TJM tax case originated from prosecutor Hou Kuan-Jen, who violated the principle of double jeopardy to conduct investigation and prosecution on Tai Ji men, and forward the case to National Tax Bureau. Despite knowing the conflicting nature of the same income in the indictment (the same income was considered as proceeds of fraud and as revenue from cram school tuition fee at the same time), the NTB did not carry out investigation required by its statutory duty, nor wait the decision of criminal court to ascertain the nature of income, but issued heavy tax penalty simply based on what said in the indictment. The NTB’s action obviously was not up to standard. In its 2009 investigation, the Control Yuan concluded seven major violations of law by the NTB on the Tai Ji Men tax case, such as failure to proactively clarify the nature of the income ex officio etc. In addition, the Control Yuan also asked the Executive Yuan to handle Tai Ji Men case in a formal and prudent manner during its visit to Executive Yuan in 2010 and 2011.
- The Executive Yuan organized an inter-ministerial meeting, and it was resolved that a public survey would be conducted to investigate the nature of the red envelopes
On 9 Dec 2011, Mr. Zheng-Sen Lin, the Secretary General of the Executive Yuan, hosted the meeting and invited 30 attendees, including Mr. Su-Der Lee, the then Minister of Finance, Mr. Ming-Tong Chen, the then deputy Minister of Ministry of Justice, Mr. Jin-Jian Chen, then Director of Taipei National Tax Bureau, the representative of Dr. Hong and his wife, 13 Tai Ji Men dizi, Mr. Zheng-Fang Ma, then Minister of Transportation and Communication, and Mr. Qio-Yang Huang, then Consultant of Executive Yuan etc. It was resolved that: 1) the criminal indictment could no longer serve as the basis of taxation and the Taipei National Tax Bureau will conduct a public survey to investigate the nature of the red envelopes; 2) if the results of public survey concluded the nature of red envelope as gift, then the tax case should be closed accordingly. In case the survey concluded as tuition fee, then the income should be taxed in accordance with relevant regulations. The resolution and statements are evidenced by the tape recording and meeting minutes.
- The outcome of public survey concluded the red envelope as gift
On 16 Dec 2011, the Re-assessment and Investigation Committee of Taipei National Tax Bureau agreed to apply the resolution of the above-mentioned inter-ministerial meeting and carry out public survey. On 19 Dec 2011, Taipei NTB officially announced the public survey through newspapers, NTB websites and their own bulletin boards (Taipei NTB Letter 16 Dec 2011 Chai-Pei Fa 2 No. 1000249751). The survey results showed that 100% of the 7,401 respondents indicated the red envelopes were gifts and no one declared them as tuition, which was consistent with the findings in the final criminal court decision. Despite the clear evidence, the NTB not only disregarded the agreed resolution, which is to close the tax case in accordance with the survey result, but also intentionally breached the principle of taxation by assessment and twisted the nature of income as half as gifts and half as tuition fee and again issued another tax bill.
- Ministry of Finance and National Tax Bureau should honor the resolution of the inter-ministerial meeting and close Tai Ji Men case
The agreement to follow the resolution in the inter-ministerial meeting on 9 Dec 2011 to clarify the nature of red envelopes by public survey has formed a binding governmental contract with proof of evidence. The Ministry of Finance and National Tax Bureau should, honestly and with administrative ethic, honor the resolution and survey result and revoke the unlawful tax sanction on Tai Ji Men for tax year 1992 in accordance with legitimate expectation, administration self-discipline, and the decision No. 422 made by the Supreme Administrative Court in 2018 acknowledging that its original ruling for 1992 did not take into consideration the public survey result that all 7,401 respondents indicated the red envelopes were gifts.