Estate Tax Amnesty Requirements Without Extrajudicial Settlement: A Philippine Legal Perspective

Introduction

In the Philippines, the settlement of a decedent's estate often involves complex tax obligations, primarily the estate tax imposed under Section 84 of the National Internal Revenue Code (NIRC), as amended. Estate tax amnesty programs have been introduced periodically to encourage compliance by allowing taxpayers to settle unpaid estate taxes at reduced rates without incurring penalties, interests, or surcharges. The most notable is the Estate Tax Amnesty under Republic Act (RA) No. 11213, the Tax Amnesty Act of 2019, which was extended by RA No. 11569 until June 14, 2023. This amnesty targets estates of decedents who passed away on or before December 31, 2017, with unpaid estate taxes.

A common hurdle in estate settlement is the requirement for an extrajudicial settlement of estate (EJS), a deed where heirs agree on the division of properties without court intervention. However, not all heirs may cooperate, leading to delays or disputes. The key question is whether one can avail of the estate tax amnesty without an EJS. Philippine tax authorities, particularly the Bureau of Internal Revenue (BIR), have provisions allowing amnesty availment even in the absence of an EJS, provided certain requirements are met. This facilitates tax compliance without resolving inheritance disputes upfront.

This article comprehensively details the legal framework, requirements, processes, benefits, and limitations of availing estate tax amnesty without an EJS in the Philippine context. It emphasizes how the amnesty serves as a bridge to eventual estate settlement while protecting heirs from escalating liabilities.

Legal Framework Governing Estate Tax Amnesty

The estate tax amnesty is rooted in several key laws and regulations, designed to promote voluntary compliance and revenue collection:

1. Republic Act No. 11213 (Tax Amnesty Act of 2019)

This law provides a one-time opportunity for estates with unpaid taxes to settle at a flat rate of 6% on the net estate value, absolving them of civil, criminal, or administrative liabilities related to non-payment.
It applies to decedents who died on or before December 31, 2017, regardless of whether an estate tax return was previously filed.
Importantly, the act does not mandate an EJS as a prerequisite, allowing any qualified heir, executor, or administrator to file on behalf of the estate.

2. Republic Act No. 11569 (Extension of Tax Amnesty)

Extended the availment period from June 14, 2021, to June 14, 2023, to accommodate more taxpayers amid the COVID-19 pandemic.
Reiterates that amnesty can proceed without full heir consensus, as long as the filer acts in good faith and provides necessary estate details.

3. National Internal Revenue Code (NIRC), as Amended

Section 90 requires filing an estate tax return within one year from death (extended from six months under Tax Reform for Acceleration and Inclusion or TRAIN Law).
Without amnesty, estate tax rates are progressive (up to 20% on net estates over PHP 10 million), plus penalties. Amnesty simplifies this to 6% flat.
BIR Revenue Regulations (RR) No. 6-2019 and RR No. 12-2021 clarify that amnesty filing does not require prior judicial or extrajudicial settlement if the estate is undivided, but the filer must represent the estate's interests.

4. BIR Issuances and Guidelines

Revenue Memorandum Order (RMO) No. 14-2019 outlines procedures, explicitly stating that an EJS is not mandatory for amnesty if other proofs of heirship and estate composition are submitted.
BIR allows "provisional" filings by one heir, with the understanding that full settlement (judicial or extrajudicial) may follow for property transfers.
Supreme Court rulings, such as in Heirs of Gamboa v. Teves (G.R. No. 176831), affirm that tax obligations are separate from civil inheritance disputes, supporting amnesty without EJS.

5. Civil Code Provisions on Succession

Articles 777-1077 govern inheritance, where EJS (under Article 1056) is optional for undivided estates without debts or disputes.
Absence of EJS does not bar tax compliance; it merely delays property titling. Amnesty ensures tax clearance, a prerequisite for eventual transfers via the Bureau of Internal Revenue's Certificate Authorizing Registration (CAR).

These laws collectively prioritize tax settlement over immediate heir agreements, recognizing practical challenges in family dynamics.

What is Extrajudicial Settlement and Why It Might Be Absent

An EJS is a public instrument executed by all heirs, partitioning the estate's assets and liabilities without court approval, as per Rule 74 of the Rules of Court. It requires:

Unanimous agreement among heirs.
No outstanding debts.
Publication in a newspaper and bond filing with the Register of Deeds.

Absence of EJS often stems from:

Disputes among heirs over asset division.
Missing or uncooperative heirs (e.g., abroad or estranged).
Complex estates with debts or multiple properties.
Preference for judicial settlement for legal protection.

