Does an Employer Still Issue BIR Form 2316 If an Employee Dies During the Year?

Yes — an employee’s death during the taxable year does not cancel the employer’s BIR Form 2316 obligation. The employer must still prepare and issue the Certificate of Compensation Payment/Tax Withheld, covering compensation actually paid and tax actually withheld from January 1 (or the employee’s hire date) through the date of death. The certificate does not go to the employee, obviously — it goes to whoever has legal authority to act for the employee’s estate: a court-appointed executor or administrator, or the heirs under an extrajudicial settlement.

Does an employee’s death end the employer’s withholding obligation? #

No — the employer’s duty to withhold tax on compensation and to certify it applies for as long as compensation was actually paid, and death simply marks the last day that duty covers. Revenue Regulations (RR) No. 2-98, Section 2.83.1 ties the obligation to furnish BIR Form 2316 to the fact that taxes were withheld from an employee’s compensation — it does not carve out an exception for an employee who later dies during the same taxable year. Everything the employer paid and withheld while the employee was alive and working remains reportable exactly as it would for any other employee.

What changes is who the certificate is for. A living employee receives their own copy and, where they qualify, signs a certificate of retainment relying on it for substituted filing. A deceased employee cannot do either, so the certificate instead becomes a document the estate needs to close out the decedent’s own tax affairs — a distinction this guide works through in the sections below.

Who legally receives the certificate for a deceased employee? #

The certificate goes to the person with legal authority to act for the deceased employee’s estate — a court-appointed executor or administrator, or, more commonly for a straightforward estate, the heirs proceeding under an extrajudicial settlement. This mirrors how the BIR treats a decedent’s other tax affairs generally: under NIRC Sections 60 to 66 (Title II, Chapter X — Estates and Trusts), an estate is a distinct taxpayer once administration begins, and BIR Form 1701 filings made on a decedent’s behalf are made by “the executor, administrator, or any person acting in a fiduciary capacity” for that estate — the same filer category this site covers in How Are Trusts and Estates Under Administration Taxed by the BIR?.

In practice, that means:

• If a spouse or next of kin is settling the employee’s affairs without a court proceeding, HR should release the certificate to that person once they can show proof of their relationship and authority (for example, an extrajudicial settlement document or, for a straightforward case, a death certificate plus a simple affidavit of heirship the company’s counsel is comfortable accepting).
• If a court has appointed an executor or administrator, the certificate goes to that person, since they are the one who will use it in filings made for the estate.
• The certificate should never simply sit in company files “because the employee is gone” — someone still needs it to account for the decedent’s compensation and tax withheld for the year.

Does the accelerated separation deadline apply to a death? #

Yes — death ends the employment relationship the same way a resignation or termination does, so the same accelerated BIR Form 2316 deadline applies. Under RR No. 2-98, Section 2.83.4, an employer does not wait until the following January 31 to furnish the certificate when employment ends before December 31; it is due on the day the last payment of compensation is made. This site’s guide on BIR Form 2316 for Resigned or Separated Employees covers this deadline for the general separation case — death is simply one more reason employment ends mid-year, not an exception to how quickly the certificate is owed. In practice, “the day the last payment is made” is usually the payroll run that releases the employee’s final pay to the estate, since that is typically the point at which the employer’s own compensation and withholding records for that employee are complete.

Does the death-related final pay get taxed the same way as regular salary? #

Not automatically — regular compensation earned through the date of death is ordinary taxable compensation, but a separate payment made specifically because the employee’s separation from service was due to death can qualify for a distinct exemption. Section 32(B)(6)(b) of the National Internal Revenue Code (NIRC) excludes certain separation-related payments from gross income entirely. As commonly reproduced from the Tax Code:

“Any amount received by an official or employee or by his heirs from the employer as a consequence of separation of such official or employee from the service of the employer because of death, sickness or other physical disability or for any cause beyond the control of said official or employee.”

That exclusion covers a payment the employer makes to the heirs because the employee’s service ended in death — a company-paid death gratuity or an accelerated retirement benefit released early for this reason, for example — not the employee’s already-earned, already-withheld regular salary for the months actually worked. Revenue Memorandum Order (RMO) No. 26-2011, later expanded by RMO No. 36-2011 and RMO No. 66-2016, sets out the process for securing the BIR’s confirmation that a specific payment qualifies for this exclusion: the employer applies for a Certificate of Tax Exemption from the appropriate BIR office before treating the amount as exempt from withholding. Until that confirmation is in hand, the safer default is to withhold and let any excess be resolved once the exemption is confirmed, rather than assuming the exclusion applies without documentation.

The two categories stay on separate tracks in the paperwork: regular compensation and tax withheld through the date of death go on BIR Form 2316 the normal way; a confirmed Section 32(B)(6)(b) death benefit is excluded from that compensation figure and is not subject to withholding once the BIR-confirmed exemption is in place.

