Grant of Request for Waiver of Surcharge and Compromise Penalties

July 9, 1999 BIR RULING NO. 097-99 248 (A) (1); 249; 90-000-00-097-99 Heirs of Soledad Cario y dela Paz 404 Malaya St., Mandaluyong City Gentlemen : This refers to your letter requesting for an extension of time to file the estate tax return and pay the tax due thereon and a waiver of the surcharges and compromise penalties on the late payment of the estate tax of the late Soledad Cario y dela Paz. cdll It is represented that Soledad Cario y dela Paz died intestate on October 29, 1998 at Mandaluyong City; that the decedent was survived by the following heirs, namely, Ildefonso M. Cario, Jr. April Sharon P. Cario and Ildefonso Giovanni P. Cario III; that the deceased was a victim of a felony and the sudden and unexpected turn of events has caught the heirs totally unprepared; that the said heirs intended to settle the estate tax of the decedent but unforeseen delays were incurred in the course of securing the proper documentation over the properties comprising the estate; that the heirs exerted all efforts to obtain the documents, particularly in regard to the real properties comprising the estate from government agencies, like the Registry of Deeds of Silang/Trece Martires City, Cavite City and San Pablo City, but which were not readily available. In reply, Section 90(C) of the Tax Code of 1997 provides: "SEC. 90. Estate Tax Returns. xxx xxx xxx "(C) Extension of time . the Commissioner shall have authority to grant, in meritorious cases , a reasonable extension not exceeding thirty days for filing the return. xxx xxx xxx" Moreover, pursuant to Section 91(B) of the Tax Code of 1997, when the Commissioner 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, he may extend the time for 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. In such case, the amount in respect of which the extension is granted shall be paid on or before the date of the expiration of the period of the extension, and the running of the Statute of Limitations for assessment as provided in Section 203 of this Code shall be suspended for the period of any such extension. If an extension is granted, the Commissioner may require the executor, or administrator, or beneficiary, as the case may be, to furnish a bond in such amount, not exceeding double the amount of the tax and with such sureties as the Commissioner deems necessary, conditioned upon the payment of the said tax in accordance with the terms of the extension. Accordingly, inasmuch as your request for extension of time to file the estate tax return has been filed beyond the time prescribed for the filing, i.e. within six (6) months from the decedent's death, the same is hereby denied. However, your request for extension to pay the estate tax is hereby granted which shall not exceed two (2) years to be reckoned from the date prescribed for payment, subject to the condition that the executor, administrator, or beneficiary shall furnish a bond not to exceed twice the amount of the estate tax due. In view thereof, inasmuch as your failure to pay the estate tax within the prescribed period is due to circumstances beyond your control, your request for waiver of the surcharge and compromise penalties is likewise granted but not the corresponding interest due thereon as provided for under Section 249 of the Tax Code of 1997. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue