House passes bill granting amnesty in paying estate taxes

March 24, 2017

The House of Representatives approved before adjourning last week a bill to grant amnesty in the payment of estate taxes on third and final reading.

House Bill No. 4814, or “An Act Granting Amnesty in the Payment of Estate Tax,” is expected to generate additional revenues for the government and encourage taxpayers to settle their outstanding estate taxes, thereby freeing up properties of unsettled estates.

The bill, which was endorsed for plenary approval by the committee on ways and means chaired by Rep. Dakila Carlo Cua (Lone District, Quirino), proposes a tax amnesty program covering estate taxes for the year 2016 and the previous years that have remained unpaid as of December 31, 2016.

The bill has been transmitted to the Senate for its concurrence.

The bill grants the following immunities and privileges to taxpayers who avail of the tax amnesty: (1) immunity from the payment of estate taxes, civil, criminal, or administrative penalties under the National Internal Revenue Code of 1997, as amended, arising from the failure to pay any and all estate taxes for taxable year 2016 and prior years; (2) the taxpayer’s Estate Tax Amnesty Returns for 2016 and prior years shall not be admissible as evidence in all proceedings that pertain to taxable year 2016 and prior years related to estate settlement cases before any judicial, quasi-judicial, or administrative bodies in which the defendant or respondent, and except for the purpose of ascertaining the gross estate for 2016 and prior years, the same shall not be examined, inquired or looked into by any person or government office; and (3) the books of accounts and other records of the taxpayer for the years covered by the estate tax amnesty availed of shall not be examined.

To avail of the benefits of the tax amnesty, the covered taxpayer shall file with the Bureau of Internal Revenue (BIR) an Estate Tax Amnesty Return and pay the six percent of the decedent’s or deceased person’s net estate within two years from the issuance of the Implementing Rules and Regulations (IRR) of the proposed legislation. The IRR shall be promulgated within 30 days after the law becomes effective.

However, the proposed tax amnesty does not cover taxpayers with pending cases : (1) those with pending cases falling under the jurisdiction of the Presidential Commission on Good Government (PCGG); (2) those cases involving unexplained wealth or unlawfully acquired wealth or under the Anti-Graft and Corrupt Practices Act; (3) those cases filed in court involving violation of the Anti-Money Laundering Law; (4) those criminal cases for tax evasion and other criminal offenses under Chapter II of Title X of the National Internal Revenue Code of 1997, as amended, and the felonies of frauds, illegal exactions and transactions, and malversation of public funds and property under Chapters III and IV of Title VII of the Revised Penal Code; and (5) tax cases subject to final and executor judgment by the courts.

The bill imposes the following penalties: (1) a person who, having filed a statement or Estate Tax Amnesty Return, wilfully understates the gross estate to the extent of 30 percent or more shall be subject to the penalties of perjury under the Revised Penal Code; (2) the willful failure to declare any property in the statement and/or in the Estate Tax Amnesty Return shall be deemed prima facie evidence of fraud and shall constitute a ground upon which attachment of such property may be issued in favor of the BIR to answer for the satisfaction of any judgment that may be acquired against the declarant; (3) any person who unlawfully discloses the existence of an Estate Tax Amnesty Return, or its contents, shall be penalized by a fine of not less than P150,000 and imprisonment of not less than six years but not more than 10 years.

It further provides that if the offender is an officer or employee of the BIR or any government entity, he shall suffer the additional penalties of perpetual disqualification from holding public office, from exercising the right to vote and be voted for any public elective post. DMS