Elimination of Requirement for Tax Exemption Ruling
- Revenue Regulations No. 14-2000 mandates an Escrow Agreement involving the Revenue District Officer (RDO), Authorized Agent Bank (AAB), and the seller/transferor.
- The Escrow Agreement secures the amount covering the capital gains tax from the sale.
- Consequently, previous tax exemption rulings referenced in Revenue Memorandum Circulars Nos. 3-2001 and 14-2001 are no longer required for issuing the CAR or TCL.
Responsibility of the Revenue District Officer (RDO)
- After 18 months from the construction or acquisition period, the RDO monitors if the seller has used the sale proceeds to purchase or construct a new principal residence.
- If there is no evidence of utilization within 30 days following the 18-month period, the RDO must immediately initiate the assessment for deficiency capital gains tax.
- The RDO shall then apply the amount held in the escrowed bank deposit account to cover the deficiency tax, pursuant to Section 3(7) of Revenue Regulations 13-99 as amended by RR 14-2000.
Repeal and Amendment of Inconsistent Issuances
- Any previous internal revenue issuances that conflict with this Circular are repealed, modified, or amended accordingly to conform with the updated rules.
Effectivity
- This Circular took effect immediately upon approval on October 14, 2002.
- Signed and promulgated by Guillermo L. Parayno, Jr., Commissioner of Internal Revenue.