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amendment of an extrajudicial settlement filed with the BIR

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cclerma


Arresto Menor
We filed an estate tax return with the BIR and one of the documents submitted was the extrajudicial settlement agreement. The estate tax was paid and there is no issue with the BIR as to the estate tax paid. However, inadvertently included in the extrajudicial settlement was a paragraph (actually a few words) which confused the BIR. they interpreted the paragraph as my dad's waiver of his conjugal share of some identified properties in favor of his children. Which is not the case because the table of partition indicates his waiving his inherited share but not his conjugal share. On that basis they are assessing us donor's tax.

We are contemplating submitting to the BIR any of the following (1) an addendum to the extradjudicial settlement filed  to clarify the erroneous provision and/or (2) father's  affidavit expressing his true intention and clearing any ambiguity in the agreement; or (3) crossing out the pertinent words on the filed extrajudicial settlement that is causing the BIR confusion and all of us heirs countersigning it. this modification shall not affect the assessment and  the estate tax already paid. But this is intended to  clarify with the BIR that we are not duty bound to pay donor's tax either.

I would like to know if we can legally and rightfully do this and if we can compel the BIR to accept our documents. If yes, would you have any BIR or court ruling or legal basis which i can present to the BIR to convince them of our legal remedy?

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attyLLL


moderator
many ej settlement drafts floating on the internet have the statement that one of the parties is waiving the inheritance in favor of the other parties, does your extrajudicial settlement have that clause? if so, that is a donation.

what should have been stated is that the father is simply waiving his right to inherit, but not say it is in favor of anyone so that no donation occurs but it has the similar effect of having more property to be shared by the rest of the heirs.


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cclerma


Arresto Menor
Thank you AttyLLL for your quick response. the waiver of my dad is what you call a general renunciation of his inherited share in favor of the children thus it is tax free. To that extent we do not have issues with the BIR.

The sole area of contention now  was a typo error in the EJ that  mentions that he is also waiving his conjugal share to certain identified properties(which was inadvertently included as it appeared in an old draft that was not removed in the final version). these words are inconsistent with the full text of the EJ where the table of partition shows that he remained owner of the conjugal share, clearly showing that typo error. this is not the intention of my father.

I would like to correct that typo error and I need to convince the BIR of the appropriate document to file so they can clear us for any donor's tax obligation.  

thank you.

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attyLLL


moderator
could you quote the pertinent portion? ask the BIR if you can withdraw the earlier settlement so you can file a revised one.


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cclerma


Arresto Menor
thanks for the follow up reply. this is the pertinent provision:

That the surviving spouse XXX  who is not granted any of the properties covered by TCT YYY (3 properties were identified out of 6 titles) above described has waived all his conjugal share and hereditary rights and interests in favor of the other co-heirs so designated and the heirs so designated have accepted the waiver made in their favor.

Note that the underlined portions are the erroneous sections because the surviving spouse has not waived his conjugal share (in the final version of the EJ). His true intention to retain his ownership over his conjugal share is reflected in the tables of partition. His waiver was only with respect to what he inherited from the deceased.

We were told by our auditors that it is not possible to pull out or replace the submitted EJ. I do not know if what they are saying is correct.  We are contemplating submitting an amended EJ/addendum to the EJ or an affidavit of the surviving spouse. We would like to submit the right and legitimate documents to the BIR to correct the mistake and do want to create the  impression that the BIR is doing us a favor for something which we can do as a matter of right.

Thank you once again.

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attyLLL


moderator
I think an addendum will be the more proper remedy. Best to inquire with BIR how to go about it.


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cclerma


Arresto Menor
Thank you very much for your valuable input. Smile

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