There are times people have not yet gone over their grief or pain for the loss of a loved one and already have to deal with the tedium of document processing in connection with the properties/estate left behind by the deceased.
Properties of a deceased person cannot be transferred to his heirs without paying the necessary estate tax. Payment of the estate tax is based on the principle that the estate of the deceased is one juridical personality and its right to transfer property to the heirs is a privilege and is thus subject to transfer tax.
A return or estate tax form (BIR Form No. 1801) needs to be filed with the Bureau of Internal Revenue for the payment of the estate tax. Hopefully, the following guidelines can aid the heirs in sorting out the tiresome process of estate taxation.
1. When to file Estate Tax Return
The return must be filed within six (6) months from the death of the decedent. In meritorious cases, the Commissioner has authority to grant a reasonable extension not exceeding thirty (30) days for filing the return.
2. Where to file Estate Tax Return
The return must be filed with the BIR district office or its representative having jurisdiction over the place of domicile of the decedent at the time of his death. If the decedent has no legal residence in the Philippines, the return shall be filed with the Office of the Commissioner (Revenue District Office No. 39, South Quezon City).
3. Who shall file the Estate Tax Return
This return must be filed in triplicate by the executor, or administrator, or any of the legal heirs of the decedent, whether resident or non-resident of the Philippines. If there is no executor or administrator appointed, qualified, and acting within the Philippines, then any person in actual or constructive possession of any property of the decedent.
Basically, a return is required to be filed in all cases of transfers where estate tax is due. However, where no estate tax is due, a return is still required where the gross value of the estate exceeds two hundred thousand (P200,000) pesos; or where regardless of the gross value of the estate, it consists of registered or registrable property such as real property, motor vehicle, shares of stock or other similar property for which a clearance from the BIR is required (i.e. bank deposits) as a condition precedent for the transfer of ownership thereof in the name of the transferee; or
4. When and Where to Pay Estate Tax
Upon filing the return, the estate tax due is to be paid to the BIR authorized Agent Bank (AAB) where the return is filed. In places where there are no AABs, payment shall be made directly to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer.
In certain cases, where the government finds that the payment on the due date of the estate tax or of any part thereof would impose undue hardship upon the estate or any of the heirs, it may allow extension of time for the payment of such tax or any part thereof not to exceed five (5) years, in case the estate is settled through the courts, or two (2) years in case the estate is settled extrajudicially.
The following requirements are to be submitted upon field or office audit of the tax case before the Tax Clearance Certificate/Certificate Authorizing Registration can be released. However, for expediency it would be best to already attach the applicable documents upon filing of the return.
i. Certified true copy of the DEATH CERTIFICATE;
ii. NOTICE OF DEATH duly received by the BIR, if gross taxable estate exceeds P20,000 for deaths occurring on or after Jan. 1, 1998; or if the gross taxable estate exceeds P3,000 for deaths occurring prior to Jan. 1, 1998;
iii. Any of the following: a) Affidavit of Self Adjudication; b) Deed of Extra-Judicial Settlement of the Estate, if the estate had been settled extrajudicially; c) Court order if settled judicially; d) Sworn Declaration of all properties of the Estate;
iv. A certified copy of the schedule of partition of the estate and the order of the court approving the same, if applicable;
v. Certified true copy/ies of the Transfer/Original/Condominium Certificate of Title/s of real property/ies (front and back pages), if applicable;
vi. Certified true copy of the latest Tax Declaration of real properties at the time of death, if applicable;
vii. "Certificate of No Improvement" issued by the Assessor's Office where declared properties have no declared improvement;
viii. Certificate of Deposit/Investment/Indebtedness owned by the decedent and the surviving spouse, if applicable;
ix. Photo copy of Certificate of Registration of vehicles and other proofs showing the correct value of the same, if applicable;
x. Proof of valuation of shares of stocks at the time of death, if applicable;
a. For listed stocks - newspapers clippings/certification from the stock exchange
b. For unlisted stocks - latest audited Financial Statements of issuing corporation with computation of book value per share
xi. Xerox copy of certificate of stocks, if applicable;
xii. Proof of valuation of other types of personal property, if applicable;
xiii. Proof of Claimed Tax Credit, if applicable;
xiv. CPA Statement on the itemized assets of the decedent, itemized deductions from gross estate and the amount due if the gross value of the estate exceeds two million pesos (P2,000,000);
xv. Certification of the Barangay Captain for the claimed Family Home;
xvi. Duly notarized Promissory Note for "Claims Against the Estate" arising from Contract of Loan;
xvii. Accounting of the proceeds of loan contracted within three (3) years prior to death of the decedent;
xviii. Proof of the claimed "Property Previously Taxed";
xix. Proof of the claimed "Transfer for Public Use".
xx. Copy of Tax Debit Memo used as payment, if applicable.
For the Estate Tax Form, please see my page on Tax Forms. And for tax saving tips and computations on the estate tax, watch out for succeeding blogs on taxes.
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