Estate Tax Amnesty Requirements: Sworn Declaration of Properties in the Philippines

Introduction

Estate tax amnesty programs in the Philippines offer heirs and estate administrators a chance to settle outstanding estate taxes at reduced rates, without penalties, for decedents who passed away before a specified cutoff date. These initiatives aim to encourage compliance, boost government revenue, and alleviate the burden on families dealing with inherited properties. A key component of availing the amnesty is the submission of a Sworn Declaration of Properties, which details the estate's assets and liabilities. This requirement ensures transparency and accurate valuation for tax computation. In the Philippine context, the most recent estate tax amnesty was introduced under Republic Act No. 11213 (Tax Amnesty Act of 2019) and extended by Republic Act No. 11569 until June 14, 2023. Although the program has lapsed as of the current date, understanding its requirements remains relevant for potential future extensions or similar relief measures. This article comprehensively examines the sworn declaration within the amnesty framework, including legal foundations, eligibility, procedural steps, content specifications, implications, and related considerations.

Legal Basis

The estate tax amnesty is anchored in several key laws and regulations:

Republic Act No. 11213 (Tax Amnesty Act of 2019): Provides amnesty on estate taxes for decedents who died on or before December 31, 2017, with unpaid taxes as of that date. It imposes a flat 6% tax rate on the net estate, waiving penalties, interests, and surcharges.
Republic Act No. 11569 (2021): Extended the availment period from June 14, 2021, to June 14, 2023, in response to the COVID-19 pandemic's impact on taxpayers.
Bureau of Internal Revenue (BIR) Revenue Regulations No. 6-2019 (as amended by RR No. 12-2021): Implements the amnesty, detailing forms, procedures, and requirements. It mandates the Sworn Declaration of Properties as part of the Estate Tax Amnesty Return (ETAR).
Tax Code (National Internal Revenue Code of 1997, as amended by Republic Act No. 10963 or TRAIN Law): Sections 84 to 97 govern estate taxes generally, with amnesty providing temporary relief from standard rates (6% on net estates over PHP 5 million) and penalties.
Civil Code Provisions: Articles 774 to 1105 on succession influence estate composition, requiring accurate declaration to avoid disputes.

The sworn declaration is a notarized affidavit under oath, subject to perjury laws (Article 183, Revised Penal Code), ensuring truthfulness in reporting assets.

Eligibility for Estate Tax Amnesty

To avail of the amnesty and submit the sworn declaration, the following criteria must be met:

Decedent's Death Date: On or before December 31, 2017.
Unsettled Estate Taxes: Taxes due but unpaid, including those with pending assessments or protests.
Estate Composition: Includes real properties, personal properties, and rights transferable upon death, regardless of location (for resident decedents) or only Philippine-situs assets (for non-residents).
Exclusions: Estates already fully settled with paid taxes, or those involving fraud, tax evasion convictions, or properties from illegal sources.
Applicants: Heirs, executors, administrators, or authorized representatives. For intestate succession, all heirs must consent; for testate, the executor leads.

Ineligible estates revert to standard tax rules, with potential audits and penalties up to 50% of the tax due.

Requirements for Availing the Amnesty

Availing the amnesty involves multiple documents, with the sworn declaration being central. General requirements include:

Estate Tax Amnesty Return (BIR Form No. 2118-EA): Filed electronically via eBIRForms or manually at the Revenue District Office (RDO) where the decedent was registered.
Payment of Amnesty Tax: 6% of the net estate (gross estate minus deductions like funeral expenses, judicial costs, and standard PHP 5 million exemption under TRAIN).
Acceptance Payment Form (BIR Form No. 0621-EA): Proof of payment.
Death Certificate: Certified true copy.
Proof of Settlement: If judicially settled, court-approved inventory; if extrajudicial, deed of extrajudicial settlement.
Property Documents: Titles, deeds, stock certificates, etc.
Sworn Declaration of Properties: Detailed below.

Failure to submit complete requirements results in denial, with no refund if payment was made.

The Sworn Declaration of Properties: Detailed Examination

The Sworn Declaration of Properties (SDP) is a mandatory attachment to the ETAR, serving as a comprehensive inventory of the estate. It must be executed under oath by the applicant and notarized.

