Death and taxes

AS the saying goes, “In this world, nothing can be said to be certain, except death and taxes.”

This hackneyed idiom effectively underscores the overreaching arm of the taxman, in our case the Bureau of Internal Revenue (BIR), in taxing transactions of the living and the dead. With the passage of Republic Act (RA) No. 10963, or the “Tax Reform for Acceleration and Inclusion” (TRAIN) Law, reforms have been made to make paying taxes less tedious for taxpayers, living and dead alike.

of estate tax, the TRAIN Law provides for a uniform rate of tax of 6 percent of the value of the deceased person’s (decedent) net estate, a welcome departure from the previous table of graduated rates. In addition, considering that a decedent’s cash deposits form part of his gross estate, certain rules have been put into place as to how a decedent’s funds in a bank may be validly withdrawn by his heirs.

Recently, the BIR has issued Revenue Memorandum Circular (RMC) No. 62-2018 to clarify the requirements on the withdrawal from the bank deposit account of a deceased depositor. We provide below the highlights of the RMC:

• The executor, administrator, or any of the legal heirs who maintained a bank deposit with the decedent may be allowed to withdraw within one year from the date of death, provided that the amount withdrawn shall be subject to a 6% withholding tax.

• For joint accounts, the 6 percent withholding tax shall only be applied on the share of the decedent in the joint account.

• Prior to the withdrawal, the bank shall require the executor, administrator, or any of the legal heirs to present a copy of the Tax Identification Number ( TIN) of the estate of the decedent, as well as a copy of the estate’s BIR Form No. 1904 ( Application for Registration) duly stamped and received by the appropriate BIR Revenue District Office ( RDO).

• The bank shall issue the corresponding BIR Form No. 2306 ( Certificate of Final Income Tax Withheld) certifying that the amount withdrawn has been subjected to the 6 percent withholding tax. The bank

prescribed quarterly returns on the 6 percent tax withheld and shall proceed to remit the same on or before the last day of the month following the close of the quarter when the withholding tax was paid.

• Bank deposit slips that are to be used for this purpose shall contain the following terms and conditions:

a) A sworn statement by any one of the surviving joint depositors that all the other joint depositors are still living at the time of withdrawal; and

b) A statement that the withdrawal is subject to the 6 percent

• Bank deposits that have already been declared for estate tax purposes shall no longer be subject to the 6 percent final withholding tax. To this end, the corresponding electronic Cer

(eCAR) issued by the concerned RDO to the executor, administrator, or any of the legal heirs of the decedent must be presented to the bank for withdrawal of the decedent’s bank deposits.