It’s a race to the finish for heirs scrambling to settle the estate tax for properties they inherited from relatives who died in or before 2017 as the window of opportunity narrows.
Heirs can pay the estate tax and beat the amnesty deadline even without a settlement of the estate if they can submit other documentary requirements of the Bureau of Internal Revenue (BIR).
But there’s a catch. The public is largely unaware of this mode stipulated in a revenue regulation that the BIR issued two years ago, preventing many families from availing themselves of this option.
Revenue Regulation 17-2001 states: “Proof of settlement of the estate, whether judicial or extrajudicial, need not accompany the ETAR [estate tax amnesty return] if it is not yet available at the time of its filing, but no electronic Certificate Authorizing Registration (eCAR) shall be issued unless such proof is presented and submitted to the concerned RDO [Revenue District Office].”
It adds: “After payment, the duly accomplished and sworn ETAR and APF [acceptance payment form—BIR Form No. 0621- EA] with proof of payment, together with the complete documentary requirements, shall be immediately submitted to the RDO in triplicate copies. Failure to submit the same until June 14, 2023 is tantamount to non-availment of the Estate Tax Amnesty and any payment made may be applied against the total regular estate due inclusive of penalties.”
Only a few families know about Revenue Regulation 17-2001 largely because the BIR appears not to have conducted an information campaign on it. The information is not included in BIR fliers about the estate tax amnesty.
In the dark
Until recently, one of those in the dark about the regulation was “Aster,” an administrator of her family’s estate. She came to know about it early in May from a former colleague. Moreover, she learned about the tax amnesty and the deadline only in March from a friend who gave her a BIR flier.
“My lawyer did not say that an extrajudicial settlement (EJS) is not required to settle the estate tax. Neither did I know that the EJS can follow later,” she said, bewailing the fact that taxpayers not given complete information will expectedly find it hard to deal with the government. “They’re not helpful.”
Like Aster, Gussie, a retired teacher and an administrator of his parents’ estate, learned about the revenue regulation only two weeks ago—not from the government but from a private chat group.
“Now that the estate tax can be paid without an EJS, I will have the tax settled so as to relieve us of anxiety that we may not be able to beat the deadline,” said Gussie, who asked that his surname not be mentioned to avoid antagonizing certain relatives.
Gussie’s family has not come to an extrajudicial settlement because his late brother’s wife refuses to have anything to do with the estate. The separation of his sister-in-law and his late brother had not been amicable, he said.
As a consequence, Gussie and his surviving siblings requested a court to declare their sister-in-law and her children disinterested parties. But the court has yet to rule on the matter, preventing them from settling the estate tax as they had not known about Revenue Regulation 17-2001 until a few weeks ago.
Families that came to know about the revenue regulation and have gathered the other documentary requirements must act now. The estate tax amnesty ends on June 14.
It’s alright if the issuance of a CAR is held in abeyance as long as heirs will no longer pay the 25% surcharge and 20% annual interest once they settle the estate tax before the deadline.
A CAR is a prerequisite for paying the transfer tax with the Treasurer’s Office of a local government where the deceased last resided, and for getting a new title in the name of the heirs from the Register of Deeds. The certificate will be issued only after the heirs come to an EJS, or a judicial settlement (JS), and submit an original copy and the proof of payment to the BIR.
Most difficult to obtain
The EJS or JS is perhaps the most difficult to obtain among the many documentary requirements, especially when the heirs do not see eye to eye on the disposition of the property.
Securing an EJS also poses a challenge when certain heirs are living abroad. For siblings or other relatives overseas, signing the EJS requires getting the document notarized and having it apostilled at the nearest Philippine consulate—a process that takes time.
The revenue regulation is thus a big help to heirs: It fast-tracks the payment of the tax.
Gathering the other requirements, however, is no mean feat.
For close to a million families who are unlikely to beat the deadline next month, an extension may be forthcoming.
Extension, expansion of coverage
Hopes for an extension were buoyed on May 15 when the House of Representatives approved on third reading a bill extending the amnesty for another two years, or until June 14, 2025. A total of 259 legislators voted to pass House Bill No. 7909; no one voted against it or abstained from voting.
The measure also seeks to expand the coverage of the amnesty to those who died in or before 2021. The current amnesty includes only those who died in or before 2017.
HB 7909 is a substitute bill to HB 7409, originally co-authored by Speaker Ferdinand Martin Romualdez, Ilocos Norte Rep. Ferdinand Alexander Marcos, Majority Leader Manuel Jose M. Dalipe of Zamboanga City and Tingog party-list Representatives Yedda Marie Romualdez and Jude Acidre.
‘An act of kindness’
Extending the amnesty period is a win-win for the government and concerned families.
Senior Deputy Speaker Ralph Recto said the families would save billions and the government would earn billions by extending the deadline to June 14, 2025. He described the extension as an “act of kindness” to vulnerable senior citizens who were prevented by the pandemic from availing themselves of the amnesty.
“If the government had extended `lifelines, bailouts in the billions’ to distressed commercial firms during the pandemic, then why should not the same compassion be extended to families? More so that it won’t cost the government anything,” Recto, a former senator, was quoted as saying.
The BIR has in fact exceeded its target of collecting P6 billion from the estate tax amnesty. At a meeting of the House ways and means committee in April, Revenue Assistant Commissioner Maria Luisa Belen said 133,860 taxpayers had availed themselves of the amnesty since 2019, generating P7.4 billion for the government.
The committee chair, Albay Rep. Joey Salceda, said some 920,000 Filipino families could benefit from the bill. A study by the committee found that almost a million Filipino families still have estates to settle despite the first estate tax amnesty and its subsequent extension by two years, Salceda said.
Speaker Romualdez, meanwhile, has urged the BIR to simplify the amnesty application procedure should HB 7909 be enacted into law, and to allow online filing, especially for heirs working overseas.
Beside raising revenues for the government, settling the estate tax will lead to the faster distribution and use of inherited properties such as land, he said.
The ball is now in the court of the Senate, where a counterpart bill is pending in the chamber’s ways and means committee.