BIR Ruling [DA-265-05]

June 17, 2005 BIR RULING [DA-265-05] 90 (C) & 91 (B) Atty. Raul Tito A. Estrella 21/F Wynsum Corporate Plaza F. Ortigas Jr. Road, Ortigas Center Pasig City S i r : This refers to your letters dated May 12 and 23, 2005 stating that you are one of the heirs of Teresita Almero Estrella and Raul Romero Estrella who passed away on May 2, 2004 and November 19, 2004, respectively; that on October 14, 2004, on behalf of your co-heirs, you requested for an additional period of thirty (30) days from November 2, 2004, or until December 2, 2004, within which to file the estate tax return of Teresita A. Estrella and an extension of two (2) years within which to pay the corresponding estate tax; that as of to date, you have not received any response of your request which was filed with the BIR-Regional Office; that while you were in the process of finalizing the estate tax return of your mother Teresita A. Estrella, your father, Raul R. Estrella, died on November 19, 2004; that inasmuch as the heirs would like to submit the estate tax return of your mother on or before December 2, 2004, considering however the time of death of your father, you requested on December 1, 2004 to be allowed to submit and file instead a consolidated estate tax return for both decedents on or before May 19, 2005 counted from the death of your father; that as of even date, you also have not received any response on said request which was filed also with the BIR-Regional Office; that notwithstanding the foregoing, you have finally prepared an inventory of the assets of your parents but only after a considerable time of ascertaining the properties and securing the necessary documents; that while you would like to immediately pay the appropriate estate tax due, however, it would signify an undue hardship upon the estate as well as the heirs due to serious financial constraints; that in view thereof, you are formally requesting that you be granted an extension of two (2) years within which to pay the estate tax due on the transmission of the above decedents' properties in favor of the heirs and that the corresponding penalties and surcharge imposed on late payment of taxes be waived. In reply thereto, 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. 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 taxes due on both estates of Spouses Raul and Teresita Estrella may be paid up to two (2) years counted from May 2, 2004 and November 19, 2004, respectively. However, you are hereby directed to immediately file the separate estate tax returns for the estate of each spouse in order to stop the running of the interest for late filing thereof. TSEHcA Moreover, in view of the above favorable action to 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 taxes due on the transmission of the estates of Spouses Raul and Teresita Estrella. However, it shall be understood that both spouses' estates shall be liable for the corresponding interest that have accrued thereon up to the time of payment of the aforesaid estate taxes 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