Have you settled the estate tax of your loved ones who passed away during the COVID-19 pandemic period? Were you able to meet the deadline in settling their estate? If you failed to do so, fret not. The estate tax amnesty has again been extended.
Estate Tax
An Estate Tax is “a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition,” according to the Bureau of Internal Revenue (BIR).
The executor, administrator, or any of the decedent’s legal heirs, whether or not he or she is a Philippine resident; or if there is no executor or administrator appointed, any person in actual or constructive possession of the decedent’s properties, is required to file the Estate Tax Return and pay the tax within a year from the decedent’s death, subject to an extension, if granted by the BIR Commissioner.
While the estate tax rate is based on the existing law at the time of decedent’s death, it is currently pegged at six percent since January 1, 2018, based on the Net Taxable Estate value of their real or personal properties, less allowable deductions, pursuant to Republic Act (RA) No. 10963 or TRAIN Law.
(For more information, please refer to the author’s April 1, 2022 article ”Everything you need to know about estate tax”)
Recent Tax Amnesties
RA 11213 or “An Act Enhancing Revenue Administration and Collection by Granting An Amnesty on All Unpaid Internal Revenue Taxes Imposed by the National Government for Taxable Year 2017 and Prior Years With Respect to Estate Tax, Other Internal Revenue Taxes, and Tax on Delinquencies,” extended the period of filing and payment from June 15, 2019 until June 14, 2021, for the heir/s who failed to settle their descendant’s estate who died on or before December 31, 2017.
Because of difficulties in the application for estate tax amnesty due to, among others, extended and repeated lockdowns; disruption to office operations during the pandemic period; poor information dissemination especially in the provinces; and financial and economic difficulties, the Tax Amnesty was amended by RA 11569 or An Act Extending the Estate Tax Amnesty and For Other Purposes, Amending Section 6 of Republic act No. 11213, Otherwise Known as the “Tax Amnesty Act,” further allowing the filing and settlement of unpaid estate taxes, without penalties and interest, from June 15, 2021 to June 14, 2023.
Another Extension
Congress deemed it proper to again lengthen such an amnesty period, as it believes the extension will help almost a million families with unsettled estates.
RA 11956 or “An Act Further Amending, Otherwise known as the ‘Tax Amnesty Act,” As Amended by Republic Act No. 11569, By Extending The Period of Availment of the Estate Tax Amnesty Until June 14, 2025 and For Other Purposes” lapsed into law last August 5, 2023.
Expanded Coverage
In addition to stretching the tax amnesty filing of returns and payment period for the estates of decedents who died on or before May 31, 2022, the following are likewise amended:
Filing of returns. With the passage of the new law, filing and payment were extended from June 15, 2023 until June 14, 2025, either manually or electronically, with authorized banks, Revenue District Office, or authorized tax software provider as defined in Revenue Memorandum Order No. 8-2019.
Mandatory requirements were limited to the following: certified copy of death certificate or valid secondary evidence; decedent and heir/s’ tax identification number (TIN); notarized claims against the estates; proof of previously taxed properties and or claimed “transfer for public use”; and at least one government ID of the executor or administrator of the estate.
For real properties, certified copy of land and or condo titles, or tax declaration nearest the time of decedent’ death, if untitled; and certificate of no improvement, if applicable.
For personal properties, certificate of deposits, investments and or indebtedness; certificate of vehicle registration, stocks and other types of properties and their corresponding proof of valuation.
Other requirements, if applicable, include notarized Special Power of Attorney; certificate from Philippine Consulate, if executed abroad; and location plan/vicinity plan, if without available zonal value.
Alternate documents. In the absence of the above, appropriate alternate documents may be requested, thereby making the filing of returns and compliance easier.
Meanwhile, proof of judicial or extrajudicial settlement of estates, which normally takes time to settle, is not required if not yet available, for the purpose of filing and payment of estate tax; provided that it is required for the issuance of the Electronic Certificate Authorizing Registration (eCAR).
Payment. Installment payment shall be allowed within two years from the statutory payment date, without penalty and interest.
Electronic Certificate Authorizing Registration (eCAR). Each real property, including improvements, if any, shall be issued their corresponding eCAR. In addition, separate eCAR shall be issued for personal properties.
Immunities and Privileges. The Tax Amnesty shall include estates covering the period ending May 31, 2022 and prior years. Those who will avail of the amnesty will enjoy immunity from civil, criminal and administrative cases, as well as penalties.
For proper guidance, consult an estate and/or tax professional.
References include RA 11956 and BIR Revenue Regulations No. 10-2023.
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Henry L. Yap is an architect, fellow in Environmental Planner and Real Estate Management, and one of the undersecretaries of the Department of Human Settlements and Urban Development.