Shobe_CEO » BIR Ruling No. 066-98 (May 21, 1998)

BIR Ruling No. 066-98 (May 21, 1998)

June 5th, 2009

000-00-066-98

Mr. Emelino T. Maestro

2120 Sma. Trinidad

Balik-balik

Sampaloc, Manila

S i r :

This refers to your letter dated April 2, 1998 requesting in behalf of the heirs of the late Ponciano L. Almeda for: (a) an extension of thirty (30) days within which to file the estate tax returns; (2) an extension of two (2) years within which to pay the corresponding estate tax due on the transmission of the said estate to the heirs pursuant to then Section 84(b) of the Tax Code of 1977 [now Section 91(B) of the Tax Code of 1997]; and (c) the waiver and non-payment of the 25% surcharge should the first two requests be allowed.

It is represented that the late Ponciano L. Almeda died on October 16, 1997; that under then Section 83(b) of the Tax Code of 1977 [now Section 90(B) of the Tax Code of 1997], the estate tax returns of the estate of the late Ponciano L. Almeda was due for filing last April 15, 1998; that the tax due on the estate is P222,504,432.00; that the sudden demise of the decedent has left the heirs in disarray, particularly with regard to the conduct of the business; that the decedent had a centralized style of management and nobody was privy to his business affairs; that the situation was further exacerbated by the fiery destruction of Almeda Building I, resulting in the loss of all records; that the income statement bears the fact that the business operates at a net loss; that the present business environment does not augur well for property rentals, which is the main line of their business; and that the heirs are constrained to make this request for they cannot possibly meet the deadline for the reasons that they cannot afford to separately and individually contribute to the settlement of the estate tax. LLphil

In reply, please be informed as follows:

(a) For the purpose of determining the estate tax provided for in then Section 77 of the Tax Code of 1977 [now Section 84 of the Tax Code of 1997], the estate tax return shall be filed within six (6) months from the decedent’s death. (Section 83(b) of the Tax Code of 1977)[now Section 90(B) of the Tax Code of 1997] Moreover, the Commissioner of Internal Revenue shall have the authority to grant, in meritorious cases, a reasonable extension not exceeding thirty days for filing the return. (Section 83(c) of the Tax Code of 1977)[now Section 90(C) of the Tax Code of 1997] Accordingly, in view of the aforesaid justifiable reasons, your request for an extension of thirty (30) days from April 15, 1998 to May 15, 1998 within which to file the estate tax return is hereby granted.

(b) The estate tax imposed by then Section 77 of the Tax Code of 1977 [now Section 84 of the Tax Code of 1997] shall be paid at the time the return is filed by the executor, administrator, or the heirs. (Sec. 84(a) of the Tax Code of 1977)[now Sec. 91(A) of the Tax Code of 1997] Moreover, 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 extra-judicially. 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 then Section 203 of the Tax Code of 1977 [also Section 203 of the Tax Code of 1997] shall be suspended for the period of any such extension. (Section 84(b) of the Tax Code of 1977)[now Section 91(B) of the Tax Code of 1997]

Such being the case, and since the payment of estate tax or any part thereof in the amount of P222,505,432.00 on the due date would impose undue hardship upon the estate or any of the heirs, your request for an extension of the time for the payment of the estate tax or any part thereof due on the transmission of the estates of the late Ponciano L. Almeda to his heirs is hereby granted. dctai

(c) Considering that the aforementioned first two requests have been granted, your request for a waiver or non-payment of the 25% surcharge on the estate tax due on the transmission of the late Ponciano L. Almeda’s estate is likewise granted. However, it shall be understood that the said estate shall be liable to the corresponding interest that have accrued thereon up to the time of filing of the return and payment of the estate tax due on the transmission of the said estate to the heirs.

Very truly yours,

(SGD.) LIWAYWAY VINZONS-CHATO

Commissioner of Internal Revenue

Entry Filed under: Taxation