BIR Ruling [UN-324-95]

September 6, 1995 BIR RULING [UN-324-95] Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles Fourth Floor, King's Court 2129 Chino Roces Avenue Makati, Metro Manila Attention: Atty . Carlos G . Baniqued and Priscilla B . Valer Gentlemen : This refers to your letter dated June 9, 1995 requesting in behalf of your client, the estate of the late Caridad J. Cruz for an extension of five (5) years from June 20, 1995 until June 20, 2000 within which to file the return and pay the estate tax due on the estate pursuant to Section 84(b) of the Tax Code, as amended. It is represented that Mrs. Caridad J. Cruz, a Filipino citizen domiciled in Bacolod City, died on November 22, 1994; that in a ruling dated March 18, 1995, this Office granted the estate an extension of 30 days or up to June 20, 1995 within which to file the estate tax return and pay the corresponding estate tax due; that as of June 9, 1995, the Administratrix of the estate cannot file the estate tax return and pay the tax because the records and documents relating to the properties comprising her estate are in disarray and several are missing; that the estate consists mainly of agricultural lands in possession of tenants and covered by the Comprehensive Agrarian Reform Law; that other properties are in possession of squatters or third persons who dispute the estate's ownership; that some properties are mortgaged to the banks and the net value of the property includible in the taxable estate is not yet fixed by the mortgagee banks; that as a consequence, the administratrix of the estate is experiencing difficulty in identifying the assets and liabilities of the estate; and that the letter of administration has not been granted to the administratrix. In reply, please be informed that Section 84(b) of the Tax Code, reads: "(b) Extension of time . When the Commissioner of Internal Revenue 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 years, in case the estate is settled through the courts or two 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 limitation for assessment as provided in Section 203 of this Code shall be suspended for the period of any such extension. xxx xxx xxx" Accordingly, in view of the aforestated justifiable reasons, your request for an extension of five (5) years from June 20, 1995 or until June 20, 2000 within which to pay the estate tax due thereon is hereby granted. However, your request for extension of five years within which to file the estate tax return is hereby denied pursuant to Section 83(c) which grants the Commissioner the power to extend the filing of estate tax return in meritorious cases only for a period of thirty (30) days. It shall be understood that the estate shall be liable to the corresponding interest that have accrued thereon up to the time of payment of the estate tax. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue