Article 14-18Liability in Rem for Tax of a Holder of Property Transferred as Security

①If a taxpayer or special collection agent is delinquent in local government levies and there is property that the person has transferred and that is the object of security by that transfer (hereinafter in this Chapter referred to as "property transferred as security"), the local government levies of the taxpayer or special collection agent may be collected from the property transferred as security only where it is found that the levies to be collected would still fall short even if a delinquent tax collection procedure were carried out against the person's property.

②When the head of a local government intends to collect under the preceding paragraph, the head must give notice to the right holder of the property transferred as security (hereinafter in this Article referred to as the "holder of property transferred as security") by a document stating the amount to be collected and other necessary matters; in this case, the head must notify the taxpayer or special collection agent to that effect.

③If the amount to be collected has not been paid in full by the day on which 10 days have elapsed from the day on which the notice referred to in the preceding paragraph was issued, a tax collection official may, deeming the holder of property transferred as security to be a secondary taxpayer, carry out a delinquent tax collection procedure against the property transferred as security.

④The provisions of Article 11, paragraphs (3) through (5) and Article 13-2 apply mutatis mutandis to the case under the preceding paragraph.

⑤A seizure made treating property transferred as security as property of the taxpayer or special collection agent referred to in paragraph (1) may, only where the requirements of that paragraph are met, be continued as a delinquent tax collection procedure as a seizure under paragraph (3); in this case, the head of a local government must give the notice and the notification referred to in paragraph (2) without delay.

⑥When continuing a delinquent tax collection procedure under the preceding paragraph, if the property transferred as security is property listed in the following items, the head of a local government must notify the person specified in the relevant item to the effect that the delinquent tax collection procedure is being continued with the seizure made as property of the taxpayer or special collection agent treated as a seizure under paragraph (3).

⑦When continuing a delinquent tax collection procedure under paragraph (5), if there is a known person among those listed in Article 55, item (i) or (iii) of the National Tax Collection Act, the head of a local government must notify them to the effect that the delinquent tax collection procedure is being continued with the seizure made as property of the taxpayer or special collection agent treated as a seizure under paragraph (3).

⑧Even where, after the notice under paragraph (2) or a seizure subject to the application of paragraph (5) has been made, the claim secured by the transfer of property of the taxpayer or special collection agent has been extinguished for a reason other than performance, such as default (including where a repurchase, promise of resale or similar contract has been concluded with respect to the property transferred as security and that contract has lost its effect for a reason other than performance of the contract, such as the passage of a time limit), paragraph (3) applies as if the property continued to exist as property transferred as security.

⑨The provisions of paragraph (1) do not apply where, on or before the statutory payment due date, etc. of the local government levies, there is a registration of transfer of rights relating to a transfer made for the purpose of security, or where the holder of property transferred as security proves, by the day before the decision to sell the property, the fact that the property had become property transferred as security on or before the statutory payment due date, etc. of the local government levies. In this case, the provisions of the second sentence of Article 14-9, paragraph (3) and paragraph (4) of that Article apply mutatis mutandis.

⑩A holder of property transferred as security to whom the provisions of paragraph (1) apply is deemed to be a taxpayer or special collection agent for the purpose of applying the provisions of this Act concerning offenses relating to delinquent tax collection procedures and offenses of refusal of examination, etc. relating to delinquent tax collection procedures.