Maryland Estate Tax

Except as provided in § 7-303 of this subtitle, a tax is imposed on the transfer of the Maryland estate of each decedent who, at the time of death, was:

(1) a resident of this State; or

(2) a nonresident of this State whose estate includes, for purposes of the federal estate tax, any interest in real or tangible personal property located in this State.

[An. Code 1957, art. 62A, §§ 1, 2; 1988, ch. 2, § 1.]

§ 7-303. Exemption.

(a) In general.- Except as provided in subsection (b) of this section, the Maryland estate tax does not apply to the transfer of personal property in an estate of a nonresident decedent, if, at the time of death, the decedent is a resident of a state or foreign country whose law, when the personal property is transferred:

(1) does not impose death taxes on the transfer of similar personal property of a resident of this State; or

(2) contains a reciprocal exemption from death taxes similar to the exemption allowed under this subsection.

(b) Limitation.- The exemption under subsection (a) of this section does not include a transfer of tangible personal property that has a taxable situs in this State.

[An. Code 1957, art. 81, § 174; 1988, ch. 2, § 1.]

§ 7-304. Amount of tax.

(a) "Federal credit" defined.- In this section, "federal credit" means the maximum credit for death taxes paid to any state that is allowable under § 2011 of the Internal Revenue Code against the federal estate tax of a decedent as reduced by the proportion that the amount of the estate not included in the Maryland estate bears to the amount of the entire estate of the decedent.

(b) In general.-

(1) Except as otherwise provided in this subsection, the Maryland estate tax is the amount, if any, by which the federal credit exceeds the total of death taxes other than the Maryland estate tax that:

(i) are imposed by a state on property included in the Maryland estate;

(ii) are allowable in computing the federal credit; and

(iii) except as provided in § 13-906 of this article, have actually been paid out of the Maryland estate and received by the appropriate unit of this State.

(2) The Maryland estate tax may not exceed the amount whose timely payment in accordance with federal law would reduce the amount of the federal estate tax payable out of the Maryland estate had this subtitle not been enacted.

(c) Failure to take full federal credit.- The Maryland estate tax is not affected by a failure to take or preserve the federal credit.

[An. Code 1957, art. 62A, §§ 1, 2; 1988, ch. 2, § 1; ch. 110, § 1; 1997, ch. 645.]

§ 7-305. Tax return.

(a) Initial return.- The person responsible for filing the federal estate tax return shall complete, under oath, and file a Maryland estate tax return with the register 9 months after the date of the death of a decedent.

(b) Amended return.- If, after a person files a Maryland estate tax return for an estate, the federal estate tax on that estate is increased, the person shall file an amended Maryland estate tax return with the register when the person pays the additional federal tax.

[An. Code 1957, art. 62A, §§ 4, 5; 1988, ch. 2, § 1; 1989, ch. 656, § 2; 1992, ch. 225.]

§ 7-306. Tax payment.

Except as provided in § 7-307 of this subtitle, the person responsible for filing the federal estate tax return shall pay the Maryland estate tax to the Comptroller when the Maryland estate tax return is filed with the register.

[An. Code 1957, art. 62A, §§ 3, 4; 1988, ch. 2, § 1.]

§ 7-307. Alternative payment schedule.

(a) In general.- On application of the person responsible for paying the Maryland estate tax and subject to § 13-601 of this article, the Comptroller may allow an alternative payment schedule for the Maryland estate tax, notwithstanding any payment extension under § 6166 of the Internal Revenue Code.

(b) Form of schedule.- The payment schedule may be in the form of:

(1) a payment deferral; or

(2) an installment payment plan.

(1) For each alternative payment schedule allowed under subsection (a) of this section, the Comptroller shall specify the procedures and guidelines, including:

(i) conditions of eligibility; and

(ii) 1. amount and duration of any payment deferral; or 2. amount of and scheduled time for any installment payments.

(2) If the Comptroller denies an application for an alternative payment schedule, the Comptroller shall mail a notice of the denial to the applicant.

(d) Time of payment.- If an alternative payment schedule is allowed under subsection (a) of this section, the person responsible for filing the federal estate tax return shall pay the tax in accordance with the schedule.

[An. Code 1957, art. 62A, § 3; 1988, ch. 2, § 1; 1989, ch. 5, § 1.]

§ 7-308. Maryland Uniform Estate Tax Apportionment Act.

(a) Definitions.-

(1) In this section the following words have the meanings indicated.

(2) "Fiduciary" means a personal representative or trustee.

(3) "Person" includes any government, political subdivision, or governmental unit.

(4) "Person interested in the estate" means any person who is entitled to receive or has received, from a decedent while alive or by reason of the death of a decedent, any property or interest in property included in the taxable estate of the decedent.

(5) "Tax" means the federal estate tax and the Maryland estate tax and interest and penalties imposed in addition to the taxes.

(b) Apportionment.- The tax shall be apportioned among all persons interested in the estate. The apportionment shall be made in the proportion that the value of the interest of each person interested in the estate bears to the total value of the interests of all persons interested in the estate. The values used in determining the tax shall be used for that purpose.

(1) The court shall determine the apportionment of the tax. If there are no administration proceedings, the court of the county where the decedent was domiciled at death shall determine the apportionment of the tax on the application of the person required to pay the tax.

(2) If the court finds that it is inequitable to apportion interest and penalties as provided in this section because of special circumstances, the court may direct apportionment in the manner that it finds equitable.

