Crediting Previously-Paid Estate Tax After an Amended Extra-Judicial Settlement

Philippine Legal Perspective (as of 23 June 2025)

1. Overview

When heirs settle an estate extra-judicially under Rule 74 of the Rules of Court, they file an Estate Tax Return (BIR Form 1801) and pay the estate tax. If, later on, the parties execute an amended or supplemental Deed of Extra-Judicial Settlement (EJS)—for example, to add an overlooked parcel of land, substitute heirs, or redistribute shares—the original estate tax computation almost always changes. Philippine tax law allows the crediting of the estate tax already paid against the liability reflected in the amended return, ensuring that heirs are not taxed twice on the same property.

2. Legal Foundations

Authority	Key Provisions for Crediting/Amendment
National Internal Revenue Code (NIRC), as amended by the TRAIN Law (R.A. 10963)	§90 (Estate Tax Return); §91 (Payment of Estate Tax); §204(C) (Tax Refunds/Credits); §229 (Recovery of Tax Erroneously or Illegally Collected).
Revenue Regulations (RRs)	RR 12-2018 (consolidated estate-tax rules under TRAIN); RR 17-2023 (streamlined CAR issuance).
Revenue Memorandum Orders (RMOs)	RMO 15-2003 (amended returns and tax credits); RMO 1-2021 (documents required for amended CAR).
Revenue Memorandum Circulars (RMCs)	RMC 62-2018 & 24-2022 (procedures for filing amended estate returns and availment of credit/refund).
Estate Tax Amnesty Act (R.A. 11213, extended by R.A. 11956)	Provides a separate mechanism for unpaid estate taxes covering deaths up to 14 June 2021—but the crediting rules for previously paid tax still follow the general NIRC scheme.
Supreme Court Jurisprudence	CIR v. Pineda (G.R. L-22734, 1967) – confirmed BIR authority over estate-tax true and correctness; Estate of Benigno Toda Jr. v. CIR (G.R. 170352, 2011) – refund allowed where over-collection proven; Heirs of Malate v. CIR (G.R. 217590, 2022) – clarified that CAR need not be cancelled if amendment merely reallocates shares.

3. Typical Scenarios Triggering an Amended EJS

Discovery of Omitted Assets – e.g., a bank account or condominium title surfaced after the original filing.
Correction of Asset Values – fair-market or zonal value was understated or overstated.
Change in Heirship – inclusion of a pre-termitted heir, legitime adjustment, or effect of a pre-existing waiver.
Partition Reconfiguration – heirs agree to swap properties among themselves or convert co-ownership into exclusive ownership shares.

Any of these changes can alter the gross estate, deductions, net taxable estate, and tax due.

4. Mechanics of Crediting Previously Paid Estate Tax

Step	What the Heirs/Executor Must Do	Notes
A. Prepare an Amended Estate Tax Return (BIR Form 1801)	Recompute the tax using current rates (6 % flat under TRAIN) but retaining the decedent’s date of death values.	The return is treated as “substituted” for the original.
B. Indicate Prior Payment	In Part V of Form 1801, place the amount of estate tax previously paid in the line “Less: Tax/Credit Payments”.	Attach photocopy of: (1) original eFPS/eBIR or revenue official receipt (ROR); (2) first CAR(s); and (3) bank-validated Form 1801 or ePayment confirmation.
C. Compute Net Tax Payable or Refundable	New Tax Due – Prior Paid Tax = Balance. If positive, pay the difference with penalties (see below). If negative, file a refund claim (rare).	The BIR initials the “Prior Paid” entry during pre-audit.
D. Submit Documentary Requirements	• Original & amended EJS (notarized and, if real property, annotated with RD). • Proof of publication (for Rule 74 settlements). • CDCs, certs of landholding, bank certs, etc. • BIR Compliance Checklists #68 & #68-A (amended estates).	If properties are under bank mortgage or subject to CTA freeze orders, clearances from those agencies are also required.
E. Secure New Certificate Authorizing Registration (CAR)	The Revenue District Office (RDO) cancels or updates prior CAR(s). A supplemental CAR is issued for additional/adjusted properties.	The Registry of Deeds (RD), LRA, BTr, and LTO will not register the amended deeds without the new CAR.
F. Pay Penalty Components (if any)	Surcharge (25 % or 50 %) and Interest (12 % p.a.) accrue only on the additional tax, counting from the statutory due date (normally 1 year + any granted extension).	Penalties do not apply to the portion already paid and now being credited.
G. Refund or Tax Credit Certificate (TCC)	If prior payment exceeds the recomputed liability, file an administrative claim under §204(C) within 2 years from the date of extra/erroneous payment.	Refunds for estate tax are cash-strapped; BIR often issues a TCC instead, creditable against the heirs’ future income-tax liabilities.

