Tax obligations in case of death. When life stops, tax obligations continue. Keys to avoiding risks and protecting your assets. By CPC Adriana Rodriguez Carrion. Discussing someone's death is undoubtedly a sensitive topic. However, from a tax and estate planning perspective, it's also a time that demands clarity, organization, and timely fulfillment of obligations. In Mexico, the death of a taxpayer does not automatically extinguish their tax obligations. On the contrary, it initiates a process that must be handled correctly to avoid legal, tax, and inheritance problems for the heirs or the company in which they were involved. In this article, we address, in a clear and practical way, what those obligations are and how to deal with them appropriately. Who is responsible for fulfilling the tax obligations of the deceased person? The Federal Tax Code, CFF, in its Article 26, mentions that the executors or representatives of the succession are jointly liable with the taxpayers for the taxes that were incurred and should have been paid during the period of their appointment. Inheritance is the legal process by which one person legally takes the place of another. Therefore, a probate or intestate succession procedure is established, through which the assets, rights, and obligations, the estate, of the deceased person pass to the heirs or legatees. In this case, a representative known as an executor must be appointed, who will be responsible for settling the debts, distributing the estate, and fulfilling tax obligations. How should the executor fulfill these tax obligations? A. For individuals who have been registered under the income regime for salaries, similar income, andor independent personal services fees, it will suffice to submit the notice of cancellation in the RFC due to death, detailed below. That the executor submit within 90 days of his appointment the annual ISR declaration, in case the deceased was obliged to do so, for the income that he had received from January 1 of the year of his death until the time of his death, in order to cover the tax that may correspond. b. In the case of individuals with other types of income, not indicated in Section A, for which they have to submit periodic declarations, whether provisional payments, monthly by monthly or annual declarations, they must display the notice of the opening of the succession. The executor must continue to comply with the tax obligations applicable to the regime in question, as well as those left pending by the author of the succession, for the entire time that the succession proceedings last. For income tax purposes, the executor will make provisional payments and pay the tax on behalf of the heirs or legatees each year, considering the income jointly, until the estate is settled. This payment will be considered final, unless the heirs or legatees choose to include their respective income in their taxable income as follows. Add them to your other income for the year. They may claim credit for the proportional part of the tax paid by the executor, in the same proportion that corresponds to them from the income of the estate, and income accrued from the estate will be considered as originating from the sources from which the estate obtained it. Heirs or legatees who did not exercise this option during the probate proceedings may do so once the proceedings have concluded. To do so, they may submit supplementary tax returns for up to the five tax years prior to the year in which the probate was finalized. With regard to VAT payments, they continue to be considered final and must be covered by the legal representative of the estate on behalf of the heirs or legatees, and in this case they cannot be distributed among them. What happens to income that the deceased would have earned, but which was received after his death? A. Income from salaries, professional activities, and from rent will be exempt from the payment of tax by heirs or legatees, as it is considered to be included within the exempt income according to the income tax law. These incomes, since they were not actually received by the deceased, could not be accumulated, and they are also outside the deceased's visa period, therefore, they are not subject to ISR tax. b. Regarding other income such as income from business activities, sale of property, acquisition of property, interest, winnings, dividends, and profits distributed from legal entities and other income. These must be considered as received by the deceased and declared, except for income from prizes. What happens to the balances in favor of the deceased person? If the deceased person generated a balance in their annual tax return for the year in which they died, how to obtain the corresponding balance in their favor? The authority indicates that the electronic contribution form must be submitted, for which, the tax mailbox must be enabled, the RFC and current password must be available to access the portal, in addition to a current e.firma certificate to make the submission. As a comment on the authority's statement, this situation appears to be extremely difficult if the deceased person did not have a valid electronic signature, e.f., or did not have one at all. If this is the case, the authority should establish precise guidelines for situations where the taxpayers' heirs are entitled to a tax refund. Notice of cancellation of a person's RFC in case of death. It is extremely important to submit a notice to the SAT to cancel the RFC of the deceased person. Who presents it? The notice of cancellation in the RFC due to death, any relative of the deceased person or an interested third party. The notice of cancellation in the RFC for liquidation of the succession, natural persons who have accepted the position of legal representative of the succession, executor. When is it presented? The notice of cancellation due to death within the month following the taxpayer's death. The notice of cancellation in the RFC due to the liquidation of the estate within the month following the day on which the liquidation of the estate has been completed.