Estate Tax - Pilot Program for Payment Deferral for Qualified Agricultural Property

Senate Bill 396 (Chapter 554, Acts of 2010)

This Act adds a new provision to Title 7 of the Tax-General Article relating to alternate payment schedules for Maryland estate tax imposed on agricultural and personal property used for farming purposes. The new Section 7-307(e) provides for a payment deferral of three years from the due date for Maryland estate tax imposed on property passing from a decedent to or for the use of an individual who enters into an agreement to use the property for farming purposes after the decedent's death. The amount that may be deferred is determined by multiplying the percentage of property of the gross estate that is used for farming purposes times the estate tax due. The amount of tax deferred under this section may not exceed $375,000 as to any decedent.

If a payment deferral is allowed, the deferred estate tax shall be paid without interest in accordance with a payment schedule prescribed by the Comptroller over a three-year period beginning in the fourth year after the due date. Interest does not begin on unpaid estate tax until the tax is due under the schedule.

To be eligible for the payment deferral, a qualified recipient must file an application and enter into an agreement in a form specified by the Comptroller to use the qualified agricultural property for farming purposes after the decedent's death and file periodic reports or allow periodic inspections as required by the Comptroller.

The new provision further provides that on or before October 1, 2013, the Comptroller shall submit a report to the General Assembly, in accordance with Section 2-1246 of the State Government Article, and the Maryland Agricultural Land Preservation Foundation concerning:

• the number of approved applications for Maryland estate tax payment deferral;
• the number of agricultural acres in which a Maryland estate tax payment deferral was approved under the payment deferral pilot program;
• the number of qualified agricultural properties approved for Maryland estate tax payment deferral that apply to preserve agricultural land under the Maryland Agricultural Land Preservation Foundation;
• the aggregate value of Maryland estate tax payment deferrals approved under the payment deferral pilot program;
• the aggregate amount of Maryland estate taxes paid due to exceeding the maximum amount eligible for payment deferral under the payment deferral pilot program; and
• recommendations for implementing a Maryland estate tax payment deferral program in the State.

This Act takes effect on July 1, 2010 and will be applicable to decedents dying after December 31, 2010. However, the Act will remain effective only for a period of four years and, at the end of June 30, 2014, with no further action required by the General Assembly, shall be abrogated and of no further force and effect.