The State of Maryland has an inheritance tax which is found in the Tax General Article §7-207, and subsequent sections. Basically, the tax is paid as a percentage of fair market value of the property passing to persons at the time of death of another. Persons receiving property from the decedent's estate are responsible for the tax. The rate of tax varies according to the relationship of the decedent to the person receiving the property. The Department becomes involved in two situations arising under Tax General Article §7-211 of the inheritance tax law, where the tax is paid on agricultural or use value, rather than market value.

Under Tax General Article §7-211, the person who receives agricultural property assessed pursuant to Tax-Property Article §8-209 or §8-211, or property listed on the "National Register of Historic Places" may elect to pay the inheritance tax on a value other than market value. Instead, the person pays the tax based on its agricultural value §8-209 or §8-211 in the case of farmland or woodland), or on the basis of "actual use" (in the case of "National Register" property). The inheritance tax is also computed on the basis of market value for both types of property. The difference between the "market value inheritance tax" and the "agricultural or use value inheritance tax" (which is paid) becomes an inchoate lien on the property. This lien is recorded in the land records. The amount of the tax covered by the lien becomes due and payable if a disqualifying event occurs. For agricultural land, the disqualifying event is the loss of agricultural assessment. For "National Register" property, the disqualifying event is removal of the property from the Register.

MECHANICS OF THIS PROVISION AS IT AFFECTS THE SUPERVISOR

Farmland or Woodland

The person who receives either agriculturally assessed farmland or woodland from the decedent's estate pays the inheritance tax on the most recent agricultural full cash value if the property has been agriculturally assessed for five previous years. The Register of Wills will request from the Supervisor, the most recent agricultural value of the property involved. Once the tax is paid, the property must retain the agricultural assessment for fifteen years following the date of the decedent’s death. If it loses the agricultural assessment during that period, the supervisor notifies the Register of Wills and the Comptroller by letter that a disqualifying event has occurred. The balance of the tax is then due.

(NOTE: If a parcel transfers that is part agriculturally assessed and part residentially assessed, this provision only applies to the agricultural land. The taxpayer pays the inheritance tax on the fair market value of any residential acreage on the farm.)

"National Register of Historic Place's":

The person who receives real property listed on the "National Register of Historic Places" pays an inheritance tax based on the actual use value (rather than the market value) at the time of the decedent's death. If the property is taken off the "National Register" at any time during the following fifteen years, that is a disqualifying event. The Supervisor reports to the Comptroller and the Register of Wills by letter if the property is taken off the "National Register." The balance of the tax is then due.

RECORD AND AUDIT INSTRUCTIONS

1. The Register of Wills will provide to the supervisor a copy of any inchoate lien filed. Record in the mainframe master file that the property is encumbered by an inchoate lien and the date of decedent's death. Check every reassessment whether the property is still being farmed or still on the "National Register." (Call Maryland Historical Trust for the latter information.) Notify the Comptroller and Register of Wills by letter if a disqualifying event occurs.
   
2. If the property transfers from the person receiving it from the decedent to new ownership, the new owner is responsible for the amount of the inchoate lien if a disqualifying event occurs.
   
3. The register of wills will provide to the supervisor a copy of any certificate of nondisqualification that is issued. It should be recorded on the account that the inchoate lien has been satisfied and the "flags" removed from the mainframe master file.
   

EXAMPLE:

FARMLAND - 200 ACRES (All 200 Acres Farmed)
(a)	Fair Market Value, per Appraisal	= $	200,000
(b)	Agricultural Land Value TP §8-209 or §8-211 200 X $300	= $	60,000
(c)	Inheritance Tax Paid Under TG §7-211 10% of $60,000	= $	6,000
(d)	Amount of Inchoate Lien $200,000 © $60,000 = $140,000 10% of $140,000	= $	14,000

"National Register" Property

Since the Supervisor is not involved with any of the valuation in this type of property, no example is given.

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