BIR Ruling [DA-082-06]

March 6, 2006 BIR RULING [DA-082-06] 90 (C) & 91 (B) Mr . Saklolo A . Leao 114 Herrera St., Legaspi Village Makati City S i r : This refers to your letter dated March 30, 2004 stating that Graham William Johnson, Jr., a nonresident alien, died in Thailand on October 2, 2003; that he has no known heirs but has a property located in the Philippines; that you needed time to have the decedent's property assessed in order to obtain a statement of the gross value of his estate; that a petition for probate and allowance of the decedent's will and settlement of his estate has been filed in the Regional Trial Court (RTC) of Makati City, Branch 132, docketed as Spec. Proc. No. M-5797; that you were designated Executor in the decedent's will but has not yet been appointed by the court, hence, you are still unauthorized to take possession and charge of the estate and prevented to make any payments therefrom; that due to the delay in preparing the statement of the gross value of the estate of the decedent and of lack of authority to make payments, you are requesting for a thirty days extension within which to file the estate tax return and two (2) years within which to pay the estate tax due thereon reckoned from March 30, 2004; and that, likewise, in a letter submitted in January 2006, you are requesting that the penalties, surcharge and interest imposed for the delay in the payment of estate tax be waived. In reply, please be informed that under Section 90(B) and (C) of the Tax Code of 1997, estate tax return is required to be filed within six (6) months from the decedent's death, and in meritorious cases, a reasonable extension not exceeding thirty (30) days for filing the return may be granted by the Commissioner of Internal Revenue. The payment of the estate tax or any part thereof shall be made upon the filing of the return or on such date as fixed if an extension is granted by the Commissioner, but in no case 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 pursuant to Section 91(B) of the Tax Code of 1997. aEDCAH Based on the aforestated justifiable reason, your request for an extension of time within which to pay the estate tax is hereby granted pursuant to Section 91 (B) of the Tax Code of 1997. Accordingly, the estate tax due on the estate of Graham William Johnson, Jr. may be paid up to two (2) years counted from March 30, 2004 or until March 30, 2006. On the other hand, under Section 90(C) of the Tax Code, only thirty (30) days is granted as an extension of the period within which to file the estate tax return reckoned from the lapse of the six-month period within which the said return is required to be filed. Thus, considering that Graham William Johnson, Jr. died on October 2, 2003, said period had already lapsed. Such being the case, you are hereby directed to immediately file the estate tax return for the estate of Graham William Johnson, Jr. in order to stop the running of the interest for late filing thereof. Moreover, in view of the above favorable action on your request for an extension of two (2) years within which to pay the estate tax, this Office has decided to forego the imposition of the surcharge and penalties on the estate tax due on the transmission of the estate of Graham William Johnson, Jr. However, it shall be understood that the estate shall be liable for the corresponding interest that has accrued thereon up to the time of payment of the aforesaid estate tax pursuant to Section 249 of the Tax Code of 1997. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service