Ignacio Arroyo heirs have to pay inheritance taxes first -- BIR | Inquirer Business

Ignacio Arroyo heirs have to pay inheritance taxes first — BIR

Former Negros Occidental Rep. Ignacio “Iggy” Arroyo. INQUIRER FILE PHOTO

MANILA, Philippines — Heirs of the late Negros Occidental Rep. Ignacio “Iggy” Arroyo have three weeks left to file the necessary papers with tax authorities before they can touch his assets, according to Internal Revenue Commissioner Kim S. Henares.

Henares said in an interview that Arroyo’s bank accounts could not be touched until the filing of relevant tax returns, for which the law has given the estate of Arroyo six months from his death. Arroyo died in London last Jan. 26.

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“There is no need to have the accounts frozen because by operation of law, once a bank account holder dies, nobody is allowed to withdraw” from such funds, Henares explained.

“The heirs cannot do anything (with the accounts) until they file the returns,” she added.

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Henares, a certified public accountant and lawyer, also said the BIR has not made any move regarding Arroyo’s bank accounts since the prescribed period has not lapsed.

“Considering all these talk about (Arroyo’s) account, let us wait for them to file the returns,” she said.

In 2011, Finance Secretary Cesar V. Purisima said the government would go after bank managers who allow heirs to draw down on the accounts of deceased depositors, enabling them to avoid paying the 20-percent estate tax.

Purisima said the move had the backing of the Department of Justice, and Justice Secretary Leila de Lima agreed that such practice “is a crime that we can pursue.”

“Tax evasion cannot happen without the cooperation of someone in the private sector such as an accountant or a manager in a bank,” he said.

“Our collection of estate taxes is so low because all these branch managers allow the family to withdraw the money on the day of the death of the clients, it’s part of their service,” he added.

Purisima said the government’s collection of the estate tax reached only about P1 billion yearly, an amount so small when considering that some 400,000 people died each year.

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He said this put the average estate tax paid at P2,500, a figure that should be higher considering “there were many people who passed away but to whom large amounts of wealth were attributed to.”

In 2010, the BIR under Commissioner Joel L. Tan-Torres year issued Revenue Memorandum Order No.10-2010, mandating BIR offices to work with public and private institutions to access information about heirs, including civil registers, hospitals, memorial parks, cemeteries, funeral parlors, crematoriums, judicial clerks of courts, newspapers (regarding obituaries), life insurance firms and other financial entities.

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TAGS: Bureau of Internal Revenue, Business, estate taxes, Ignacio "Iggy" Arroyo, inheritance taxes, Kim S. Henares, taxes
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