BIR Ruling No. 247-15

July 15, 2015 BIR RULING NO. 247-15 Secs. 90 (C); 91 (B) & 249 NIRC; Revenue Regulations No. 02-2003; BIR Ruling No. 059-2015; BIR Ruling No. 374-2012 Mr. Aurelio R. Montinola III 29 Pili Ave., South Forbes Park Makati City Sir : This refers to your letter dated April 28, 2015 requesting, as Attorney-in-Fact of the legal heirs of the late Rolando P. Gosiengfiao, for an extension of time to file the latter's estate tax return and pay the estate tax due pursuant to Sections 90 (C) and 91 (B), respectively of the 1997 Tax Code, as amended. You likewise, request that the estate tax due be paid by installment and to sell the decedents real estate and personal properties upon payment of the corresponding estate tax due thereon in accordance with Section 9 (F) of Revenue Regulations (RR) No. 02-2003. It is represented that Rolando P. Gosiengfiao suddenly passed away on January 22, 2015 due to a heart attack. The decedent left behind his adult children, namely: Fay, who resides in New York City, USA and Julian, who has recently accepted a job in Toronto, Canada. The afore-named heirs are still in the process of sorting out and collating all the relevant documents pertaining to the properties left by the decedent, which principally consists of real properties in different parts of the Philippines. The heirs anticipate that they will not be able to finalize and file the estate tax return by July 22, 2015, since they are and have been residing outside the Philippines. They also foresee that they will have difficulties in raising enough funds to pay for the estate tax due on the decedent's estate. In reply thereto, please be informed that Sections 90 (C) and 91 (B) of the Tax Code of 1997 provide, viz. : "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 (30) days for filing the return." "SEC. 91. Payment of tax. xxx xxx xxx (B) Extension of Time. 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." AcICHD xxx xxx xxx "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." Based on the foregoing representations, this Office finds justifiable reason to grant the request for an extension to file the estate tax return for a period of thirty (30) days counted from July 22, 2015, which is the last day for filing of the estate tax return of the late Rolando P. Gosiengfiao. Thus, the filing of the said estate tax return of the decedent is hereby extended up to August 21, 2015. (BIR Ruling No. 059-2015 dated February 27, 2015) Furthermore, since the heirs are in the process of collating all documents and information necessary for the preparation of the said return and the task is made more difficult by the number of properties involved and the immediate family members are based abroad, the request for extension of two (2) years (where the estate will be settled extra-judicially) within which to pay the estate tax is hereby granted. Thus, the heirs shall pay the estate tax within 2 years reckoned from actual filing of the return or on August 21, 2015, whichever comes first, provided that the executor, or administrator, or beneficiary, shall 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. As regards your request to pay in installment the taxes due on the estate, Section 9 (F) of RR No. 02-2003 provides that: "(F) Payment of the estate tax by installment. In case the available cash of the estate is not sufficient to pay its total estate tax liability, the estate may be allowed to pay the tax by installment and a clearance shall be released only with respect to the property the corresponding/computed tax on which has been paid. There shall, therefore, be as many clearances (Certificates Authorizing Registration) as there are as many properties released because they have been paid for by the installment payments of the estate tax. The computation of the estate tax, however, shall always be on the cumulative amount of the net taxable estate. Any amount paid after the statutory due date of the tax shall be imposed the corresponding applicable penalty thereto. However, if the payment of the tax after the due date is approved by the Commissioner or his duly authorized representative, the imposable penalty thereon shall only be the interest. Nothing in this paragraph, however, prevents the Commissioner from executing enforcement action against the estate after the due date of the estate tax provided that all the applicable laws and required procedures are followed/observed." Accordingly, your request that you be allowed to pay the estate tax in installment is also hereby granted. In this connection, you are therefore directed to file, together with the estate tax return, a running inventory of the properties of the estate every time you will make an installment payment. Finally, your request for authorization to sell portions of the estate is similarly granted provided that the estate tax due thereon has already been paid and the corresponding Certificate Authorizing Registration (CAR) has been issued by the concerned Revenue District Office (RDO). In view thereof, the RDO is hereby authorized to issue a partial tax clearance (TCL) or CAR on the portion of the estate, the taxes due on which have already been paid, so that the same may be sold and the proceeds thereof be used for the payment of the estate tax liability of the Estate of the late Rolando P. Gosiengfiao. It shall be understood, however, that the estate shall be liable for the corresponding interest that shall have accrued from August 21, 2015 up to the time of payment of the estate tax due on the transmission by the said estate of its properties in favor of the heirs pursuant to Section 249 of the Tax Code of 1997. (BIR Ruling No. 374-12 dated June 6, 2012) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. TAIaHE Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue