for realization, except where there is a risk that the value of the property will decrease significantly.

Where a secondary taxpayer has filed an action regarding the notification under paragraph (1), the demand under paragraph (2), or the delinquent tax collection procedure concerning the local government levies relating to these, realization of that property may not be carried out while the action is pending.

The provisions of the following Article through Article 11-10 and Article 12-2, paragraphs (2) and (3) do not preclude the exercise of the right to reimbursement by a secondary taxpayer against the taxpayer or special collection agent referred to in paragraph (1).

Where a general partnership company or limited partnership company, or a certified public tax accountant corporation, attorney corporation, registered foreign lawyer corporation, joint corporation of attorneys and registered foreign lawyers, audit corporation, patent attorney corporation, judicial scrivener corporation, certified administrative procedures legal specialist corporation, public consultant on social and labour insurance corporation or land and buildings investigator corporation is delinquent in local government levies, and it is found that the amount to be collected remains insufficient even after carrying out delinquent tax collection procedures on its property, its members (in the case of a limited partnership company and an audit corporation, the unlimited liability members) have secondary tax liability for the local government levies relating to that delinquency. In this case, those members are jointly and severally liable.

Where a juridical person has been dissolved and has made the distribution of residual assets or the delivery of residual assets without paying or remitting the local government levies that are to be imposed on that juridical person or that it was to pay or remit, the liquidator and the persons who received the distribution or delivery of the residual assets (excluding persons to whom the provisions of the preceding Article apply; the same applies hereinafter in this paragraph) have secondary tax liability for the local government levies relating to that delinquency, only where it is found that the amount to be collected remains insufficient even after carrying out delinquent tax collection procedures on that juridical person; provided, however, that the liquidator is liable to the extent of the value of the property distributed or delivered, and the persons who received the distribution or delivery of the residual assets are liable to the extent of the value of the property they received, respectively.

Where a trust prescribed in Article 175 of the Trust Act has been terminated, and the liquidating trustee of that trust (meaning a liquidating trustee prescribed in Article 177 of that Act; the same applies hereinafter in this paragraph) has delivered property belonging to the trust property to residual property beneficiaries, etc. (meaning residual property beneficiaries, etc. prescribed in Article 182, paragraph (2) of that Act; the same applies hereinafter in this paragraph) without paying the local government levies that are to be imposed on that liquidating trustee or that the liquidating trustee was to pay or remit (limited to those for which the obligation to pay or remit becomes an obligation covered by the trust property; the same applies hereinafter in this paragraph), the liquidating trustee (limited to a liquidating trustee liable to perform the obligation to pay or remit those local government levies only with property belonging to the trust property; hereinafter in this paragraph referred to as the "specified liquidation trustee") and the residual property beneficiaries, etc. have secondary tax liability for the local government levies relating to that delinquency, only where it is found that the amount to be collected remains insufficient even after carrying out delinquent tax collection procedures on that liquidating trustee; provided, however, that the specified liquidation trustee is liable to the extent of the value of the property delivered, and the residual property beneficiaries, etc. are liable to the extent of the value of the property received, respectively.

Where a person delinquent in payment holds shares or capital contributions in a company that would fall under a company prescribed in Article 2, item (x) of the Corporation Tax Act if that person were selected as the shareholder or member serving as the basis for the determination (hereinafter in this Chapter referred to as a "family corporation"), and there is a reason listed below with respect to those shares or capital contributions, and it is found that the amount of local government levies to be collected remains insufficient even after carrying out delinquent tax collection procedures on that person's property (excluding those shares or capital contributions), that company has secondary tax liability for the local government levies relating to that delinquency, to the extent of the value of the shares or capital contributions held by that person (excluding those acquired at least one year before the statutory payment due date for the local government levies relating to that delinquency (meaning the time limit by which local tax is to be paid or remitted under the provisions of this Act or the Prefectural or Municipal Ordinances based on it (excluding time limits relating to an amended return, a late return, a reassessment or determination, advance collection or deferment of collection, and other time limits specified by Cabinet Order); for the second and subsequent payment periods of a local tax whose payment period is divided, the due date for payment of its first payment period; and, for demand fees, delinquency charges, additional charges for understatement, additional charges for failure to file, substantial additional charges and expenses for the delinquent tax collection procedure, that time limit for the local tax that gave rise to the collection; the same applies hereinafter in this Chapter)):

that even after the shares or capital contributions have been put up for realization again, there is no purchaser;

that, because there are restrictions on the transfer of the shares or capital contributions under an Act or the articles of incorporation, or because share certificates have not been issued, there is an obstacle to transferring them.

The value of the shares or capital contributions of a family corporation referred to in the preceding paragraph is the amount calculated on the basis of the amount obtained by dividing the amount obtained by deducting the total amount of liabilities from the total amount of assets of that company at the time of issuing the written notice of payment or remittance referred to in Article 11, paragraph (1) by the number of those shares or capital contributions.

Whether a company is a family corporation referred to in paragraph (1) is determined according to its status at the time of issuing the written notice of payment or remittance referred to in Article 11, paragraph (1).