Bill Would Fix Ag Transfer Tax “Curveball”

On February 10, 2016, MACo Executive Director Michael Sanderson testified to the Senate Budget and Taxation Committee in support of SB 306, Agricultural Land Transfer Tax – Calculation.

This bill would clarify how a State-imposed surcharge is applied in the calculation of the state and county agricultural transfer taxes, and prospectively reversing a recent court case. No stakeholders testified in opposition to the corrective bill.

In 2008 the General Assembly enacted SB 622, which, among other things, added a 25% surcharge to the State’s Agricultural Transfer Tax. The surcharge was meant to help provide additional funding for the Maryland Agricultural and Resource-Based Industry Development Corporation (MARBIDCO) and the Maryland Agricultural Land Preservation Foundation.

At the time, MACo took no position on SB 622 as the wide understanding was that the surcharge was separate from the State’s agricultural transfer tax calculation and thus would have no effect on the amount of funds collected by a county through its local agricultural transfer tax. This understanding was established through the bill’s fiscal note and MACo’s communications with SB 622’s primary sponsor, Senator Mac Middleton, and MARBIDCO officials.

The MACo testimony states,

This understanding was upset by the recent Maryland Court of Appeals decision in Montgomery County, Maryland v. Jean K. Phillips, et al., Misc. No. 20, September Term, 2014 (Filed October 16, 2015). The Phillips case essentially held that surcharge was included as part of the State’s transfer tax calculation and that local agricultural transfer taxes must be reduced by the amount of the surcharge.

This bill would merely restore the method of calculation intended by the General Assembly and involved stakeholders.

SB 306 restores how the surcharge was intended to be applied in the transfer tax calculation and would continue to hold county agricultural transfer taxes harmless consistent with the original intent of SB 622. Accordingly, MACo urges the Committee to issue a FAVORABLE report for SB 306.

An identical cross-filed bill, HB 833, will be heard at a later date in the House.

For more background on the case that triggered SB 306, see previous Conduit Street coverage: Court of Appeals Holding Reduces County Agriculture Transfer Tax Share

For more on 2016 MACo legislation, visit the Legislative Database.

 

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