Maryland Assessment Procedure Manual

Category:

Real Property

Category No.:

019

Subject:

Woodland

Subject No.:

070

Topic:

Rollback Tax and Penalty for Violating a FCMA

Topic No.:

Date Issued:

9/25/1985

Revision Date:

5/4/2017

The rollback tax for the termination of a Forest Conservation Management Agreement is calculated pursuant to Tax Property Article, §8-211. The effect of the provision is that when (1) all or part of the timber is harvested not in accordance with the plan, (2) all or part of the tract is conveyed to a new owner, unless the new owner agrees to a continuation of the management plan, (3) non-compliance with the agreement occurs, or (4) voluntary termination of the plan occurs, a rollback tax is due. Note that a woodland owner who has 50 or more contiguous acres of land, subject to an agreement, may subdivide the property and transfer to his or her child a building lot for the construction of a dwelling without incurring a rollback tax. Whenever a rollback tax results from a partial conveyance or other action not involving the whole parcel, then the rollback tax will be calculated only on that portion of the land affected by the action.

The rollback tax is calculated as follows. First, the market value of the property must be established for the tax year in which the violation occurs. From this market value, the Supervisor will subtract the value in effect at the beginning of the original agreement. The difference will be subject to a rollback tax bill that is calculated for the entire period of the agreement, with the value difference being phased-in incrementally, beginning with the year when the FCMA was entered and ending with the year that the violation occurs.

Break in FCMA Agreement: If an owner chooses not to renew and thus continue the agreement as consecutive, one full year of taxes must be paid on market rate or any other qualifying program. Any FCMA agreement entered into after at least one full year of taxes paid on market or any other qualifying program will be considered a new FCMA Agreement beginning with year one.

Example:

Property owner signs an FCMA for fiscal year 2011 at which time the full cash value for the FCMA was $2,000. In FY 2015 the Agreement is terminated and at this time the full cash market value is $40,000.

$40,000 - $2,000 = $38,000 / 5 years = $7,600 Yearly Incremental Full Cash Value

Fiscal Year	Full Cash Value	Assessment Percentage	Tax
2011	(7,600 X 1) 7,600 X	100% =	7,600 x 2011 Tax Rate = $Tax Yr. 1
2012	(7,600 X 2) 15,200 X	100% =	15,200 x 2012 Tax Rate = $Tax Yr. 2
2013	(7,600 X 3) 22,800 X	100% =	22,800 x 2013 Tax Rate = $Tax Yr. 3
2014	(7,600 X 4) 30,400 X	100% =	30,400 X 2014 Tax Rate = $Tax Yr. 4
2015	(7,600 X 5) 38,000 X	100% =	38,000 X 2015 Tax Rate = $Tax Yr. 5

Tax rates for the years 2011 through 2015 would be applied to the respective incremental assessment to arrive at the total rollback tax due.

The rollback tax for termination of a Forest Conservation Management Agreement will take the form of a revised tax bill. This revised tax bill will be submitted to the appropriate county tax collection office upon violation. The appropriate county tax collection office must also be notified if the additional $100 Department of Natural Resources penalty for non-compliance is imposed.

The Department of Assessments and Taxation is responsible for the collection of the $100 DNR penalty any time an FCMA is terminated before its scheduled expiration unless it has been reassigned. The property owner shall write a separate check made payable to DNR. It is the responsibility of the Supervisor of Assessments to obtain the $100 check payable to DNR. The check should contain the notation "Penalty for violating a F C M A."
The check for the DNR penalty is to be forwarded by the Local Assessment Office to DNR in care of the FCMA Penalty Administrator.
The check should be sent to:
MD DNR - Forest Service
c/o FCMA Penalty Administrator
Tawes State Office Building, E-1
580 Taylor Avenue
Annapolis, MD 21401

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