Instead of a one-time payment that many find difficult to comply with, heirs may now pay in installments the estate tax due the property they inherited from relatives. They may also stagger the payments over a two-year period.
Heirs even have the option to settle the amount online with an accredited bank of the Bureau of Internal Revenue (BIR) in the jurisdiction of the Revenue District Office (RDO) where the property is located.
Installment and online payments are among the measures adopted under Republic Act No. 11956 to help ease the tedious and labyrinthine process involved in the settlement of the estate tax, which is a levy on the privilege of transmitting property upon its owner’s death.
In addition, the estate tax amnesty now covers those who died on or before May 31, 2022. Previously, only those who died in or before 2017 were covered.
RA 11956, which extends the estate tax amnesty for two more years, or from June 15, 2023, to June 14, 2025, is now in effect with the publication on Sept. 8 of the BIR’s implementing guidelines contained in Revenue Regulations No. 10-2023.
The implementing guidelines were issued a month after RA 11956 lapsed into law on Aug. 5. A bill approved by both the Senate and the House of Representatives lapses into law if the President does not sign or veto it.
The September effectivity of the new law left a period of three months during which the estate tax amnesty was not in effect, causing heirs to face a double-digit tax rate and penalties. In contrast, the rate was fixed at only 6% of the net value of the estate when the amnesty took effect.
Families that could not wait for RA 11956 to take effect had to pay a rate of up to 20% and a 25% surcharge and 20% interest per year.
For example, a Canada-based estate administrator, who flew to Manila in July, and her siblings were willing to bite the bullet as long as they could settle the tax to allow her to return home to North America soon. They needed to settle the tax for the sale of their ancestral home in Manila to proceed.
Fortunately, and to the relief of the estate administrator and her siblings who are all in their 70s and 80s, they did not have to wait long, as the implementing guidelines of RA 11956 had been published.
The new law brings to a total of six years the period given to heirs to settle the estate tax. The amnesty first lapsed on June 14, 2021, under RA 11213, or the Tax Amnesty Act that then President Rodrigo Duterte signed on Feb. 14, 2019.
Under RA 11569, the amnesty was extended by two years until June 14, 2023, in consideration of the Covid-19 lockdowns and other pandemic restrictions that prevented families from paying the tax.
Lawmakers have expressed hope that the second extension until June 14, 2025, would give families more time to pay the tax. It was estimated that before the new law was passed, close to a million families had estates to settle. That number is expected to grow as the coverage of the amnesty has been extended to those who died on or before May 31, 2022.
The filing of the estate tax has become a little less tedious because the steps were “streamlined” under RA 11956 and Revenue Regulations No. 10-2023. But for the uninitiated, the process is still daunting.
Before one can pay online or manually, the estate tax amnesty return (ETAR, or BIR Form No. 2118-EA, Annex B) must be presented to the RDO along with the acceptance payment form (APF-BIR Form No. 0621-EA, Annex C) and the complete documents.
The documents to be submitted are:
A. Mandatory requirements
1. Certified true copy of the death certificate, or if not available, the certificate of no record of death from the Philippine Statistics Authority (PSA) and any valid secondary evidence, including but not limited to those issued by any government agency/office sufficient to establish the decedent’s death. (Previously, a death certificate from the PSA was a must. Now a death certificate from a hospital will do.)
2. Tax payment identification number (TIN) of decedent and heir/s.
3. For “claims against the estate” arising from contract loan, a notarized promissory note, if applicable.
4. Proof of the claimed “property previously taxed,” if any.
5. Proof of the claimed “transfer for public use,” if any.
6. At least one government-issued ID of the estate’s executor/administrator, or if there is no appointed executor or administrator, of the heirs, transferees, beneficiaries or authorized representative.
(No longer required are a copy of the birth certificate of each heir from the PSA and a certification from the barangay captain for the last residence of the decedent.)
B. For real properties
1. Certified true copy/ies of the original transfer certificate of title for land and/or condominium certificate of title. (These can be obtained from the Register of Deeds for a fee.)
2. Certified true copy of the tax declaration of real property/ies, if untitled, including the improvements at the time of death or the succeeding available tax declaration issued nearest the time of death of the decedent, if none is available at the time of death.
(Before, a title to the land was a must, resulting in many estates with only tax declarations as proof of one’s claim of ownership unsettled. Tax declarations for land and improvements can be obtained from the assessor’s office.)
3. Certificate of no improvement issued by the assessor’s office at the time of death of the decedent, if applicable.
C. Other requirements, if applicable
1. Duly notarized special power of attorney (SPA), if the person transacting the transfer is the authorized representative or one of the heirs, designated as executor/administrator;
2. Certification from the Philippine Consulate or apostille, if the document is executed abroad.
3. Location plan/vicinity map, if the zonal value is not readily available.
The RDO will then endorse, within five working days from the receipt of the documents, the APF for payment of the estate amnesty tax with the authorized agent banks, revenue collection officers, or authorized tax software provider.
One can pay the tax even without an extrajudicial settlement (EJS). But no certificate authorizing registration (CAR) can be issued unless an EJS is presented.
A CAR is a requirement of the city or municipality treasurer’s office for the payment of transfer tax (3/4 of 1%, or 0.75% in most cities in Metro Manila). The submission of the CAR is also among the requirements of the Register of Deeds before it issues a new title in the name of the heir/s.
Settling the estate tax confers benefits on both the heirs and the government. The government generates revenue while the heirs can make use of the property in a manner that they see fit. If for sale, real estate still in the name of one’s deceased relatives may command prices lower than those of similar properties with settled estates.