Comptroller v. Phillips

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In the Circu it Court for T albot Cou nty Case No. 20-C-03-004819 IN THE COURT OF APPEALS OF MARYLAND No. 46 September Term, 2004 COMPTROLLER OF THE TREASURY v. BLAINE T. PHILLIPS, EXECUTOR OF THE ESTATE OF DONALD P. ROSS, JR. Bell, C.J. Raker Wilner Cathell Harrell Battaglia Greene, JJ. Opinio n by Rak er, J. Filed: January 13, 2005 In this case, we determine whether the Comptroller of the Treasury may impose Maryland estate tax on an estate that has no federal estate tax liability due to its utilization of the federal credit for tax on prior transfers. The Maryland Tax Court and the Circuit Court for Talbot County held that the Comptroller may not assess Maryland estate tax in such circumstances. We affirm. I. Background Since 1926, the f ederal gov ernment h as shared e state tax revenu e with states through an eighty percent credit for state death taxes, now codified as I.R.C. § 2011 (2004). 1 See Page v. Comptroller, 270 Md. 725, 729, 313 A.2 d 691, 69 3 (1974). T he Gen eral Assem bly enacted the Maryland estate tax in 1929, 1929 Md. Laws Chap. 275, to take advantage of this federal revenu e sharin g. See Page, 270 M d. at 729 , 313 A .2d at 69 3. As such, the Maryland estate tax, unlike the Maryland inheritance tax, is linked directly to the federal estate tax. In Comptroller v. Jameson, 332 Md. 723, 633 A.2d 93 (1993), we provided an overview of the interplay between these three taxes: The United States imposes a federal esta te tax whic h is payable nine months after death. On the federal estate tax return, estates 1 I.R.C. § 2011 (2004) provides in part as follows: (a) In gener al. The tax imposed by section 200 1 [the estate tax] shall be credited with the amount of any estate, inheritance, lega cy, or succession taxes actually paid to any State or the District of Columbia, in respect of any property included in the gross estate (not including any such taxes paid with respect to the estat e of a p erson o ther than the dec edent). are permitted to claim a credit, up to a specified amount, for state death taxes actually paid to any of the fifty states. This credit is a method of revenue sharing in which the federal government is diverting some federal estate tax revenue to the states. The Maryland inheritance tax is a tax imposed on the privilege of receivin g prop erty. See Maryland Cod e (1988) § 7-202 of the Tax-General Article. . . . The Maryland inheritance tax is not integrated with the federal estate tax; in other words, the calculation of the Maryland inheritance tax is not dependant upon the fede ral es tate tax sys tem i n any way. On the other han d, the Ma ryland estate tax is complete ly integrated with the fe deral estate tax. The structure of the Maryland estate tax is referred to as a pick-up tax. This means that, if the federal credit for state death taxes allowable b y the Internal Revenue Code exceeds the Maryland inheritance tax, an estate must pay Maryland estate tax to p ick up the difference between the credit and the state inher itance tax. Sta ted more succ inctl y, the inheritance tax is deducted from th e federal es tate tax credit to determine the amount of Maryland estate tax. By providing for full use of the federal cred it for state death taxes, the Maryland e state tax statute shifts taxes that would otherwise be paid to the fe deral go vernm ent to the state trea sury. . . . Id. at 725- 26, 633 A.2d a t 94 (cita tions om itted). II. Facts Appellant is Comptroller of the Treasury of Maryland, an official charged with, inter alia, the duty to assess and collect Maryland estate tax. -2- Appellee is execu tor of th e estate o f Don ald P. R oss, Jr. ( d ecede nt ), a Delaware resident who d ied on J une 30 , 2000. The majority of decedent s estate was located outside Maryland, but he left a one-third, undivided interest in real property kn own as 6 523 Shin gle Row Road in Royal Oak, Talbot County. The date-of-death value of this interest was $1,750,000. Decedent also left a one-third interest in the tangible property located at that address. The date-of-death value of the tangible pro perty for