Tax Issues and Practical Solutions (T.I.P.S.) for July 2021
1. What is the extended period for availing yourself of the Estate Tax Amnesty?
Taxpayers now have until June 14, 2023, to avail themselves of the Estate Tax Amnesty. Republic Act No. 11569, titled “An Act Extending the Estate Tax Amnesty and for Other Purposes, Amending Section 6 of Republic Act No. 11213, otherwise known as the ‘Tax Amnesty Act’” was signed into law by President Rodrigo Duterte on June 30, 2021.
Section 6 of the Tax Amnesty Act now states that “[t]he executor or administrator of the estate, or if there is no executor or administrator appointed, the legal heirs, transferees, or beneficiaries, who wish to avail of the Estate Tax Amnesty shall, within June 15, 2021 or until June 14, 2023, file with the Revenue District Office of the Bureau of Internal Revenue, which has jurisdiction over the last residence of the decedent, a sworn Estate Tax Amnesty Return, in such forms as may be prescribed in the Implementing Rules and Regulations.” Pursuant to Section 5 of the Tax Amnesty Act, those qualified to avail of tax amnesty are the “estate of decedents who died on or before December 31, 2017, with or without assessments duly issued therefor, whose estate taxes have remained unpaid or have accrued as of December 31, 2017,” subject to exceptions provided in the Tax Amnesty Act.
2. May the Bureau of Internal Revenue issue a Final Letter of Demand and Final Assessment prior to the expiration of the 15-day period given to the taxpayer to respond to a Preliminary Assessment Notice?
No. In CIR v. Lanao Del Norte Electric Coop. (CTA En Banc Case No. 2236 (CTA Case No. 8769), June 9, 2021), the Court of Tax Appeals En Banc (CTA En Banc) ruled that it is only upon the failure of the taxpayer to respond to the Preliminary Assessment Notice (PAN) within the 15-day period that the Commissioner of Internal Revenue (CIR), or his duly authorized representative, can validly issue the Final Letter of Demand and Final Assessment (FLD/FAN). Thus, the CIR is required to wait for the expiration of the 15-day period, reckoned from the date of receipt of the PAN, before it can issue the FLD/FAN. The date of receipt of the FLD/FAN is not significant even if the same falls after the expiration of the 15-day period. Instead, it is the date when the FLD/FAN was issued that is of importance because it shows when the 15-day period given to the taxpayer to respond to the PAN is observed.