Can You Pay BIR Estate Tax in Installments? The 2-Year Rule Under Section 91(C)

Yes — estate tax can be paid in installments within two years of the statutory due date, without civil penalty or interest, when the estate’s available cash is insufficient to cover the full amount. This right was added by the TRAIN Law (Republic Act No. 10963) as Section 91(C) of the National Internal Revenue Code (NIRC) and is separate from the Commissioner’s older, discretionary hardship extension.

What does Section 91(C) actually allow? #

Section 91(C) is a taxpayer right, not a discretionary grant — if the estate genuinely lacks the cash to pay in full, the heirs may spread the estate tax due over up to two years from the statutory payment date without incurring the surcharge and interest that would otherwise apply to a late payment.

The Tax Code states:

“In case the available cash of the estate is insufficient to pay the total estate tax due, payment by installment shall be allowed within two (2) years from the statutory date for its payment without civil penalty and interest.”

This is distinct from Section 91(B), the Commissioner’s older discretionary power to extend the time for payment — up to five years if the estate is settled through the courts, or two years if settled extrajudicially — when payment “would impose undue hardship upon the estate or any of the heirs.” Section 91(B) can require the heirs to post a bond of up to double the tax due; Section 91(C)’s installment right is narrower in trigger (insufficient cash specifically) but does not depend on the Commissioner finding “undue hardship” first.

How does Revenue Regulations No. 12-2018 implement the installment option? #

Revenue Regulations (RR) No. 12-2018, issued to implement the TRAIN Law’s estate tax changes, sets out the mechanics heirs use to actually exercise the Section 91(C) installment right when filing BIR Form 1801, the Estate Tax Return.

In practice, heirs who intend to pay by installment should:

1. File BIR Form 1801 within the standard one-year deadline from the decedent’s date of death, even if the tax cannot yet be paid in full
2. Indicate the intent to pay by installment and the proposed schedule when filing
3. Complete all installment payments within two years from the statutory due date (not two years from the date of filing) to avoid civil penalty and interest on the unpaid balance
4. Coordinate with the Revenue District Office (RDO) on how partial payments affect the release of the Certificate Authorizing Registration (eCAR) for estate properties, since real property is typically transferred to heirs only after the corresponding portion of the tax is settled

Because the eCAR is usually tied to proof of tax settlement on specific properties, heirs paying by installment should expect the RDO to release eCARs progressively as each installment covering a given property is paid, rather than all at once at the start.

A worked example #

An estate has a net taxable value of ₱15,000,000, producing an estate tax due of 6% × ₱15,000,000 = ₱900,000 under the TRAIN Law’s flat estate tax rate. The estate’s liquid assets on hand are only ₱300,000 — the rest of the estate’s value is tied up in real property that hasn’t yet been sold. Because the available cash is insufficient to cover the full ₱900,000, the heirs may file BIR Form 1801 on time, pay ₱300,000 immediately, and settle the remaining ₱600,000 in installments over the following months — as long as the full balance is paid within two years of the original statutory due date, with no surcharge or interest added on the unpaid portion in the meantime.

Summary #

Section 91(C) of the NIRC, added by the TRAIN Law, gives heirs a penalty-free, two-year window to pay estate tax in installments when the estate doesn’t have enough cash on hand — a narrower and more automatic right than the Commissioner’s older discretionary hardship extension under Section 91(B). Filing BIR Form 1801 on time is still required regardless of whether the tax is paid in full or by installment. For the full filing process and worked computation of the underlying 6% estate tax, see How to File BIR Form 1801: Estate Tax Return Requirements and Deadlines, and for the separate, since-expired amnesty program, see Estate Tax Amnesty 2026 Status: Is It Still Available in the Philippines?.