THE Bureau of Internal Revenue (BIR) yesterday said all real properties of deceased persons whose inheritance taxes have not yet been paid by their heirs can be foreclosed and sold through public auction and their cash in banks and jewelry can be garnished in favor of the government.
Speaking before the 888 News Forum at Marco Polo Plaza, lawyer Neri Yu, chief of the BIR 13 legal division, said the death of persons who left real properties, personal properties, cash in bank and shares of stocks in corporations must be reported to the BIR not later than six months from the date of death.
The purpose of reporting it is for the computation of the inheritance tax.
Yu said an unpaid inheritance tax will now have a surcharge of 25 percent plus 20 percent interest per year of the total amount.
Yu said that if a deceased person left millions of pesos of deposit in the bank and his heirs have not yet paid the inheritance tax, the law prohibits the bank to release the money (to the heirs) without BIR clearance.
BIR records show that grandchildren in cities and municipalities of Cebu and Bohol possess vast tract of lands and buildings still titled in the names of their grandparents. Their parents who are supposed to be the first level of heirs do not report the death of their grandparents to the BIR.
“When their parents died, the inheritance tax doubled (and a second layer of surcharges and interests are added to it). We don’t pressure the heirs of properties to pay, especially those in the provinces who have limited money. But they will have a problem if they will sell the properties because they are required to pay inheritance tax with surcharges and interest before the titles will be transferred to the buyers,” Yu said.
In some cases, Yu said buyers will only pay a little amount to the heirs with a pledge to shoulder all unpaid taxes as a requirement in transferring the property ownership.
Another problem will come out if the grandchildren decide to enter into an extra-judicial partition because payment of inheritance tax is a requirement.
“My advice to heirs is to report the death of their grandparents or parents who left properties within the reglamentary period of six months and settle all obligations to the government to avoid paying surcharges and interests,” Yu said.
When asked if the BIR can give amnesty to thousands of heirs in the country who failed to settle their inheritance taxes, Yu said only Congress can do that.
He said the BIR had done it in 2004 but only a few availed themselves (of the program) because most heirs had no money.