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MANILA – “The only things certain in life are death and taxes,” Benjamin Franklin once said. And as far as the Bureau of Internal Revenue is concerned, taxes should follow death.
According to Commissioner Kim Jacinto-Henares, the bureau will ramp up collection of estate taxes by imposing surcharges and interest on unpaid obligations to the state six months from death.
She said this initiative is aimed at compelling estate administrators and executors to pay on time.
"Annually, we are only collecting slightly over a billion pesos or even less from estate tax, notwithstanding the substantial number of people dying every year," Jacinto-Henares said.
She said the tax take on estates amounts to only a percent of the bureau’s P1.066 trillion revenue goal for the year.
Last year, the BIR started going after banks that allowed heirs to withdraw from a decedent's account before estate taxes are paid.
With its latest move, the bureau will expand its coverage by going after registrable properties and other interests of a decedent, such as real property, motor vehicles and shares of stock.
“We should be collecting more than what we are collecting right now. Estate tax for the year should be significantly higher,” Jacinto-Henares said.
"Under the Tax Code, estate tax accrues notwithstanding the non-registration or transfer of title to the heirs or other recipients. Meaning, the liability to pay the estate tax is entirely separate and distinct from the transfer of title or registration of property," she said.
"However, a lot of heirs and beneficiaries receive and take possession of their respective shares of the inheritance without transferring the titles to their names through CAR, believing that in so doing, they suspend or even avoid the payment of the estate tax," she said, referring to the Certificate Authorizing Registration.
Under Revenue Regulation 2-2003, the estate tax return shall be filed by the executor or administrator of the estate within six months from the decedent's death. In meritorious cases and upon application, however, the BIR chief may extend the deadline by up to 30 days.
"Estate tax is like a metered taxi. It accrues from the moment of death, and if it remains unpaid after six months, then surcharges depending on the culpability as well as interest of up to 20 percent will likewise accrue,” Jacinto-Henares said.
"Thus, the estate's executor or administrator should pay within the period. Otherwise, nothing might be left in the estate for the heirs," she said.
Surcharges range from 25 to 50 percent
The BIR chief said executors or administrators will face criminal prosecution for neglecting their duty to pay the estate tax prior to distribution.
She said the bureau is firming up its linkage with the National Statistics Office to determine death, in turn serving as go signal for BIR to assess the extent of estate left by the deceased.
"We have to device different means to keep us posted since wealthy people are now avoiding placing notices in the newspaper’s obituary sections," Jacinto-Henares said.
"Thereafter, we will wait for the administrator or executor to come to us within six months to file the corresponding estate tax returns. If they fail, then we will go after them,” she added.
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