National Tax Collection Act

In the case where a person listed in the following items holds important property indispensable for carrying out the taxpayer's business and the income arising from that property constitutes the taxpayer's income, if the taxpayer is delinquent in paying the national tax pertaining to the business for which the property is used, and it is found that the amount to be collected is still insufficient even after the delinquent tax collection procedure has been executed on that national tax, the person listed in the relevant item is to bear secondary tax liability for the national tax pertaining to that delinquency, up to the limit of that property (including acquired property).

Where the taxpayer is an individual: a spouse or other relative sharing the same livelihood with that individual who receives income from the business operated by the taxpayer;

Where the taxpayer is a family corporation in its present condition at the time the relevant fact occurred: the shareholders or members who formed the basis for that determination.

In the case where a taxpayer has transferred a business to an individual who is a relative sharing the same livelihood with the taxpayer or otherwise has a special relationship with the taxpayer, or to a controlled company (meaning a company that would fall under the company prescribed in Article 67, paragraph (2) of the Corporation Tax Act (Special Tax Rate for Specified Family Companies) if the taxpayer were selected as the shareholder or member forming the basis for the determination, and including a corporation similar thereto), in either case one specified by Cabinet Order, and the transferee carries on the same or a similar business, if the taxpayer is delinquent in paying the national tax pertaining to that business, and it is found that the amount to be collected is still insufficient even after the delinquent tax collection procedure has been executed on that national tax, the transferee is to bear secondary tax liability for the national tax pertaining to that delinquency, up to the limit of the value of the transferred property; provided, however, that this does not apply if the transfer was made one year or more before the statutory due date for tax payment of the national tax pertaining to the delinquency.

In the case where it is found that the amount to be collected is still insufficient even after the execution of the delinquent tax collection procedure on a delinquent taxpayer's national tax (including, where a request has been made for collection assistance by a tax treaty partner, etc. (meaning assistance, based on the provisions of a tax treaty, etc. (meaning a tax treaty, etc. as prescribed in Article 2, item (ii) (Definitions) of the Act on Special Provisions of the Income Tax Act, the Corporation Tax Act and the Local Tax Act Incidental to Enforcement of Tax Treaties, etc. (Act No. 46 of 1969)), by the treaty partner of that tax treaty, etc. (meaning a treaty partner as prescribed in Article 2, item (iii) of that Act) in the collection of a national tax subject to collection assistance (meaning a national tax subject to collection assistance as prescribed in Article 11-2, paragraph (1) (Assistance in the Collection of National Tax) of that Act); referred to as "collection assistance by a tax treaty partner, etc." in Article 153, paragraph (1), item (i) (Requirements for Suspension of Delinquent Tax Collection Procedures, etc.) and Article 187, paragraphs (1) and (2) (Penal Provisions)), collection pursuant to that request), and that insufficiency is found to be attributable to a transfer, made by the delinquent taxpayer on or after the day one year before the statutory due date for tax payment of that national tax, of the delinquent taxpayer's property for no consideration or for consideration of a remarkably low amount (excluding a transfer made for the purpose of security), a waiver of an obligation, or any other disposition that gives a benefit to a third party, as specified by Cabinet Order, a person who has acquired a right or been relieved of an obligation by those dispositions is to bear secondary tax liability for the national tax pertaining to that delinquency, up to the limit of the extent to which the benefit received by those dispositions currently exists (or, if at the time of those dispositions those persons were a relative of the delinquent taxpayer or other individual who has a special relationship with the delinquent taxpayer, or a family corporation (including a corporation similar thereto) specified by Cabinet Order (referred to as "relative or other person with a special relationship" in Article 58, paragraph (1) (Procedure for Seizure of Movables, etc. in the Possession of a Third Party) and Article 142, paragraph (2), item (ii) (Authority and Methods of Search)), up to the limit of the benefit received by those dispositions).

In the case where a stock company, limited partnership company, or limited liability company that has evaded national tax, or received a refund of national tax, by deceit or other wrongful acts has not paid that national tax (including the accessory tax on it; the same applies hereinafter in this Article), when it is found that the amount to be collected is still insufficient even after the delinquent tax collection procedure has been executed on that stock company, limited partnership company, or limited liability company (in the case of a limited partnership company, only where it is found that the amount to be collected is still insufficient even after the delinquent tax collection procedure has been executed on the members with unlimited liability referred to in Article 33 (Secondary Tax Liability of Members of General Partnership Companies, etc.)), the officers of that stock company who engaged in that deceit or other wrongful acts, or the members with limited liability who execute the business of that limited partnership company or limited liability company (limited to the officers or members with limited liability in the case where, if those officers or members with limited liability were selected as the shareholders or members forming the basis for the determination, that stock company, limited partnership company, or limited liability company would fall under the company prescribed in Article 67, paragraph (2) of the Corporation Tax Act (Special Tax Rate for Specified Family Companies); hereinafter in this Article referred to as "specified officers, etc.") are to bear secondary tax liability for the national tax pertaining to that delinquency, up to the limit of the lower of the amount of the national tax evaded or refunded by that deceit or other wrongful acts and the value of the property of that stock company, limited partnership company, or limited liability company that, on or after the time of that deceit or other wrongful acts, was transferred to the specified officers, etc. or transferred by the specified officers, etc. (excluding property transferred as a transaction specified by Cabinet Order, such as a transaction that gives rise to the amount of cost of sales, selling expenses, or general and administrative expenses pertaining to the revenue of each business year of that stock company, limited partnership company, or limited liability company and that is found, in light of the content of the transactions of that stock company, limited partnership company, or limited liability company and other circumstances, to have been carried out with the counterparty to the transaction in accordance with ordinary transaction terms).

In the case where an association or foundation without legal personality is delinquent in paying national tax, if it is found that the amount to be collected is still insufficient even after the delinquent tax collection procedure has been executed on the property belonging to it (excluding property that is regarded as legally belonging to a third party because that third party is the nominal holder), that third party is to bear secondary tax liability for the national tax pertaining to that delinquency, up to the limit of the property regarded as legally belonging to that third party.

In the case where property of an association or foundation without legal personality that is a delinquent taxpayer has been refunded or distributed (except in the case where Article 34 (Secondary Tax Liability of Liquidators, etc.) applies), if it is found that the amount to be collected is still insufficient even after the delinquent tax collection procedure has been executed on that association or foundation (including the third party prescribed in the preceding paragraph), the person who received that refund or distribution is to bear secondary tax liability for the national tax pertaining to that delinquency, up to the limit of the value of the property received; provided, however, that this does not apply if the refund or distribution was made one year or more before the statutory due date for tax payment of the national tax pertaining to the delinquency.