5. Key Rules & Practical Nuances

Amendment vs. Additional Return – The amended return completely replaces the first return and carries its own Date of Filing for purposes of fraud or penalty determination.
One-Year Prescriptive Period for Estate Tax – The §91 deadline (one year from death) is tolled neither by discovery of new assets nor by amendment filing. Late-found assets cause penalties on incremental tax, not on the whole estate.
Extensions – Under §91 (second paragraph), the Commissioner may grant up to a 5-year extension for judicial settlements or a 2-year extension for extra-judicial ones. Penalties on the increment are avoided if the extension is secured before the original deadline.
Effect on Co-Heirs’ Capital-Gains/Doc Stamp Taxes – A later CAR does not invalidate deeds already registered, but subsequent transfers might need fresh DST and CGT computations if consideration or fair-market value changed.
Crediting Flowchart

Original Estate Tax Paid  ──►  Amended Return Computed
                                   │
                                   ▼
                        New Tax < Old Paid? ──► Refund/TCC Route
                                   │
                        New Tax > Old Paid? ──► Pay Difference (+ penalties)

CAR Number Sequencing – The supplemental CAR bears a suffix “-A”, “-B”, etc., tied to the original CAR number; title annotators at RD match these to avoid duplicate transactions.
Notice to Creditors – Rule 74 §4 still applies; an amended EJS restarts the 2-year creditor liability period for heirs if new assets increase the estate’s reach.
Amnesty Estates – If heirs originally paid under R.A. 11213 amnesty, the BIR will not re-open valuation but will impose DST and transfer fees on omitted properties; crediting is limited because the amnesty tax is final and unconditional.
Special Cases
- Transferred Property Later Found Inexistent – Heirs may seek a refund of the proportionate estate tax paid on that property via §229 (erroneous payment).
- Heir Dies Before Amendment – The credit inures to the sub-estate of the deceased heir; his own estate tax return can apply the TCC.

6. Documentary Checklist (Amended Filing)

Document	Purpose/Where Filed	Tips
Amended BIR Form 1801 (3 copies)	RDO – Assessment Section	Indicate “AMENDED” at top margin.
Proof of Original Payment (eROR or bank slip)	RDO, Accounts Receivable	Must be machine-validated or ePayment-verified.
Original CAR(s)	For cancellation/notation	Provide photocopies plus the “owner’s copy.”
New/Amended EJS + Publication Affidavits	RDO for review	Publication again for 3 consecutive weeks if Partition changed.
Appraisal/Valuation Docs	Asset valuation	Use date of death FMVs; no escalation.
SPA/Board Resolution (if corporate heir)	Authorization to sign	Must be notarized & consularized if executed abroad.
IDs & TINs of heirs	Identity verification	Bring original IDs; TIN mandatory for each heir.

7. Illustrative Example

Facts (Condensed): Juan died 10 January 2024. On 1 June 2024, his three heirs filed an EJS covering ₱20 million in assets and paid ₱1.2 million estate tax (6 %). In February 2025, they discover an unlisted lot worth ₱5 million. Amended Computation: Total estate now ₱25 million → Tax due = ₱1.5 million. Crediting: Prior payment ₱1.2 million is credited. Balance = ₱300 k. Penalties: Since the additional ₱300 k became due on 10 January 2025, interest (12 % p.a.) and surcharge (25 %) apply from that date until payment. Outcome: Heirs pay roughly ₱375 k (₱300 k + ₱75 k surcharge/interest) and receive CAR-A for the extra lot; original CAR remains valid for earlier properties.

8. Frequently Asked Questions

Q	A
Can we simply “offset” the overpayment against our annual income tax?	No, you must first secure a TCC or refund ruling; only a TCC is creditable against future taxes.
What if the omitted asset is sold before amending the estate return?	The Register of Deeds will reject the sale’s CGT/DST processing without a CAR; both the amended estate tax and the transfer taxes must be settled before registration.
Is the BIR bound to accept our valuation for the new asset?	No; the RDO may re-appraise using the higher of: (a) BIR zonal value at date of death or (b) FMV per the Provincial/City Assessor’s schedule.
Will the amendment reopen the entire estate for audit?	Practically, the RDO re-checks the whole file, but the focus is on items changed. Fraud indicators (e.g., substantial undervaluation) can trigger a full audit.
Does a judicial settlement avoid these amendment hassles?	Judicial settlements follow the same estate-tax rules; however, once a court-approved project of partition is final, substantial amendments require court approval, not just a deed.

9. Best-Practice Tips for Heirs, Executors, and Counsel

Do a “Last-Asset Search” – Request certifications from banks, LRA, SEC, and LGUs before first filing.
Use E-CAR Tracking – BIR’s eCAR system (rolled out nationwide in 2024) flags CAR numbers already printed; it reduces duplication when you amend.
Keep Original Receipts Intact – The BIR rarely issues certified true copies of RORs once archived; secure them early.
Monitor the 2-Year Refund Window – If an overpayment is possible, file the refund application simultaneously with the amended return to beat the deadline.
Communicate With the RDO Early – Pre-evaluation meetings help identify missing annexes and avoid multiple re-filings.

10. Conclusion

Amending an Extra-Judicial Settlement is common and, when handled correctly, does not mean paying the estate tax twice. The Philippine tax framework under the NIRC and its revenue issuances provides a clear crediting mechanism: declare the prior payment in the amended return, support it with documentary proof, and either pay the incremental amount or claim a refund/TCC. Vigilant documentation, timely filings, and strict adherence to BIR checklists ensure that heirs receive due credit, avoid double taxation, and secure updated certificates for smooth property transfers.