Missed the estate tax amnesty? What now?

The deadline to avail of the estate tax amnesty lapsed on June 16, marking the end of a generous window of opportunity granted under Republic Act (RA) No. 11213, as amended by RA No. 11569 and extended further through RA No. 11956. This three-tiered legislation allowed heirs of decedents who died on or before May 31, 2022, to settle unpaid estate taxes at a flat rate of 6%, free from surcharges, interest, and penalties. For many, it was the best opportunity in decades to finally transfer ownership titles of inherited assets without incurring significant cost. But for those who weren’t able to take the opportunity to file within the amnesty period — what now?

As of June 17, unsettled estates have reverted to the regular tax regime under the Tax Code. While the base estate tax rate remains at 6% under TRAIN (RA No. 10963), this no longer comes with the shield of amnesty privileges. The filing of the estate tax returns beyond the original deadline, i.e., one year from the decedent’s death, will now attract a 25% surcharge for late filing, plus annual interest of 12% which will run from the original filing deadline. The Bureau of Internal Revenue (BIR) also retains the right to impose compromise penalties or pursue criminal liability for willful non-compliance.

To put this in perspective, for an estate with a net value of P10 million, the estate tax due under amnesty would have been a clean P600,000. After the deadline, the same estate could now face a surcharge of P150,000 (25% of P600,000) plus annual interest of P72,000 (12% of P600,000 for one year), inflating the total liability to well over P822,000. The longer the estate remains unsettled, the higher the cost becomes, not just financially, but administratively.

Nonetheless, heirs and executors have options. The first and most prudent course of action is to immediately compute the estate tax liability under the regular rules and proceed with filing the BIR Form 1801 (Estate Tax Return). Timely filing, even without full payment, signals good faith and enables families to explore remedies such as installment payment arrangements. The law allows installment settlements for tax liabilities when financial capacity is an issue, and the BIR has historically been open to negotiated payment terms, particularly when documentary requirements are complete and voluntarily disclosed.

Moreover, it is still possible in rare cases to apply for a compromise settlement although this hinges on clear evidence of financial incapacity or a disputable legal position. These must be accompanied by appropriate documentation and are subject to BIR evaluation and approval. Given the complexity of compromise mechanisms, consulting estate tax specialists is highly advised.

Another important consideration is that the tax lien on estate properties will remain effective until full payment of estate tax and associated charges. This means banks, the Land Registration Authority, and other registries will continue to withhold asset transfers until the BIR issues a Certificate Authorizing Registration (CAR) or an eCAR. Without this, heirs cannot legally sell, mortgage, or distribute estate assets. Even a seemingly minor transaction like re-titling a vehicle or withdrawing funds from a deceased person’s bank account can be frozen indefinitely due to unresolved estate tax obligations.

Adding to this, executors or administrators who failed to act during the amnesty period now face added legal complications. During the amnesty, even incomplete settlements were permitted. Beneficiaries could submit a sworn undertaking in lieu of formal extrajudicial settlements. This flexibility is now gone. Going forward, only fully documented estates, with notarized extrajudicial settlement or court-issued letters of administration, will be processed. Any pending undertaking submitted under the old rules will no longer be honored unless it was filed before the deadline.

One practical approach to minimizing estate tax liabilities under the regular regime is through accurate asset valuation and careful review of allowable deductions. The Tax Code, as amended by TRAIN Law, provides a P5 million standard deduction and up to a P10 million deduction for the family home, significantly simplifying the process compared to the itemized deductions in the past. Taxpayers should also explore other permissible deductions such as vanishing deductions (for properties received within five years prior to death and previously taxed) and transfers for public use, where applicable. Proper valuation and documentation remain essential in substantiating estate tax filings and avoiding disputes with tax authorities.

Additionally, consolidating documents early, such as land titles, bank statements, insurance policies, and debt instruments, can help expedite the preparation of an accurate estate tax return and minimize costly errors or overstatements. Families with several heirs and/or complex estates may also consider judicial settlement to clarify ownership shares and strengthen the basis for filing, especially when disputes or unclear inheritances exist.

While the window for amnesty has closed, strategic compliance and proper documentation can still prevent continued running of interest and ensure that estate assets are eventually transferred in accordance with the law.

From a policy perspective, the closure of the amnesty presents a turning point. While past Congresses showed willingness to extend relief, amnesty periods were extended twice since 2019, the political appetite for a third extension is unclear. Public trust and voluntary compliance were cornerstones of RA 11956’s rationale. However, tax relief programs can lose credibility if continually extended without clear finality. For now, taxpayers must act under the assumption that there will be no further amnesty, and plan accordingly.

The closure of the estate tax amnesty is a sobering reminder that delaying estate planning can be costly. Yet for those who missed the deadline, this is not the end of the road; it is simply a shift in terrain. With urgency, proper documentation, and competent advice, families can still protect their legacy, preserve asset value, and ensure lawful transfer of wealth. The key now is swift action, not wishful waiting for a future amnesty that may take several years or decades to come again.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general Information purposes only, and should not be used as a substitute for specific advice.

Lois Ann Caroline Sarajan is an assistant manager at the Tax Services department of Isla Lipana & Co., the Philippine member firm of the PwC network.

lois.ann.caroline.sarajan@pwc.com