(3) The expenses reasonably incurred by any fiduciary and by any other person interested in the estate in connection with the determination of the amount and apportionment of the tax shall be apportioned as provided in subsection (b) of this section and charged and collected as a part of the tax apportioned. If the court finds that it is inequitable to apportion the expenses as provided in subsection (b) of this section, the court may direct an equitable apportionment.

(4) If the court finds that the assessment of penalties and interest assessed in relation to the tax is due to delay caused by the negligence of the fiduciary, the court may charge the fiduciary with the amount of the assessed penalties and interest.

(5) In any suit or judicial proceeding to recover from any person interested in the estate the amount of the tax apportioned to the person in accordance with this section, the determination of the court is prima facie correct.

(d) Method of payment.-

(1) The fiduciary or other person required to pay the tax may withhold, from any property of the decedent that is in the possession of the person and is distributable to any person interested in the estate, the amount of tax attributable to that person's interest. If the property in the possession of the fiduciary or other person required to pay the tax and distributable to any person interested in the estate is insufficient to satisfy the proportionate amount of the tax determined to be due from the person, the fiduciary or other person required to pay the tax may recover the deficiency from the person interested in the estate. If the property is not in the possession of the fiduciary or other person required to pay the tax, the person may recover from any person interested in the estate the amount of the tax apportioned to that person in accordance with this section.

(2) If property held by the fiduciary or other person required to pay the tax is distributed before the final apportionment of the tax, the person may require the distributee to provide a bond or other security for the apportionment liability in the form and amount required by the fiduciary or other person, with the approval of the court.

(3) If the fiduciary or other person required to pay the tax transfers any property included in the estate to another person, other than a bona fide purchaser for value, the transferee is jointly and severally liable with the transferor for the amount of tax apportioned to the transferor under this section, less the value, at the time of the transfer, of any consideration given by the transferee for the property.

(e) Allowances for exemptions, deductions, and credits.-

(1) In making an apportionment, allowances shall be made for any exemptions granted and for any deductions and credits allowed by the law imposing the tax.

(2) Any exemption or reduction allowed by reason of the relationship of any person to the decedent or by reason of the purposes of the gift inures to the benefit of the person bearing that relationship or receiving the gift. If an interest is subject to a prior present interest that is not allowable as a deduction, the tax apportionable against the present interest shall be paid from principal.

(3) Any credit for property previously taxed, any credit for state death taxes, and any credit for gift taxes or death taxes of a foreign country inure to the proportionate benefit of all persons liable to apportionment.

(4) To the extent that property passing to or in trust for a surviving spouse or any charitable, public or similar gift or bequest is not an allowable deduction for purposes of the tax solely by reason of an inheritance tax or other death taxes imposed on and deductible from the property, the property is not included in the computation for which this section provides and, to that extent, an apportionment may not be made against the property. This paragraph does not apply if the result deprives the estate of a deduction otherwise allowable under § 2053 (d) of the Internal Revenue Code, relating to deduction for state death taxes on transfers for public, charitable or religious uses.

(f) Property not apportionable.- An interest in income, an estate for years, an estate for life, or any other temporary interest in any property or money is not subject to apportionment between the temporary interest and the remainder. The tax on the temporary interest and the tax, if any, on the remainder is chargeable against the corpus of the property or money subject to the temporary interest and remainder.

(g) Apportionment of unpaid tax.- The fiduciary or other person required to pay the tax need not institute any suit or proceeding to recover from any person interested in the estate the amount of the tax apportioned to that person until the expiration of the 6 months next following the payment of any tax. If the fiduciary or other person required to pay the tax cannot collect from any person interested in the estate the amount of tax apportioned to the person, the amount not recoverable shall be equitably apportioned among the other persons interested in the estate who are subject to apportionment.

(h) Recovery of federal and state estate tax.- Subject to this subsection, a fiduciary acting in another state or a person required to pay the tax who is resident in another state may institute an action in a court of this State and may recover a proportionate amount of the federal estate tax or an estate tax payable to another state or of a death duty due by an estate to another state from a person interested in the estate who either is resident in this State or owns property in this State subject to attachment or execution. For the purpose of the action, the determination of apportionment by the court having jurisdiction of the administration of the estate in the other state is prima facie correct. This subsection applies only if the state in which the determination of apportionment was made affords a substantially similar remedy.

(i) Uniformity of construction.- The provisions of this section that are uniform with statutes enacted in other states shall be construed to make uniform the laws of those states that enact the uniform provisions.

(j) Short title.- This section may be cited as the "Maryland Uniform Estate Tax Apportionment Act".

(k) Applicability of section.- Except as otherwise provided in the will or other controlling instrument, this section applies to the apportionment of, and contribution to, the federal and Maryland estate taxes.

[ET § 11-109; 1988, ch. 2, § 1; 1989, ch. 5, § 1; 1995, ch. 555.]

§ 7-309. Effect of change in federal estate tax law.

If Congress passes an act that repeals the federal credit under § 2011 of the Internal Revenue Code and does not enact a similar statute as a substitute:

(1) the provisions of this subtitle that are in effect before the passage of the Act of Congress shall apply with respect to a decedent who died before the end of the period covered by a budget bill that the General Assembly passed before the effective date of the Act of Congress; and

(2) this subtitle is void with respect to a decedent who dies after the effective date of the Act of Congress.

[An. Code 1957, art. 62A, §§ 7, 9; 1988, ch. 2, § 1; 1989, ch. 656, § 2.]