Special Power of Attorney Requirements for Estate Tax Amnesty Philippines

Introduction

In the Philippines, the estate tax amnesty program provides a mechanism for heirs and estate administrators to settle outstanding estate tax liabilities at reduced rates, free from certain penalties and interests. Enacted under Republic Act No. 11213 (Tax Amnesty Act of 2019), and implemented through Revenue Regulations No. 6-2019 and subsequent issuances by the Bureau of Internal Revenue (BIR), the program targets estates of decedents who passed away on or before December 31, 2017. Availing of this amnesty often requires coordination among multiple heirs, and in cases where not all parties can personally handle the process, a Special Power of Attorney (SPA) becomes essential. This legal instrument authorizes a designated agent to act on behalf of the principal in specific matters related to the amnesty application.

This article comprehensively explores the requirements for an SPA in the context of the Philippine estate tax amnesty, including its legal foundations, necessary contents, execution formalities, submission procedures, and potential pitfalls. Understanding these elements is crucial for ensuring compliance and avoiding delays or rejections by the BIR.

Legal Basis for Estate Tax Amnesty and the Role of SPA

The estate tax amnesty is governed by the following key laws and regulations:

• Republic Act No. 11213 (Tax Amnesty Act of 2019): This law offers a one-time opportunity to settle estate taxes by paying a flat rate of 6% based on the decedent's net estate, without civil, criminal, or administrative penalties.
• Revenue Regulations No. 6-2019: Issued by the BIR, this details the implementation of the amnesty, including filing requirements and deadlines. The original availment period was from June 15, 2019, to June 14, 2021, but extensions were granted via Revenue Regulations No. 12-2021 and No. 15-2021, pushing the deadline to June 14, 2023.
• Civil Code of the Philippines (Articles 1874-1895): Governs powers of attorney, stipulating that an SPA is required for acts of strict dominion or those involving specific authorizations, such as tax settlements.
• BIR Revenue Memorandum Circulars (RMCs): Various RMCs, such as RMC No. 58-2019 and RMC No. 66-2019, clarify documentary requirements, including the use of SPAs for representatives.

An SPA is particularly relevant when:

• Multiple heirs are involved, and one heir or a third party (e.g., a lawyer or accountant) is designated to file the Estate Tax Amnesty Return (ETAR) and pay the amnesty tax.
• The principal is abroad, incapacitated, or otherwise unable to personally appear before the BIR.
• The estate involves complex assets requiring specialized handling, such as real properties or shares of stock.

Without a valid SPA, the BIR may reject the application, as it ensures that the agent has explicit authority to bind the principal in tax matters.

Who Can Execute and Be Appointed Under an SPA

Principals (Grantors)

• Heirs or Successors: Legal heirs, legatees, or devisees of the decedent who are entitled to the estate. All compulsory heirs must typically consent or be represented.
• Estate Administrators or Executors: If a judicial or extrajudicial settlement is in place, the appointed administrator may execute an SPA if further delegation is needed.
• Eligibility Requirements: The principal must be of legal age (18 years or older), of sound mind, and not under any legal disability (e.g., not declared incompetent by a court).

Agents (Attorneys-in-Fact)

• Any competent individual, including family members, lawyers, certified public accountants (CPAs), or professional representatives.
• No specific qualifications are mandated by the BIR for estate tax amnesty, but the agent should be trustworthy and knowledgeable in tax procedures to avoid errors.
• Multiple agents can be appointed, but the SPA must specify if their powers are joint or several.

In cases involving non-resident heirs, the SPA must comply with international authentication standards to be valid in the Philippines.

Essential Contents of the SPA

An SPA for estate tax amnesty must be tailored to the specific acts required, as a general power of attorney (GPA) is insufficient for acts involving disposition of property or settlement of obligations. Under Article 1878 of the Civil Code, an SPA is mandatory for compromising obligations, which includes tax settlements.

Key elements to include:

1. Identification of Parties:

   • Full name, address, civil status, and taxpayer identification number (TIN) of the principal.
   • Full name, address, and TIN of the agent.
   • Details of the decedent: Full name, date of death, TIN, and place of death.

