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Part Three
One of the common tax problems that my clients, relatives and friends present to me is how to resolve their long pending estate tax issues. Most of them have been unable to transfer to the rightful heirs the properties left by their ancestors since the required estate tax payments and clearances have not been completed after so many years since the decedent’s death. Consequently, they have not been able to put to maximum productive use these properties due to constraints of the unsettled estate tax and ownership issues.
With the recent passage of Republic Act 11313 providing for a tax amnesy on estate tax, is the resolution of this problem forthcoming? This TA provides for the settlement of the tax obligations of estates of decedents who died on or before December 31, 2017, with the payment of TA of 6 percent of the net estate value. It is to be noted that for estates of decedents who died after December 31, 2017, the estate tax provisions under the Tax Reform for Acceleration and Inclusion law will apply, including the 6-percent estate tax rate similar to the TA estate tax rate.
The TA on estate tax provides a relief for the administrators of, and heirs to, estates who have not been able to pay the estate taxes on properties left by decedents. Several issuances have been promulgated by the Department of Finance and the Bureau of Internal Revenue (BIR) for this TA, including Revenue Regulations 6-2018, Revenue Memorandum Order 33-2019 and Revenue Memorandum Circular 68-2019. It is expected that additonal guidelines will still be issued in the near future.
Those availing themselves of this must complete the payment of the TA tax and submit all documentary requirements on or before June 15, 2021. For those availing themselves of this amnesty, this just provides a limited time of two years from the date of effectivity of the Revenue Regulations to comply with the provisions on the TA law. The guidelines issued by the BIR provide the Estate Tax Amnesty Return (ETAR), the Acceptance Payment Form (APF), and Certificate of Availment (CA) that will be used by taxpayers availing of the amnesty.
The ETAR and the APF can be accomplished without too much difficulty. What are very useful are the information in the guidelines of the ETAR and in RR 6-2019, which provides for the allowable deductions in the eight laws since 1936 that taxpayers may consider in computing their TA estate tax. The TA law, with the veto of the President of certain contentious provisions of the enrolled bill submitted by Congress to Malacañang, provides that the availment should be made for each stage of transfer of properties of multiple estates. Thus, for situations where there are several decedents covering various generations, the TA process should be made for each estate for the common properties.
Once the ETAR and APF are accomplished, these are to be submitted to the concerned BIR Office. The BIR will review and endorse these back to the taxpayer, with the APF bearing the signature of the authorized BIR officer.
The taxpayer shall pay the amnesty tax to the authorized accredited agent bank or revenue collection office by merely presenting the APF. There is no need to present the ETAR or any supporting document to the bank or RCO. Instead, all of the documents, including the ETAR, bank-validated APF and supporting documents should be filed in triplicate with the concerned BIR office after the payment. The taxpayer will be given the received copy of all of these documents.
The CA and the electronic Certificate Authorizing Registration (eCARs) shall be issued within 15 calendar days from the receipt of validated APF and proof of payment.
The eCARs shall be presented to the Register of Deeds, Corporate Secretary or any other person mandated to register asset ownership transfer matters, to start the process of the transfer of ownership to the rightful heirs. After all of these steps and processes, people ask me if this finally is the resolution of the long pending estate tax issues. My answer: “Perhaps.”
To be continued
Joel L. Tan-Torres is a Certified Public Accountant who placed No. 1 in the May 1979 CPA Board Examinations. He was the former commissioner of the Bureau of Internal Revenue from 2009 to 2010 and the chairman of the Professional Regulatory Board of Accountancy from 2014 to August 2018. He is a partner of Reyes Tacandong & Co.
This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa.secretariat.@gmail.com.