Purpose and Importance

Valuation Basis: Provides the fair market value (FMV) of assets for computing the 6% amnesty tax.
Transparency: Prevents underreporting, which could lead to post-amnesty audits.
Evidence in Disputes: Serves as prima facie proof in inheritance claims or tax contests.
Compliance Tool: Aligns with BIR's push for digital reporting and anti-evasion measures.

Contents of the Sworn Declaration

The SDP must include:

Personal Information: Decedent's full name, TIN, date and place of death, residence, citizenship, and marital status.
Heirs' Details: Names, relationships, TINs, and shares in the estate.
Gross Estate Inventory:
- Real Properties: Description (location, TCT/OCT number, area), assessed value, zonal value (per BIR), FMV, and encumbrances (e.g., mortgages).
- Personal Properties: Cash, bank deposits, vehicles (with plate numbers), jewelry, artworks, household items, with appraised values.
- Shares of Stock: Corporation name, number of shares, par value, FMV (book value or market price).
- Other Assets: Receivables, intellectual property, business interests, foreign assets (for residents).
Deductions: Itemized list of allowable deductions (e.g., funeral expenses up to PHP 200,000, medical costs up to PHP 500,000, family home up to PHP 10 million).
Net Estate Computation: Gross minus deductions.
Sworn Statement: Affirmation of completeness and accuracy, with awareness of penalties for falsehoods.
Attachments: Supporting valuations (e.g., appraisals from accredited valuators, bank statements).

Values must use the higher of zonal or assessed values for real properties, per RR No. 12-2018. For unappraised items, conservative estimates are advised to avoid disputes.

Format and Execution

Form: No specific BIR form; a notarized affidavit suffices, but must follow BIR guidelines in RR No. 6-2019.
Notarization: Before a notary public, with doc stamps (PHP 30 per document).
Multiple Declarations: If new assets are discovered post-submission, an amended SDP and ETAR may be filed before the deadline.

Procedure for Submission

Preparation: Gather documents, appraise assets, compute net estate.
Filing the ETAR and SDP: Submit to RDO or Authorized Agent Bank (AAB), with payment.
BIR Processing: BIR issues Electronic Certificate Authorizing Registration (eCAR) upon approval, allowing property transfers.
Timeline: Within the amnesty period (expired June 14, 2023); late filings invalid.
Fees: Notarial fees (PHP 200-500), documentary stamps, and bank charges.

For estates with properties in multiple RDOs, file at the decedent's residence RDO.

Implications and Consequences

Benefits: Waiver of penalties (up to 25% surcharge, 20% interest per annum), immunity from audits for the covered period.
Risks: False declarations invite perjury charges (up to 6 years imprisonment) or estafa if fraudulent. Post-amnesty, standard taxes apply to undeclared assets.
Tax Clearance: eCAR facilitates title transfers; without amnesty, back taxes block registrations.
International Aspects: For non-resident aliens, only Philippine assets declared; coordinate with foreign tax authorities if dual taxation.

Relevant Jurisprudence and BIR Rulings

Commissioner of Internal Revenue v. Estate of Benigno Toda Jr. (2004): Emphasized accurate valuation in estate inventories, analogous to SDP requirements.
BIR Ruling No. 020-2020: Clarified that SDPs must include all known assets, with amendments allowed pre-deadline.
Court of Tax Appeals Cases: Various decisions uphold BIR's authority to verify declarations, denying amnesty for incomplete SDPs.

These reinforce the need for diligence in preparation.

Challenges and Practical Considerations

Valuation Disputes: Zonal values may be outdated; hire certified appraisers.
Heir Conflicts: Require unanimous consent; mediate via barangay or courts.
Documentation Gaps: For lost titles, reconstruct via Registry of Deeds.
Post-Amnesty Planning: Consult tax lawyers for wills or trusts to avoid future issues.
Digital Shift: BIR's e-filing promotes efficiency but requires tech-savvy applicants.

Conclusion

The Sworn Declaration of Properties is the cornerstone of estate tax amnesty availment in the Philippines, ensuring fair taxation while providing relief from historical liabilities. Though the 2019-2023 program has ended, its framework offers valuable insights for estate planning and potential future amnesties. Heirs must prioritize accuracy and completeness to maximize benefits and avoid legal pitfalls. Engaging professionals—accountants, lawyers, and appraisers—is crucial for navigating this complex process, ultimately securing family legacies within the bounds of tax compliance.