Ex-lawmaker Lee Sang-jik loses suit over tax bill sent to prison

Former lawmaker Lee Sang-jik lost a lawsuit against an income tax assessment of about 40 million won ($29,900). Lee argued that the tax calculation was wrong. He said he had never received bonuses or dividends while serving as a lawmaker. He also argued that his rental income from a building was a necessary expense for his legislative work, but the court rejected his claims.

According to legal circles Thursday, the Jeonju District Court's Administrative Division 1-2 (Chief Judge Lim Hyun-jun) ruled against Lee on Aug. 13 in his lawsuit seeking to cancel a total of 36.04 million won in income tax imposed by tax authorities.

Earlier, tax authorities imposed 36.05 million won in income tax on Lee in two rounds, in May and October 2023. They determined that Lee had failed to report about 108 million won in additional income he earned from company dividends, bonuses and housing rental income between 2017 and 2021.

At the time of the assessment, Lee was serving a prison term at Jeonju Prison. The Supreme Court finalized a six-year prison sentence for Lee in April 2023 on charges of embezzlement and breach of trust. The charges involved about 55 billion won in funds from Eastar Jet and its affiliates. An investigation found that Lee received the tax authorities' notice through a Jeonju Prison official.

Lee filed an objection to the assessment belatedly, but it was rejected. The Tax Tribunal and other bodies dismissed his objection because it had been filed after the 90-day deadline following notification. Ultimately, Lee filed the lawsuit in January 2025.

During the trial, Lee's side argued that he had mistaken the notice for something else and discarded it without reading it, only realizing what it was later. He argued that this meant the deadline to seek cancellation had not yet passed.

But the court did not accept Lee's argument either. The bench said, "Since the notice was lawfully delivered to Lee through a prison official, it can be presumed that he was aware of its contents." It then said, "Even assuming he did not know the contents, the objection period still runs regardless."

Lee also argued that the assessment was invalid due to procedural and substantive illegality, but none of his claims were accepted.

Lee said the assessment was procedurally flawed because tax authorities did not conduct a separate tax investigation before issuing it. But the court said, "That alone does not mean the tax authorities violated procedure." In addition, the court said, "For each assessment, tax authorities lawfully issued a pre-assessment notice stating the relevant tax base, calculated tax amount and expected tax bill."

Arguing substantive illegality, Lee said, "I never received any separate income or bonuses while serving as a lawmaker at the time," adding that his rental income should count as a necessary expense because he rented a separate officetel for his legislative work.

But the court dismissed this, saying, "Taking the arguments as a whole, the income and bonuses Lee received during the period in question were not paid based on any position or role he held, but rather constituted funds the company lent him free of charge, unrelated to his duties."

The court then concluded, "Even if Lee rented a separate residence and paid monthly rent for it apart from the building he leased out, that does not qualify as a necessary expense," adding, "This stems from a separate cause unrelated to the matter at hand."

The ruling was finalized on Friday. Lee did not appeal the lower court's decision.