The Estate Tax Amnesty and What You Need to Know About It

Have you ever thought about what happens with someone's house, properties, money, and assets after they pass away? Does it get transferred easily to family members and loved ones? Maybe, but along with the inherited properties are taxes that need to be settled. That becomes a big problem when an irresponsible person owns multiple properties and assets but neglects the law concerning taxes.

To settle estate tax obligations, heirs must know the current status of the properties. This is crucial because they can't put the properties or assets under their names if it has unpaid internal revenue taxes. So, what happens when noncompliance continues to take place? The Bureau of Internal Revenue (BIR) makes sure that the outstanding estate tax liabilities are carried on to the latter. Hence, be kind and responsible enough to fulfill your duties.

Of course, there were unforeseen circumstances that led some of our fellow citizens to miss chances in paying estate taxes. That includes the COVID-19 pandemic and other natural calamities. Hence, the government came up with the Tax Amnesty Act, which grants estate tax amnesty for two years that expired last June 14, 2021. No need to worry as it was extended until June 14, 2023. You still have a chance to avail tax amnesty on delinquencies and settle them for good. If you're unaware of this law, then let us walk you through the things you need to know.

What is an Estate?

To help you understand, let's start with the term that is mentioned all throughout this article. By definition, the estate sums up the net worth of an individual, including all land and real estate properties, personal belongings, money, and other assets that he/she owns. Also, it becomes most relevant upon an individual's death. It is often associated with Wills and Testaments but they are actually quite different.

What is the Estate Tax Amnesty Program?

When President Rodrigo Roa Duterte signed the Republic Act (RA) 11213 or the "Tax Amnesty Act of 2019" an act enhancing revenue administration and collection which granted estate tax amnesty for two years for all the unpaid internal revenue taxes imposed by the National Government for Taxable Year 2017.

Also granting amnesty to taxes imposed in the prior years with respect to estate tax, other internal revenue taxes, and also the tax on delinquencies. It expired last June 14, 2021, but is subject to extension by the law.

Heirs are allowed to settle the unpaid estate taxes at the rate of 6% without penalty. But it only applies to estates of decedents who passed away on or before December 31, 2017. Also, the estate tax amnesty covers undeclared estates. These are the properties that weren't included in the previously filed estate tax returns.

Note that the amnesty tax rate of 6 percent is set on the net estate of the decedent. In determining the net estate, there are allowable deductions against the value of the gross estate of the decedent at the time of death. The implementing rules and regulations (IRR) of the Estate Tax Amnesty under the Revenue Regulation 6-2019 was issued by the BIR.

The Estate Tax Amnesty Features

Estates of the decedents who died on or before December 31, 2017, and whose assessments remained unpaid or accrued as of December 31, 2017.

The Exceptions of the Program

Know that there are also exceptions for the said program. It excludes those with delinquent estate tax liabilities that have become final, executory, and those covered by the Tax Amnesty on Delinquencies. It also excludes the properties involved in pending cases under appropriate courts such as the Presidential Commission on Good Government (PCGG) cases and Anti-Graft and Corrupt Practices Act cases. It also excluded properties that have pending plunder cases, Anti-Money Laundering Act cases, Tax Evasion cases, and other criminal offenses.

The Rate of Estate Tax

There's a 6% flat rate on each decedent's total net estate taxes at the time of death, without penalties at all the stages of the transfer of property. It also provides Php 5,000 minimum estate amnesty tax for each decedent.

It also considers the valuation of the gross estate for real properties, stock shares, personal properties, and proprietary shares.

Other Estate Tax Amnesty Features You Should Know

• The deductions allowed by the estate tax law are applicable at the time of death of the decedent.
• The amnesty shall only be filed by the executor or administrator, legal heirs, transferees, or the beneficiaries of the decedent. It accepts filings within two years from June 15, 2019, initially until June 14, 2021. But there was an approved extension until June 14, 2023.

Indeed, the presence of the Tax Amnesty Act of 2019 was crucial especially to those whose taxes have folded over the years. The goal is to help the heirs to update the estate tax of the properties and to provide help if it has reached quite a large amount after the BIR's assessments.

The Estate Tax Amnesty is Extended Until June 14, 2023

What great news for those who wish to settle their unpaid estate taxes!

Since the estate tax amnesty program provides an opportunity for those who have unsettled tax liability, the extension of the deadline to avail of the estate tax amnesty is a relief for those who missed their chance. They can finally transfer the titles under their names and those inherited properties will now be of use.

We hope that the extension that was approved due to the drastic changes brought by the Covid-19 pandemic will help you finally settle your tax obligations. Do not discourage yourself to fulfill which have hampered people from settling their tax obligations.

Lumina Homes: Make That Tax Worth It with an Investment You Can Trust

Choosing the best investment is probably one of the crucial decisions you'll make to grow your money. That's why Lumina Homes is here to help you. When you buy a residential house and lot from our master-planned projects, you're investing in a real estate property that is built with you in mind. Your goal to invest in your future is also our priority hence, we offer affordable yet quality properties for you and your family. By the time they inherit your dream home, you are sure that the estate tax will be worth it.

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