Does substituted filing apply to a deceased employee? #

Not in the way it applies to a living employee. Substituted filing works because a qualifying employee — one employer for the full year, purely compensation income, tax withheld equal to tax due — signs a certificate of retainment relying on the employer’s own annual filing instead of submitting a personal return. A deceased employee cannot sign anything, and the “full calendar year with one employer” framing substituted filing is built around doesn’t fit a year cut short by death either.

In practice, the compensation and tax withheld shown on the deceased employee’s BIR Form 2316 becomes supporting documentation for the decedent’s own final personal income tax return, filed on their behalf using BIR Form 1701 — the same fiduciary filing category used elsewhere on this site for an estate under judicial settlement, though here the return covers the decedent’s own stub-year income rather than income the estate later earns. The executor, administrator, or an heir prepares and files that return, reporting the decedent’s compensation from January 1 through the date of death. This is separate and distinct from the one-time BIR Form 1801 estate tax return on the value of everything the decedent left behind — see BIR Form 1801: The Estate Tax Return for that filing.

Worked example: an employee who dies in September #

A concrete payroll scenario shows exactly what the employer computes and where each document goes. Ramon (fictional), a mid-level staff employee earning ₱45,000 gross monthly, works the full year through August and passes away on September 15. His employer’s payroll and HR teams close out his compensation record as follows:

Separately, Ramon’s employer also releases a ₱100,000 company-funded death benefit to his widow under the company’s group policy — over and above the ₱382,500 in regular compensation above. Because that ₱100,000 is paid specifically as a consequence of Ramon’s separation from service due to death, the employer applies for a BIR Certificate of Tax Exemption under RMO No. 26-2011 before treating it as excluded from withholding under NIRC Section 32(B)(6)(b); it does not appear as taxable compensation on Ramon’s BIR Form 2316.

His widow, acting as his heir, receives the completed BIR Form 2316 showing ₱382,500 in compensation and ₱17,175 in tax withheld for the January–September period. She (or a court-appointed administrator, if one is later needed) uses that certificate as the supporting record when filing Ramon’s final BIR Form 1701 for the stub year, separate from any estate tax return on the value of what he left behind.

Frequently asked questions #

Does an employer still issue BIR Form 2316 if an employee dies during the year? #

Yes. The employer’s obligation to withhold tax on compensation and to furnish a Certificate of Compensation Payment/Tax Withheld does not end because the employee died — it covers compensation actually paid and tax actually withheld from January 1 (or the hire date) through the date of death, and the certificate is delivered to the employee’s estate, executor, administrator, or heirs rather than to the employee.

Who receives a deceased employee’s BIR Form 2316? #

The employee’s estate, through whoever has legal authority to act for it — a court-appointed executor or administrator, or the heirs under an extrajudicial settlement. Whoever eventually files the decedent’s final personal income tax return needs this certificate as supporting documentation, so it should go to that person directly, not sit in the company’s files marked undeliverable.

When must the employer issue the certificate after an employee’s death? #

Death ends the employment relationship, so the same accelerated deadline that applies to any other separated employee applies here: under RR No. 2-98, Section 2.83.4, the employer furnishes BIR Form 2316 on the day the last payment of compensation is made, rather than waiting for the following January 31.

Does substituted filing apply to a deceased employee’s compensation for the year? #

Not in the ordinary sense. Substituted filing relies on the employee personally qualifying and, in practice, acknowledging reliance on the employer’s filing — something a deceased employee cannot do. In practice, the decedent’s compensation and tax withheld for the stub period are reported on a final individual income tax return filed on the decedent’s behalf by the executor, administrator, or an heir, using BIR Form 1701, rather than assumed to be closed out by substituted filing.

Is a death-related payment from the employer to the heirs taxed the same as the employee’s regular salary? #

Not necessarily. Regular compensation earned through the date of death is ordinary taxable compensation, withheld and reported the normal way. A separate amount the employer pays to the heirs specifically as a consequence of the employee’s separation from service because of death can be excluded from gross income and exempt from withholding tax under Section 32(B)(6)(b) of the Tax Code, subject to the employer securing the BIR’s confirmation that the payment qualifies.

Summary #

An employee’s death during the taxable year narrows the BIR Form 2316 obligation to a shorter period — it does not remove it. The employer still computes compensation and tax withheld from January 1 through the date of death, issues the certificate on the day final pay is released under RR No. 2-98, Section 2.83.4, and delivers it to the estate, executor, administrator, or heirs rather than the employee. A separate death-related payment can qualify for its own exclusion under NIRC Section 32(B)(6)(b) once the BIR confirms it under RMO No. 26-2011, and the decedent’s stub-year compensation typically ends up supporting a final BIR Form 1701 filed on their behalf, since substituted filing isn’t built for a taxpayer who is no longer alive to rely on it. For the certificate’s standard structure and deadlines outside this scenario, see What Is BIR Form 2316 and When Must You Issue It? and BIR Form 2316 for Resigned or Separated Employees; for how a deceased sole proprietor’s own BIR registration (rather than an employee’s compensation) transitions to their estate, see What Happens to a Sole Proprietor’s BIR Registration When the Owner Dies?