What is the procedure before the SAT in these cases?
Unfortunately, in addition to all the situations that have to be dealt with when a loved one passes away, there are still those related to the loved one's tax obligations.
"In this world nothing is certain, except death and taxes."
Benjamin Franklin 1
CONTINUITY IN THE ISSUANCE OF VOUCHERS BY SUCCESSION
RCFF Article 38.- For the purposes of Articles 29 and 29-A of the Code, in the event of the death of the taxpayer, the legal representative of the estate shall be the only one authorized to continue issuing the digital tax receipts by Internet that correspond to the author of the estate.
Practically any income received by a natural person that is not formalized before a notary public, entails the obligation to prove it with the issuance of a tax receipt. In this case, the legal representative of the estate will be the only one authorized to continue issuing them. Let's think of a business, invoicing, a landlord, rent receipts, etc.
DEATH NOTICES TO BE FILED
RCFF Article 30 For the purposes of the preceding article, the following shall apply:
... VIII. The notice of opening of succession shall be filed by the legal representative of the succession in the event of the death of a person obliged to file periodic returns on his/her own account. The filing of this notice must be made after accepting the position and prior to the notice of cancellation in the federal taxpayer registry due to liquidation of the succession.
There is no obligation to file the notice referred to in this section when the person who dies has been obligated to file a periodic tax return only for personal services or is in suspension of activities, except in the latter case, when the taxpayer has determined tax credits;
IX. The notice of cancellation in the federal taxpayer registry due to death shall be filed by any relative of the deceased person or interested third party, provided that the conditions for the filing of the notice of opening of succession are not met ;
X. The notice of cancellation in the federal taxpayer registry due to liquidation of the estate shall be filed by the legal representative of the estate when the liquidation of the estate has been finalized;
From the review of these provisions we can make the following comments. If the person was filing periodic returns he/she must file notice of "Opening of the Succession", unless the obligation to file them derived from personal services (fees) or he/she is in "suspension of activities" status. The chapters containing the obligation to file periodic returns refer to the following types of income:
- Business activities - normal regime and RIF.
- Leases
Other income is not included in the assumption.
It is also indicated that those who are not in such cases, will directly file the notice of "Cancellation of the Federal Taxpayers Registry".
Finally, for those who have filed the "Opening of the succession" notice, the "Notice of cancellation of the Federal Taxpayers Registry due to liquidation of the succession" must be filed once the liquidation of the succession has been completed.
TREATMENT OF INCOME IN SUCCESSION
ANNUAL STATEMENT
The law foresees that in the event that a testamentary succession is initiated (which is desirable instead of an intestate proceeding), and being the case that the person who died was obliged to file an annual tax return, the annual tax return will be filed considering the income received from January 1 until the date of death, and this would be a first cut-off.
The date for filing this is within ninety days after the executor's office is discerned.
In the case of the existence of income that the deceased was already entitled to receive, but the estate already received it, that is, it was received after his death, Article 261 of the Income Tax Regulations (RISR) states that if it comes from:
- Salaries and similar
- Lease of real estate
- Professional Services
They are considered exempt, since they are considered as income derived from inheritance or legacy.
However, if other types of income are involved, these should be considered as income of the estate and the corresponding taxes should be calculated and paid.
This includes income derived from business activities, alienation of assets, acquisition of assets, interests, dividends and other income of the decedent. The only exception in this section refers to income derived from the obtaining of prizes.
LISR Article 261. In the event of death of persons required to file returns under the terms of Article 150 of the Law, the procedure shall be as follows:
- Within ninety days following the date on which the executor's position is dissolved, the executor must file a tax return for the income referred to in Title IV of the Law, which the author of the succession has received since January 1 of the year of his death and up to the time of his death, in order to cover the corresponding Tax, and
- The income referred to in Title IV of the Law, accrued up to the time of death of the author of the succession that had not been effectively received during his lifetime, shall be subject to the following:
- Those included in Title IV, Chapters I and III of the Law, as well as those derived from the rendering of professional services referred to in Title IV, Chapter II of the Law, shall be exempt from payment of the Tax for the heirs or legatees as they are considered included in Article 93, Section XXII of the Law; and
- In the case of the income referred to in Title IV, Chapters IV to IX of the Law, as well as that derived from the performance of business activities, it may be considered as income received by the author of the succession and declared, except for that referred to in Title IV, Chapter VII of the Law, in terms of the preceding section, or when the heirs or legatees choose to accumulate it with their other income in accordance with Article 146 of these Regulations.
For income that is not considered as part of the inheritance or legacy, the law proposes two possible options:
Consider them as received by the author of the succession (i.e., consider them as income of the succession), or That the heirs and legatees choose to accumulate them to their other income in accordance with article 146 of the RISR, which is transcribed below:
For the purposes of Article 92, last paragraph of the Law, the legal representative of the estate shall be the one who makes the provisional payments of the Tax and files the corresponding annual return considering the income and deductions jointly, without prejudice to the provisions of Article 201, last paragraph of these Regulations.
...
The above refers to the fact that the person who must file the tax return is the legal representative of the estate, which is normally the "Executor(s)". The same article saves the possibility that in the case of deductions identified in the alienation of real estate pro indiviso, each owner must determine his gain.
ANNUAL TAX ON CO-OWNERSHIP
The law is not entirely clear in this regard, but, with respect to monthly income and provisional payment declarations, income derived from jointly owned property, whether or not the property is owned by a third party, is not included in the income statement.
- Business - for business activities
- Leases -
- Disposal of assets
- Procurement of goods
- Interests
- Stock dividends
- Awards
Regarding these, the Legal Representative of the succession in each calendar year shall pay the annual tax, but on behalf of the heirs and legatees. And it will continue this way, until the liquidation of the succession is concluded.
LISR Article 92.
The legal representative of the succession will pay the tax in each calendar year on behalf of the heirs or legatees, considering the income jointly, until the liquidation of the succession has been finalized. The payment made in this manner shall be considered as definitive, unless the heirs or legatees choose to accumulate the respective income corresponding to them, in which case they may credit the proportional part of the tax paid.
However, for the heirs there remain 2 possible options:
- That the tax paid by the legal representative be considered as definitive or,
- Each heir may choose to accumulate the income that corresponds to him/her and in this case, they can credit the proportional part of the tax paid.
Conclusions
It is important to know which are the tax obligations that arise in a situation of death. We can say that with respect to the periodic income, a cut-off must be calculated for the income received from the beginning of the year until the date of death, and the tax must be determined and paid. For those that have already accrued and have not yet been collected with respect to such income, the heirs will consider them as part of the inheritance.
The other income will generate income tax according to each chapter, and leave the option to be fully accrued in the estate and the annual return filed or to be accrued by each heir on a proportional basis.
We can also highlight that while the succession is being carried out, the filing of tax returns of the businesses that are taxed under the scheme of business activities and real estate leasing must continue and the legal representative can continue with the issuance of the corresponding CFDI.
Regarding the filing of notices before the RFC, so that those who are obliged to file periodic tax returns, except for professional services, will also have to file the notice of cancellation of the RFC due to the liquidation of the estate once it is concluded, and those who did not receive income that obliged them to file periodic tax returns, must only file the notice of cancellation of the RFC.
If you would like further information, please do not hesitate to contact the Kreston CSM office nearest you.
