Article 24Liability in Rem for Tax of a Holder of Property Transferred as Security

①Where a taxpayer is delinquent in paying national tax, if there is property that the taxpayer has transferred and that has become the object of security by that transfer (hereinafter referred to as "property transferred as security"), the taxpayer's national tax may be collected from the property transferred as security only where it is found that the national tax to be collected would still be insufficient even if the delinquent tax collection procedure were executed against the taxpayer's property.

②When the district director intends to collect under the provisions of the preceding paragraph, the district director must give notice, by a document stating the amount to be collected and other necessary matters, to the right holder of the property transferred as security (hereinafter referred to as "holder of property transferred as security"). In this case, the district director must notify that fact to the district director competent over the location of the holder's domicile or residence (including offices and places of business; the same applies hereinafter) and to the taxpayer.

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 written notice under the preceding paragraph was issued, a collection official may execute the delinquent tax collection procedure against the property transferred as security, deeming the holder of property transferred as security to be a secondary taxpayer. In this case, the provisions of Article 32, paragraphs (3) through (5) (General Rules on Secondary Tax Liability) and Article 90, paragraph (3) (Restrictions on Realization) apply mutatis mutandis.

④Where property transferred as security has been seized as the taxpayer's property referred to in paragraph (1), the delinquent tax collection procedure may be continued by treating the seizure as seizure under the provisions of the preceding paragraph, only where the requirements of paragraph (1) are met. In this case, the district director must without delay give the notice and make the notification under paragraph (2).

⑤When continuing the delinquent tax collection procedure under the provisions of the preceding paragraph, if the property transferred as security is property listed in the following items, the district director must notify the person specified in each such item that the delinquent tax collection procedure will be continued by treating the seizure made as seizure of the taxpayer's property as seizure under the provisions of paragraph (3).

⑥When continuing the delinquent tax collection procedure under the provisions of paragraph (4), if there is a known person among those listed in Article 55, item (i) or item (iii) (Notice of Seizure to Pledgees, etc.), the district director must notify them that the delinquent tax collection procedure will be continued by treating the seizure made as seizure of the taxpayer's property as seizure under the provisions of paragraph (3).

⑦Where, after notice under the provisions of paragraph (2) has been given or seizure subject to the provisions of paragraph (4) has been made, the claim secured by the transfer of the taxpayer's property is extinguished by default or for any other reason except performance (including where a contract of repurchase, reservation of resale or any similar contract has been concluded with respect to the property transferred as security and that contract loses effect for a reason other than performance of the contract, such as lapse of a time limit), the provisions of paragraph (3) apply even in that case, deeming the property to continue to exist as property transferred as security.

⑧The provisions of paragraph (1) do not apply where, on or before the statutory due date for tax payment, etc. of national tax, there is 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, that the property had become property transferred as security on or before the statutory due date for tax payment, etc. of the national tax. In this case, the provisions of Article 15, paragraph (2), second sentence and paragraph (3) (Proof of Pledges Having Priority) apply mutatis mutandis.

⑨A holder of property transferred as security who is subject to the provisions of paragraph (1) is deemed to be a taxpayer for the purpose of applying the provisions of Chapter X (Penal Provisions).