BIR Ruling [DA-573-98]

December 23, 1998 BIR RULING [DA-573-98] Arcadio R. Garcia and Associates Certified Public Accountants 3-1 Edeficio Enrequita Corner D. Tuason & Amoranto Sts. Sta. Mesa Heights, Quezon City Attention: Mr . Arcadio R . Garcia Partner Gentlemen : This refers to your letter dated November 16, 1998 requesting on behalf of your client, the late Antonio Tuazon, for an extension of time within which to file the estate tax return pursuant to Section 90(C) of the Tax Code of 1997 and at the same time for waiver of the surcharge, penalties and the interest due thereon. cdta It is represented that the late Antonio Tuazon died on June 26, 1998; and that you are constrained to make this request for the following reasons: "1. The decedent, who up to the time of his death was a resident of No. 33 Silencio St., Quezon City, left a last will and testament which has yet to be probated; and that the first court hearing on the matter is set on November 26, 1998, which is barely a month before the deadline for the filing of the estate tax return on December 26, 1998; "2. The decedent designated the executor of his estate in his last will and testament, hence, as of this date, the court has not formally appointed an executor who can initiate and supervise the gathering of facts and data that are necessary for the preparation and filing of the decedent's estate tax return; that the possibility of the appointment of the designated executor being objected to by anyone of the twenty two (22) instituted heirs who may also be interested in the position is not all remote; and that should such situation arise, the formal appointment of an executor would be further delayed; "3. Initial information gathered from the bookkeeper/accountant of the decedent showed that about eighty five (85%) percent of his estate consisted of real estate property located mostly in Marikina City, the exact locations of which are yet to be ascertained, as many of them are located along river banks; "4. The ownership of some of the aforementioned lots in Marikina City are being contested by squatters occupying the area who recently filed a case in court to bolster their claim; and "5. Considering the current cash position of the estate and the difficulty of disposing of real property nowadays, it is expected that the estate tax due on the decedent's estate could not be settled within the near foreseeable future." 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 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 years in case the estate is settled through the courts, or two years in case the estate is settled extrajudicially pursuant to Sec. 84 of the same Code. Such being the case and considering that the Petition for Probate of the Last Will and Testament of the estate of the late Antonio Tuazon is still pending with the Probate Court, your request for extension of thirty (30) days from December 26, 1998 to January 28, 1999 within which to file the estate tax return of the late Antonio Tuazon is hereby granted. On the other hand, since the payment of the estate tax or any part thereof on the due date would impose undue hardship upon the estate or any of the heirs, your request for an extension of five years within which to pay the estate tax or any part thereof due on the transmission of the estate of the late Antonio Tuazon, is hereby granted. In view of the foregoing, this Office has decided to forego the imposition of the surcharge and penalties on the estate tax due on the transmission of the late Antonio Tuazon's estate to the heirs. However, it shall be understood that the estate shall be liable to the corresponding interest that have accrued thereon up to the time of filing of the estate tax return and payment of the estate tax. (BIR Ruling No. 25-97 dated March 25, 1997) Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)