Mrs. Leticia T. de los Santos

July 6, 2007 BIR RULING [DA-366-07] 90 (C) & 91 (B) Mrs. Leticia T. de los Santos 555 R. M. Garcia Street, Bankers Village II Caloocan City M a d a m : This refers to your letter dated June 8, 2007 stating that your husband, Eloyd Z. de los Santos, died on October 7, 2006; that since 2001, your health has been in a deteriorating state and this was aggravated by your husband's death, resulting in your confinement for several times in the hospital due to coronary artery disease, enlargement of the heart and other complications; that since your physical condition and depression prevented you from attending personally to the settlement of your husband's estate, you were forced to delegate most of the work to your assistant, including the inventory of the conjugal assets, the filing of the notice of death and the preparation of the estate tax return; that you have learned very recently that you should have filed the return and paid the estate tax within six (6) months from the death of your husband, something which your assistant should have told you but unfortunately neglected to; that immediately upon learning that the deadline had lapsed, you made arrangements to find out how much you should pay; that you were informed that you have to pay in addition to the basic estate tax, penalty, surcharge and interest; that the foregoing prompted you to request from the Revenue District Office of Caloocan for an extension of time to file the estate tax return and pay the corresponding estate tax which request was filed on May 11, 2007; that said request was forwarded to the Regional Office in Valenzuela City; that your request for an extension of time to file the estate return was denied on the ground that the thirty-day extension granted by law had already lapsed; that on the other hand, your request for an extension of time to pay the estate tax was not granted pending submission of proof that payment of the tax upon filing would impose undue hardship to the estate or the heirs; that you already made arrangements to pay the tax, however, you already have stretched your financial resources to the limit that you no longer have the capacity to pay for the penalty, surcharge and interest. Based on the foregoing, you are requesting that you be allowed to file the estate tax return and pay the corresponding estate tax on July 31, 2007 without payment of the penalty, surcharge and interest. 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. 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 Eloyd Z. de los Santos may be paid up to July 31, 2007. On the other hand, this Office reiterates the denial made by the Regional Office on your request for an extension of time to file the estate tax return for the estate of your late husband. 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 Eloyd Z. de los Santos died on October 7, 2006, said period had already lapsed. Such being the case, you are hereby directed to immediately file the estate tax return for the estate of Eloyd Z. de los Santos in order to stop the running of the interest for late filing thereof. AcTHCE Moreover, in view of the above favorable action on your request for an extension of time 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 Eloyd Z. de los Santos. 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