HB 219
Department of Legislative Services
Maryland General Assembly
2020 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
House Bill 219 (Chair, Ways and Means Committee)(By Request -
Departmental - Comptroller)
Ways and Means Budget and Taxation
Maryland Estate Tax - Portability
This departmental bill authorizes the Comptroller to examine the Maryland estate tax return
of a predeceased spouse in order to validate (1) a deceased spousal unused exclusion
(DSUE) election and (2) the amount of DSUE exclusion claimed by an estate. The bill does
not provide the Comptroller authority to impose an additional tax on the estate of the
predeceased spouse beyond that provided under current law. In addition, the bill conforms
State law to federal law by requiring an individual to file a Maryland estate tax return
within two years after the date of death of a decedent if the return is filed solely for the
purpose of making a DSUE election and clarifies the calculation of the DSUE amount in
the event that the last predeceased spouse was a Maryland resident who died before
January 1, 2019. The bill takes effect June 1, 2020.
Fiscal Summary
State Effect: The bill is not expected to materially impact State finances.
Local Effect: None.
Small Business Effect: The Comptroller’s Office has determined that this bill has minimal
or no impact on small business (attached). The Department of Legislative Services concurs
with this assessment. (The attached assessment does not reflect amendments to the bill.)
 Analysis
Current Law:
Deceased Spousal Exclusion Amount
Under the federal and State estate tax, an estate may exclude a certain amount of the estate
from taxation. Under the federal estate tax, the estates of decedents may elect to transfer
any unused exclusion to the surviving spouse. The amount received by the surviving spouse
is called the DSUE amount. If the executor of the decedent’s estate elects transfer, or
portability, of the DSUE amount, the surviving spouse can apply the DSUE amount
received from the estate of his or her last deceased spouse.
Chapters 15 and 21 of 2018 established portability under the State estate tax by allowing,
under specified circumstances, the estate of a married taxpayer to pass along the DSUE
amount to the surviving spouse. A surviving spouse may subsequently elect to claim the
unused portion of the estate tax exclusion amount of the predeceased spouse.
Federal and State Assessment Limitations
In general, the Internal Revenue Service (IRS) may examine a federal tax return and assess
a tax within three years after the return was filed. Notwithstanding this limitation, the IRS
may after three years examine the estate tax return of a predeceased spouse to make a
determination with respect to the amount of a DSUE amount.
Subject to specified exceptions, the Comptroller may not assess a tax under the estate tax
after three years from the later of the date the return was filed or due. The Comptroller may
assess a tax at any time if (1) a false return with the intent to evade the tax is filed; (2) a
willful attempt is made to evade the tax; (3) a return is not filed as required; (4) certain
amended returns are not filed; (5) an incomplete return is filed; or (6) certain returns are
not filed as required pursuant to federal tax law changes.
Background: The State imposes a tax on property that passes at or after the death of an
individual through an estate tax and an inheritance tax. In fiscal 2021, estate tax general
fund revenues are projected to total $109.2 million. Estates may generally claim a credit
against the estate tax for the amount of inheritance taxes paid.
A Maryland estate tax return is required for every estate with a federal gross estate, plus
specified adjustments, that equals or exceeds the Maryland estate tax exclusion amount for
the decedent’s date of death. An estate with a value that exceeds this exclusion amount
must file a return if the decedent, at the date of death, was a Maryland resident or the
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decedent was a nonresident who owned real or tangible personal property having a taxable
situs in Maryland.
Chapters 15 and 21 of 2018 decoupled the Maryland estate tax from the increased
federal exclusion amount enacted by the Tax Cuts and Jobs Act of 2017. Beginning
January 1, 2019, the State exclusion amount equals $5.0 million plus any DSUE amount
claimed by an estate.
State Fiscal Effect: The bill authorizes the Comptroller to examine the Maryland estate
tax return of a predeceased spouse to determine the validity of a DSUE election and the
DSUE amount claimed by an estate. In addition, the bill establishes certain procedures for
claiming and calculating the DSUE amount. The Comptroller’s Office advises that the bill
will allow the office to efficiently implement portability in a manner that is consistent with
procedures at the federal level and will reduce the administrative burden of administering
portability in the State. In addition, general fund revenues may increase to the extent the
bill increases estate tax compliance.
Additional Information
Prior Introductions: None.
Designated Cross File: None.
Information Source(s): Comptroller’s Office; Department of Legislative Services
Fiscal Note History: First Reader - February 2, 2020
rh/rjr Third Reader - March 14, 2020
Revised - Amendment(s) - March 14, 2020
Analysis by: Michael Sanelli Direct Inquiries to:
(410) 946-5510
(301) 970-5510
HB 219/ Page 3
 ANALYSIS OF ECONOMIC IMPACT ON SMALL BUSINESSES
TITLE OF BILL: Maryland Estate Tax- Portability
BILL NUMBER: HB 219
PREPARED BY: Anne Klase
PART A. ECONOMIC IMPACT RATING
This agency estimates that the proposed bill:
_X_ WILL HAVE MINIMAL OR NO ECONOMIC IMPACT ON MARYLAND SMALL
BUSINESS
OR
WILL HAVE MEANINGFUL ECONOMIC IMPACT ON MARYLAND SMALL
BUSINESSES
PART B. ECONOMIC IMPACT ANALYSIS
N/A
HB 219/ Page 4


Statutes affected:
Text - First - Maryland Estate Tax - Portability: 7-309 Tax General, 2-015 Tax General, 2-016 Tax General, 2-017 Tax General, 2-018 Tax General, 2-019 Tax General, 2-015 Tax General, 2-016 Tax General, 2-017 Tax General, 2-018 Tax General, 2-019 Tax General, 7-308 Tax General, 2-019 Tax General, 2-010 Tax General
Text - Third - Maryland Estate Tax - Portability: 7-305 Tax General, 7-306 Tax General, 7-305 Tax General, 7-309 Tax General, 2-015 Tax General, 2-016 Tax General, 2-017 Tax General, 2-018 Tax General, 2-019 Tax General, 2-015 Tax General, 2-016 Tax General, 2-017 Tax General, 2-018 Tax General, 2-019 Tax General, 7-308 Tax General, 2-019 Tax General, 2-010 Tax General