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Estate tax amnesty to end June 14, 2023

By Euney Marie Mata-Perez on February 2,2023

THE original deadline to avail of the estate tax amnesty — June 15, 2021 — was extended for two years when Republic Act (RA) 11569 was signed into law on June 30, 2021, amending RA 11213, or the “Tax Amnesty Act of 2019.”

To date, no bill has been filed to further extend the revised June 14, 2023 deadline.

Delays in the settlement of estates are common for a variety of reasons. Family sensitivities and infighting may delay the execution of any extrajudicial settlement agreement or may even force heirs to go to court to settle the estate judicially. The estate or the heirs’ lack of liquidity is another reason that may cause a delay.

The estate tax amnesty offers a rare privilege to settle unpaid estate taxes for estates of decedents who died on or before Dec. 31, 2017 at a reduced tax amnesty tax rate of 6 percent only of the gross estate, without penalties and surcharge.

The rate is much lower than the previous graduated estate tax rate of 5 to 20 percent and will be imposed without the 25-percent surcharge and 20-percent interest per annum that ordinarily would have been charged by the Bureau of Internal Revenue (BIR) because of the delayed payment.

Under the old provisions of the National Internal Revenue Code (Tax Code), estate taxes were due or required to be paid within six months from the death of the decedent. Under the current Tax Code, the deadline for payment is now one year.

Availment of the amnesty is done via the filing of an Estate Tax Amnesty Return (ETAR) with the Revenue District Office of the BIR that has jurisdiction over the last residence of the decedent and the payment of the estate tax amnesty due.

The amnesty is deemed availed of only after the filing of the ETAR and the required supporting documents, which include proof of the settlement of the estate.

Proof of settlement can be in the form of a duly notarized and executed extrajudicial settlement agreement, if the estate is settled extrajudicially (out of court) or an affidavit of self-adjudication in cases where there is only one heir. If the estate is settled in court (judicially), a certified copy of the order of the court granting the settlement should be submitted.

It is significant that pursuant to Revenue Regulations 17-2021, the BIR can accept applications for estate tax amnesty even without the submission of proof of settlement of the estate, whether judicial or extrajudicial. However, no certificate authorizing registration of the properties of the estate will be issued by the BIR unless such proof is submitted.

The gathering of documents, especially those proving the valuation of the properties, can also be a cause of delay. The amnesty estate tax, like the regular estate tax, is calculated based on the fair value of the properties at the time of death. If the decedent had died several years back, it can be a challenge to gather these documents. For real properties, the fair values are determined by tax declarations and BIR zonal values existing at the time of the death of the decedent.

Considering the limited time left for availing of the estate tax amnesty and the possible delay in settling an estate, we thus encourage heirs, administrators or executors of decedents who died on or before Dec. 31, 2017 to avail of the estate tax amnesty and work on the process now.

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Euney Marie J. Mata-Perez is a CPA-lawyer and the managing partner of Mata-Perez, Tamayo & Francisco (MTF Counsel).

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