The Tax Amnesty Act (Republic Act No. 11213), signed into law on 14 February 2019, provides for a one-time opportunity to settle estate tax obligations through an estate tax amnesty program that will give reasonable tax relief to estates with deficiency estate taxes. In other words, it provides a clean slate for taxpayers with existing estate tax delinquencies. Here is an introduction to the Tax Amnesty Act, in conjunction with Revenue Regulation No. 6-2019 issued by the Bureau of Internal Revenue (BIR).
The Tax Amnesty Act covers the estate of decedents who died on or before 31 December 2017, with or without assessments duly issued.
The estate tax amnesty shall not cover the following:
- Delinquent estate tax liabilities which have become final and executory and which are covered by Tax Amnesty of Delinquencies; and
- Properties involved in cases pending appropriate courts as enumerated in the regulation, viz:
- Those falling under the jurisdiction of the Presidential Commission on Good Government (PCGG);
- Unexplained or unlawfully acquired wealth under the Anti-Graft and Corrupt Practices Act and Plunder Act;
- Violation of the Anti-Money Laundering Act;
- Tax evasion and other criminal offenses under Chapter II of Title X of the Tax Code;
- Felonies of fraud, illegal exactions and transactions, malversation of public funds and property.
The Estate Tax Amnesty is available for a period of two (2) years from 15 June 2019, which is the effectivity date of the IRR, or until 15 June 2021.
Note: We suggest starting the process early.
If the estate involved has properties which are still in the name of another decedent or donor, the present holder, heirs, executors or administrators cannot file one Estate Tax Amnesty Return. One-time declaration and settlement is not allowed.
TAX RATE AND APPLICABLE RULES
Estate Amnesty tax rate is 6% of the decedent’s total net estate at the time of death.
If an estate tax return was earlier filed, the 6% estate amnesty tax will be based on the net undeclared estate.
A minimum estate amnesty tax of PHP5,000 shall be paid if the allowable deductions applicable at the time of death exceed the value of the gross estate.
Net Estate refers to the gross estate less all allowable deductions as provided in the Tax Code, or the applicable estate tax laws prevailing at the time of death of the decedent.
Gross Estate shall be valued based on the fair market value as of the time of death of the decedent. For Real properties, fair market value shall be the higher between the zonal value as determined by the Commissioner of Internal Revenue and the fair market value as shown in the schedule of values fixed by the provincial and city assessors.
Net undeclared estate refers to the difference between the total net estate valued at the time of death and the net estate previously declared with the BIR, if any.
Prepare a sworn Estate Tax Amnesty Return (ETAR) – BIR Form No. 2118-EA. Who shall file? Executor or administrator, legal heirs, transferees or beneficiaries.
Secure an Acceptance Payment Form (APF) – BIR Form No. 0621-EA from the RDO. The RDO shall issue and endorse an Acceptance Payment Form authorizing the AAB or in the absence thereof, the collection agent or municipal treasurer concerned, to accept the amnesty tax payment.
Pay the amnesty estate tax at the time the return is filed.
Submit the APR and sworn ETAR to the RDO.
BIR issues a Certificate of Availment of the Estate Tax Amnesty within 15 calendar days from submission of the APF and ETAR to the BIR.
Note: The duplicate copies of Acceptance Payment Form and ETAR, stamped as received, shall besufficient proof in lieu of a Certificate of Availment.
EFFECTS OF AVAILMENT
Once the requirements and conditions of the IRRs of Estate Tax Amnesty are fully complied with, the estate shall be immune from the payment of all estate taxes including increments and additions thereto arising from the failure to pay the estate tax for the years 2017 and prior years. Immunity shall extend to all appurtenant civil, criminal, and administrative cases and penalties under the 1997 Tax Code, as amended.
The availment of the Estate Tax Amnesty and the issuance of the Acceptance Payment Form do not imply an admission of criminal civil or administrative liability on the part of the availing estate.