What does the taxman say?

I have been teaching Wills and Succession in several law schools for the past 20 years. I know more than enough about properties belonging to the estate of the decedent for tax purposes. Some Marcos apologists claim that assets that may have been illegally acquired should not form part of the gross estate. Article 774 of the New Civil Code does not distinguish and it simply states that properties, rights, and obligations owned by the decedent shall be transmitted to his heirs upon his death.

My rudimentary knowledge of tax law tells me that government is given much flexibility as to what will be included in the gross base. Under income taxation, illegal income is most definitely part of taxable income in the hands of anyone. Otherwise, such would countenance a wrongdoing and reward evildoers. The burden of paying such estate taxes falls on the administrator or the heirs themselves, which, in this case, include Ferdinand “Bongbong” Marcos. Worthwhile to add is that the current estate tax liability of the Marcos heirs does not cover those sequestered properties, as per the opinion of former BIR Commissioner Kim Henares.

All non-tax lawyers like myself perhaps remember that taxes are the lifeblood of the government. All taxpayers pay a certain sum for an orderly society without which the government cannot function properly. Further, tax rates are premised on the doctrine that those who have more in life should have more responsibility in law. But about little details and applicable procedures, I asked a reputable tax law professor, Michael Dana Montero of Ateneo Law School. With conviction and insightful analysis, he shared what he knows about the Marcos estate tax case. Professor Montero said that the more you deviate from the law, the more power is given to the government to go after you. Relative to the Marcos case, he opined that the Court was very clear that the period within which time the government can run after the tax liabilities of an offender is the longer period of 10 years and not just 3 or 5 years. The application of the much longer period was justified by the fact that no return was filed for the estate despite the BIR satisfying the requirement of proper notice, Montero said.

One other simple lesson is that tax assessments are presumed correct. Tax laws adhere to the same general legal principle that acts of administrative agencies are presumed to have been done accurately and in good faith. The taxpayer has the duty to prove any irregularity, if any. This seeming unfairness, however, is offset by the fact that taxpayers are anyway afforded sufficient chances to dispute the presumption. In the Marcos estate tax issue, Montero said that all that the family could say was that the amount was “improbable and unconscionable” but failed to provide anything more than “mere rhetoric.” Others, however, say that the defense of the Marcos family is not as simple considering the vastness of the estate and the status of ownership of its properties. Despite the legal protection afforded to the Marcoses of being able to dispute the presumption, it was evident that the same was taken mockingly, or at least, not seriously.

What I didn’t learn from my tax professor is that the BIR, in rare instances, can prepare the tax returns, which should have otherwise been prepared by the taxpayers themselves. This power is precisely to avoid the situation where taxpayers can evade taxes by merely refusing to fulfill tax returns. In the case of the estate of Marcos, the BIR did exactly what the law allowed it to do by preparing not only the estate tax return but also the income tax returns of the Marcos spouses and Ferdinand Marcos Jr. If only they had been more circumspect and responsible, the vicarious and perhaps disputable preparation done by the BIR could have been avoided.

So what we need to do as taxpayers is as simple as knowing the law. As Prof. Montero candidly said: “The decision which was rendered 25 years ago is replete with reminders from the Supreme Court that if only the Marcoses knew and followed the law, things would have turned out very differently. Simply, if they had filed their tax returns, if they had reviewed the documents sent to their representatives in their known addresses, if they had raised their objections on time, if they had put forward more than mere conjectures and general denials, and if they only exhibited basic understanding of fundamental tenets of tax law, they would not feel “persecuted” by the questions that should have been answered 33 years ago—after the passing of the late Marcos. The Supreme Court itself said: “Where there was an opportunity to raise objections to government action, and such opportunity was disregarded, for no justifiable reason, the party claiming oppression then becomes the oppressor of the orderly functions of government. He who comes to court must come with clean hands. Otherwise, he not only taints his name, but ridicules the very structure of established authority.” In the same vein, believers need to know the Biblical basics when it comes to taxes and authority. In Romans 13: 5-6, the Bible tells us, “Therefore, it is necessary to submit to the authorities, not only because of possible punishment but also as a matter of conscience. This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing.” If taxes are the lifeblood to the government, taxes are the manifestation of man’s conscientious obedience to God’s commandment.

A common principle in many written laws is that the more severe the non-compliance, the tougher the applicable rules will be. This is no truer in the case of tax laws, according to Professor Montero. In relation to gravity of sins, Writer Wayne Jackson said that, a sin of “presumption can be greater than a sin committed unwittingly because the former issues from an arrogant spirit, while the latter is done out of ignorance.” Jackson, similar to Montero, thinks that some transgressions of the law may be greater than another in terms of its destructiveness. For Jackson, to sin privately and so forfeit the blessings is a lesser offense than to live with reckless abandon and arrive at last beyond the pale of redemption. Of such persons Jesus said: “But if anyone abuses one of these little ones who believes in me, it would be better for him to have a heavy boulder tied around his neck and be hurled into the deepest sea than to face the punishment he deserves!”

(Matthew 18:6). One who evades taxes can be just as evil as the one who corrupts others. But one who not only evades but also mocks or abuses the very authority that collects the tax can be worse.

Montero concluded that the ability of taxpayers to discern tax rules is rarely, if at all, a consideration in the application of the same. Tax laws remain simple yet powerful families like the Marcos may over-complicate them for their selfish purposes. As to the Law of the Lord, what we need to do as believers is to pay all our debts. Romans 13: 7 is as basic as it can be when the Apostle Paul said, “Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.” In my case, I “pay” honor and respect to those who pay their taxes, diligently and without much hullabaloo! A tax is a debt. And essentially we owe our Almighty God our lives when He sent His only son on earth to save us from our sins. To this, we need only prepare our hearts—our “tax returns” and indicate therein our acceptance to His son as our personal Lord and Savior.

When we submit our hearts to our Taxman in heaven and ask Him what we should do to pay our debt, He will readily point us to Romans 13:8—it can be simple as “love one another.” Everything else will flow naturally from there. But from another perspective, we can’t do anything to pay our debt since Jesus did that when He died on the cross. Our obedience to His command to love one another is simply a mark of a follower, a consequence of believing. It isn’t payment.

A former infantry and intelligence officer in the Army, Siegfred Mison showcased his servant leadership philosophy in organizations such as the Integrated Bar of the Philippines, Malcolm Law Offices, Infogix Inc., University of the East, Bureau of Immigration, and Philippine Airlines. He is a graduate of West Point in New York, Ateneo Law School, and University of Southern California. A corporate lawyer by profession, he is an inspirational teacher and a Spirit-filled writer with a mission.

For questions and comments, please e-mail me at [email protected]

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