IN NOVEMBER 1789, Benjamin Franklin wrote to French scientist Jean-Baptiste Le Roy because he was concerned that he hadn’t heard from the latter since the start of the French Revolution.
One of the things he mentioned in his letter was an update about the major event in the United States of America (USA) which was the ratification of the Constitution a year before and the start of a new government under it. What did he say?
“Our new Constitution is now established, everything seems to promise it will be durable; but, in this world, nothing is certain except death and taxes.”
When a person dies, his or her family is still troubled with taxes. It is called Estate Tax.
This issue is of public interest and a significant topic especially now among the candidates running for president.
It is beneficial to know what an Estate Tax is and how we can prepare for this.
Estate Tax is a tax on the right of the deceased person to transmit his or her estate to his or her lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition. It is not a tax on property. It is a tax imposed on the privilege of transmitting property upon the death of the owner.
The Estate Tax is based on the laws in force at the time of death notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary.
It shall be filed by the executor, administrator, or any of the legal heir/s of the decedent, whether resident or non-resident of the Philippines in all cases of transfers subject to estate tax; regardless of the gross value of the estate, where the said estate consists of registered or registrable property such as real property, motor vehicle, shares of stock or other similar property for which a clearance for the Bureau of Internal Revenue (BIR) is required as a condition precedent for the transfer of ownership thereof in the name of the transferee; or if there is no executor or administrator appointed, qualified, and acting within the Philippines, then any person in actual or constructive possession of any property of the decedent.
To compute the Estate Tax, the Tax Code under Section 86 provides that the BIR should determine first the benefactor’s net estate and subtract the allowable deductions.
The Estate Tax Return shall be filed within one year from the decedent’s death. In meritorious cases, the Commissioner shall have the authority to grant a reasonable extension not exceeding 30 days for filing the return.
The filing and payment may be extended.
When the Commissioner of BIR finds that the payment on the due date of the estate tax or of any part thereof would impose an 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 Limitations for assessment as provided in Section 203 of the Tax Code shall be suspended for the period of any such extension.
Taxpayers want to pay the estate tax in full but do not have enough money. Fortunately, the BIR allows installment payments for up to two years from the statutory date of payment. In this way, you will be exempted from payment of penalties and interest.
It is elementary that “the existence of government is a necessity; that government cannot continue without means to pay its expenses; and that for these means it has a right to compel its citizens and property within its limits to contribute.”
We should be more responsible since the concept of death and taxes are part of the certainties in our life. Our government needs our support by paying our taxes because it is its lifeblood./PN