2. Specific Powers Granted:

   • Authority to file the ETAR (BIR Form No. 2118-EA).
   • Power to compute and pay the amnesty tax, including securing necessary certifications (e.g., Certificate Authorizing Registration or CAR).
   • Authorization to represent the principal before the BIR, including submitting documents, attending hearings, and receiving notices.
   • Permission to execute affidavits, waivers, or other related instruments.
   • If applicable, power to handle asset transfers, such as signing deeds of sale or extrajudicial settlements.
   • Explicit mention of the estate tax amnesty program to limit the scope and avoid overbroad authority.

3. Scope and Limitations:

   • Duration: Typically valid until the amnesty process is completed, or a specific expiration date.
   • Revocability: Statement that the SPA is revocable unless made irrevocable (rare in tax contexts).
   • Exclusions: Any acts not authorized, e.g., no power to sell properties unless explicitly stated.

4. Sworn Statement:

   • An affidavit confirming the principal's voluntary execution and understanding of the document.

The SPA should be drafted in clear, unambiguous language, preferably in English or Filipino, to prevent misinterpretation.

Execution and Formalities

To be enforceable, the SPA must adhere to strict formal requirements:

1. Form:

   • Written document, preferably on legal-sized paper.
   • Signed by the principal in the presence of witnesses (at least two, though not always mandatory).

2. Notarization:

   • Must be acknowledged before a notary public in the Philippines.
   • The notary must verify the principal's identity using government-issued IDs (e.g., passport, driver's license).
   • Includes the notary's seal, signature, and details (e.g., PTR No., IBP No.).

3. If Executed Abroad:

   • Consularized or authenticated by the Philippine Embassy or Consulate in the foreign country.
   • Apostille certification if the country is a signatory to the Hague Apostille Convention (e.g., USA, UK).
   • Translation required if not in English.

4. Additional BIR-Specific Requirements:

   • Attachment of photocopies of the principal's and agent's IDs.
   • If the agent is a professional (e.g., lawyer), include proof of accreditation (e.g., BIR Accreditation for Tax Agents).
   • For corporate representatives, include board resolutions authorizing the SPA.

Failure to notarize or consularize renders the SPA invalid, leading to BIR rejection.

Submission and Processing with the BIR

1. Where to Submit:

   • File the SPA along with the ETAR at the Revenue District Office (RDO) where the decedent was registered or resided.
   • If the estate includes real property, submission may also be required at relevant RDOs for CAR issuance.

2. Accompanying Documents:

   • Death certificate of the decedent.
   • Inventory of estate assets and liabilities.
   • Proof of payment of amnesty tax (e.g., bank payment slips).
   • Sworn Declaration of the Estate (BIR Form No. 2118-EA Annex A).

3. Processing Timeline:

   • The BIR reviews the SPA for completeness and validity.
   • Upon approval, an Acceptance Payment Form (APF) is issued, confirming amnesty availment.
   • Delays may occur if the SPA lacks specificity or proper authentication.

4. Fees:

   • Notarial fees: Approximately PHP 200-500.
   • Consular fees: Vary by country, around USD 25-50.
   • No additional BIR fees for SPA submission, but amnesty tax is 6% of the net estate.

Common Issues and Best Practices

Potential Pitfalls

• Insufficient Specificity: A vague SPA may be rejected; always enumerate exact powers.
• Expired or Revoked SPA: Ensure validity throughout the process.
• Multiple Heirs Disputes: If not all heirs sign or are represented, the application may be contested.
• Fraudulent Execution: Forged SPAs can lead to criminal liabilities under the Revised Penal Code.
• Non-Compliance with Extensions: Post-2023 availments may not be possible without new legislation.

Best Practices

• Consult a lawyer or tax expert for drafting to ensure compliance.
• Keep originals and provide certified true copies to the BIR.
• Update the SPA if circumstances change (e.g., additional assets discovered).
• Maintain records of all transactions for audit purposes.
• For complex estates, consider a joint SPA among heirs to streamline representation.

Conclusion

The SPA serves as a critical tool in navigating the estate tax amnesty process in the Philippines, ensuring efficient representation and compliance with BIR requirements. By meticulously adhering to the contents, execution, and submission guidelines outlined above, principals can facilitate a smooth amnesty availment, ultimately securing tax relief and proper estate settlement.