THE BICAM-ENDORSED TAX AMNESTY ACT
By: Euney Marie J. Mata-Perez on December 20, 2018
The Senate and the House of Representatives have ratified a bicameral conference committee report that harmonized provisions of tax amnesty bills (House Bills 4814 and 8554 and Senate Bill 2059 [SB 2059]) passed by both houses of Congress.
We will discuss in some detail the estate tax amnesty, which is Part II of the proposed Tax Amnesty Act, as endorsed by the conference committee. We will discuss the general tax amnesty in our next column. It is worth mentioning, though, that the general tax amnesty adopted proposals under SB 2059 and the House bills that give taxpayers the option to pay either a 2-percent general tax amnesty tax based on assets or approximately a 5-percent tax based on net worth.
Under the proposed Tax Amnesty Act, the estate tax amnesty can be availed of by the payment of a 6 percent amnesty tax based on decedent’s total net estate at the time of death, or if an estate tax return has been previously paid, based on the net undeclared net estate. A proviso was added that if the deductions exceed the value of the gross estate, the amnesty may be availed of by paying a minimum of P5,000.
Availment should be made within two years from the effectivity of the implementing rules and regulations (IRR) to be issued by the BIR and covers estate of decedents who died on or before December 31, 2017. Executors or administrators of the estate, or in their absence, the legal heirs, transferees or beneficiaries, should file a sworn estate tax amnesty return at the Revenue District Office (RDO) that has the jurisdiction over the last residence of the decedent.
A new rule on consolidation of estates is added. If the estate involved has properties that are still in the name of another decedent or donor, the present holder, heirs, executors or administrators shall file only one estate tax amnesty return and pay the estate amnesty tax based on the total net assets at the time of death of the last decedent “covering all accrued taxes” arising from the transfer of such estate from all prior decedents or donors through which the property or properties comprising the estate shall pass. This rule on consolidation will make availment easy if estate taxes on some properties have not been paid with respect to prior decedents. It is not clear, though, if in this case the amnesty tax is based on the net estate of the last decedent only, without regard of the estate of prior decedents. We expect that the details of this consolidation rule will be addressed in the IRR to be issued by the BIR.
The proposed Tax Amnesty Act adopted the provisions of SB 2059 requiring the appropriate revenue district officer to issue and endorse an acceptance payment form for the authorized agent banks, the revenue collection agent or municipal treasurer concerned to accept the tax amnesty payment. It is also required that proof of settlement of the estate, whether judicial or extra-judicial, be attached to the estate tax amnesty return to verify the mode of transfer and the proper recipients.
Thus, those who intend to avail of the estate tax amnesty should be ready with the proof of settlement. In our experience, it will take some time for heirs to agree, even extra-judicially, on how the assets of the estate will be distributed or divided among them. Also, judicial settlement may take years to complete.
The estate tax amnesty return shall be conclusively presumed as true, correct and final upon its filing, and will be deemed complete upon the full payment of the amount due. After payment of the estate amnesty tax, the acceptance payment form and the estate tax amnesty return should be submitted to the RDO. Completion of these requirements will be deemed full compliance with the proposed Tax Amnesty Act.
Within fifteen days from the submission of the acceptance payment form and estate tax amnesty return, the BIR shall issue a certificate of availment of the estate tax amnesty. If no such certificate is issued within the said 15-day period, the duplicate copies of the acceptance payment form, stamped as received, and the tax amnesty return will be deemed sufficient proof of availment of the amnesty.
The harmonized bill also contains an express provision that availment of the tax amnesty does not imply any admission of civil, criminal or administrative liability. It also mandates the BIR, in coordination with the applicable regulatory agencies, to set up a system enabling the transfer of titles over properties to heirs and/or beneficiaries and cash withdrawals from the bank accounts of the decedent.
The estate tax amnesty, however, shall not extend to estate tax cases that have become final and executory, cases falling under the jurisdiction of the Presidential Commission on Good Government, and those involving unexplained or unlawfully acquired wealth under Republic Act 3019 (Anti-Graft and Corrupt Practices Act) and RA 7080 (An Act Defining and Penalizing the Crime of Plunder), violations of RA 9160 ( Anti-Money Laundering Act), tax evasion under the Tax Code, felonies of frauds, illegal exactions and transactions, and malversation of public funds and property under the Revised Penal Code.
As of the writing of this article, the proposed Tax Amnesty Act still needs to be signed by the Speaker of the House and the Senate President, as well as certified by the Secretaries of both chambers. Because both have already gone on a holiday break, resuming sessions only by mid-January, the proposed law will be submitted to the President for his approval sometime next month.
Euney Marie J. Mata-Perez is a CPA-lawyer and the managing partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). She is a corporate, M&A and tax lawyer. She is the newly-elected president of the Asia-Oceana Tax Consultants’ Association. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you can email the author at firstname.lastname@example.org or visit the MTF website at www.mtfcounsel.com.
From The Manila Times website on December 20, 2018