End of Session Update: Tax and Revenue Legislation

A previous post provided the status of various tax and revenue bills that MACo took a position on. Now that the dust has settled, this post provides the final status of these bills.

Indemnity Mortgages: HB 420 would apply the recordation tax to an indemnity mortgage in the same manner as if the guarantor were primarily liable for the guaranteed loan. An indemnity mortgage is recorded to establish a lien on the property. It typically occurs when a business entity creates a LLC to purchase property and the original business entity serves as a third-party guarantor. Under current law, the recordation tax does not apply because the total amount of secured debt has not been incurred. MACo supported the bill arguing that these business relationships are created for the sole purpose of avoiding taxation  and that HB 420 would close this loophole in the current law and would ensure that all entities are paying the appropriate taxes on real estate transactions.  Status:  The House Ways and Mean Committee failed to act on this billMACo Testimony

Semiannual Payment Schedule for Business Property: HB 463 would require counties and municipalities to establish a semiannual payment property tax schedule for all business property. A semiannual payment schedule is provided for owner-occupied residential property and for a defined group of small businesses.  MACo opposed the bill, arguing that providing such a schedule for all business property lacks a compelling policy argument.  Further, there are administrative costs associated with sending multiple tax notices, and some jurisdictions will lose interest revenue and face cash flow problems. To address MACo’s concerns, the Senate amended the bill to apply to businesses with total property taxes that do not exceed $100,000.  The House concurred with these amendments.  Status:  HB 463 passed the General Assembly and is awaiting the Governor’s signature. MACo Testimony

Semiannual Payment Schedule for all Residential PropertyHB 695 would require a local government to provide for a semiannual payment of State, county, municipal, and special taxing district taxes for all residential property, not just owner occupied property.  This would extend the semiannual payment schedule to more than 355,000 properties with an estimated value of more than $83 billion. MACo opposed the bill expressing concern about the administrative burden placed on local governments to collect taxes in this manner and the possibility of increased payment defaults.  Status:  The House Ways and Means Committee failed to act on this bill. MACo Testimony

Business Start-Up Personal Property Tax Exemption: HB 1087 would grant a one-time personal property tax exemption for businesses that organize during the current tax year or relocate their headquarters to Maryland in the current tax year.  MACo supported the bill with amendments to provide counties with the option of providing this personal property tax exemption.  Status:  The House Ways and Means Committee failed to act on this billMACo Testimony

Expansion of Personal Property Exemption for Residential Business Property: SB 10 would expand the current personal property tax exemption for business personal property used in connection with a business located at an individual’s principal residence. To be eligible, the business personal property would no longer be required to be owned by the owner of the residence. MACo opposed the bill arguing that this expansion is overly broad and raising concerns with the fiscal impact on the counties.  Status: The Senate Budget and Taxation Committee failed to act on this billMACo Testimony

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