In such cases, amnesty provides a workaround, allowing tax payment first to halt penalty accruals, with settlement to follow.

Possibility of Availing Amnesty Without EJS

Yes, it is entirely possible and explicitly permitted under BIR guidelines. The amnesty focuses on tax regularization, not estate division. Key principles:

The estate is treated as a separate taxpayer with its own Tax Identification Number (TIN).
Any heir can initiate the process as a "representative" without needing consent from others, provided they disclose all known assets and heirs.
This does not prejudice other heirs' rights; it merely settles the tax debt.
Post-amnesty, an EJS or judicial settlement is still needed for property transfers, but the CAR is issued upon amnesty completion.

However, if fraud or omission is later discovered (e.g., hidden assets), the amnesty may be revoked, per RR No. 6-2019.

Requirements for Estate Tax Amnesty Without EJS

To avail without an EJS, applicants must submit a comprehensive set of documents to substantiate the estate's value and the filer's authority. Requirements include:

Basic Documents
- Duly accomplished Estate Tax Amnesty Return (BIR Form No. 2118-EA).
- Sworn Declaration of Assets and Liabilities (part of the form).
- Death Certificate of the decedent (certified true copy from the Philippine Statistics Authority).
- TIN of the estate (if none, apply via BIR Form No. 1904).
- TINs of all known heirs.
Proof of Heirship (in Lieu of EJS)
- Birth certificates or marriage certificates establishing relationship to the decedent.
- Affidavit of Self-Adjudication (if sole heir) or Affidavit of Heirship signed by at least two disinterested witnesses.
- If applicable, last will and testament (for testate succession).
Inventory and Valuation of Estate
- Detailed list of all assets (real property, bank accounts, shares, vehicles, etc.) with appraised values.
- For real property: Tax Declarations, Certificates of Title, or Zonal Valuations from BIR.
- For personal property: Bank certifications, stock certificates, or appraisals.
- Deductions proof: Funeral expenses receipts, medical bills, debts (with creditor acknowledgments).
Payment Requirements
- Computation of net estate (gross estate minus deductions).
- Amnesty tax payment: 6% of net estate (minimum PHP 5,000).
- Payment via BIR-authorized banks or online (e.g., eFPS).
Additional Submissions for Complex Cases
- If estate includes foreign assets: Proof of foreign tax payments (to claim credits).
- If decedent was non-resident: Consulate certifications.
- Waiver of bank secrecy (Republic Act No. 1405) for account verifications.

All documents must be submitted to the Revenue District Office (RDO) where the decedent resided or where the estate is administered. Electronic submissions are encouraged via the BIR's eAFS system.

Process of Availing Amnesty Without EJS

Preparation: Gather documents and compute net estate. Consult a tax professional if needed.
Filing: Submit Form 2118-EA and attachments to the RDO within the amnesty period (noting extensions if applicable).
Payment: Pay the amnesty tax; obtain Electronic Certificate Authorizing Registration (eCAR) upon approval.
Verification: BIR reviews for completeness; may request additional info.
Issuance of Acceptance: Receive Notice of Availment of Estate Tax Amnesty (NOAETA), confirming immunity.
Post-Amnesty Steps: Proceed with EJS or judicial settlement for property transfers, using the CAR.

Timeline: Processing typically takes 30-60 days, but delays occur if documents are incomplete.

Benefits and Limitations

Benefits

Reduced tax rate (6% vs. up to 20% plus penalties).
Immunity from audits, deficiencies, and prosecutions.
Stops interest accrual, preserving estate value.
Facilitates quicker access to assets for heirs.
No need for immediate heir consensus, reducing family conflicts.

Limitations

Applies only to deaths before 2018; later estates follow standard rules.
Revocable if material misrepresentations are found.
Does not resolve ownership disputes; EJS or court action still required for titling.
Non-extendable beyond legislated periods (e.g., 2023 deadline, unless new laws enact further amnesties).
Excludes estates already under BIR assessment or court litigation.

Conclusion

Availing estate tax amnesty without an extrajudicial settlement offers a pragmatic solution for Filipino families grappling with inheritance taxes amid unresolved heir issues. By focusing on tax compliance first, it aligns with the government's goal of fiscal efficiency while safeguarding taxpayer rights. Heirs are encouraged to act promptly within amnesty windows, leveraging BIR's flexible requirements to avoid burdensome penalties. For personalized advice, consulting a lawyer or certified public accountant is advisable, ensuring full adherence to evolving regulations. This approach not only settles fiscal obligations but paves the way for harmonious estate distribution.