federal estate tax purposes was $29,053.67. Pursuant to deceden t s will, his interest in the Marylan d tangible p roperty passed to his issue, per stirpes.2 The re sidue o f dece dent s e state, which included his interest in the 2 Representation per stirpes is defined for intestate succession in Md. Code (1974, 2001 Repl. Vol., 2004 Cum. Supp.), § 1-210 of the Estates and Trusts Article, and for wills in § 1-210.1. Specifically, § 1-210.1(b) defines per stirpes distributio n to the issue of one sp ecific person as follows: (1) On the occurrence of the event designated by the will, the property to be distributed shall be divided into as many equal shares as there are children of the person whose issue are to take by representation or per stirpes, excluding those children who were not living at the time of the occurrence of the event and did not leave issue who w ere living at the time of the occurrence of the event. (2) Distribution of the shares shall be made as follows: (i) One sha re shall be distributed to each child, who was living at the time of the occurrence of the event; and (ii) One share shall be distributed among the issue of ea ch child who was not living but who left issue who were living at the time of the occurrence of the event in the same manner distribution is to be made to the issue of one specified person as provid ed by this s ubsect ion. Put more simply, per stirpes means proportionately divided between beneficiaries according (contin ued...) -3- Maryland real property, pa ssed to a trust established on November 1, 1999 (the 1999 Trust ). Under the terms of the 1999 Trust, the residue of the estate was distributed immedia tely into two new trusts: the Marital Trust and the Residuary Trust. The amount of property to be s et aside in the Marita l Trust was specified as follows in the 1999 Declaratio n of Trus t: Trustee shall set aside, as the Marital Trust, property with the smallest aggregate value needed to reduce Trustor s federal estate tax to the lowest possible amount after taking into account all credits and deductions against such tax available to Trus tor s estate, except to the extent that the use of any such credit (other than the unified credit) w ould in crease s tate dea th taxes . Acc ordingly, sufficient a ssets were d istributed from the 1999 T rust into the M arital Trust to reduce decedent s federal estate tax liability to zero. Among these assets was the Maryland real p rope rty. Decedent s mother, Wilhelmina duPont Ross, predeceased her son by only five days. From her estate, decedent inherited assets valued at $5,030,307.86. Because Wilhelmina Ross predeceased decedent by less than two years, decedent s estate was entitled to a 2 (...continued) to their deceased ancestor s sh are. Black s Law Dictionary 1181 (8 th ed. 2004). -4- $2,263,471.57 credit for tax on prior transfers un der I.R.C. § 2013 (200 4).3 This credit exceeded all federal estate taxes owed on the inherited assets. On behalf of decedent s estate, appellee filed a United States Estate (and GenerationSkipping Transfer) Tax Return ( Form 706 ) on October 1, 2001. On Fo rm 706, appellee made , inter alia, the following entries: 10. Gross Estate Tax: 2,484,021.57 *** 13. Allowable unified credit: 220,550.00 *** 15. Credit for state death taxes: 0.00 *** 19. Credit for tax on prior transfers: 2,263,471.57 *** 21. Net estate tax: 0.00" Appellee filed a Maryland Estate Tax Return ( Form MET 1 ) on the same date. On Form M ET 1, a ppellee made , inter alia, the following entries: 8. Maximum credit for state death taxes (from line 15, federal Form 70 6): 0 *** 10. Percentage of Maryland estate to total gross estate: 13.18 3 I.R.C. § 2013 (2004) provides in part as follows: (a) General rule. The tax imposed by section 2001 [the estate tax] shall be credited with all or a part of the amount of the Federal estate tax paid with respect to the transfer of property . . . to the decedent by or from a person . . . who died within 10 years b efore, or within 2 years after, the deceden t s death. . . . -5- *** 11. Maryland apportioned credit (line 10 times line 8): 0.00 *** 12. Maryland estate tax liability (from line 8 or line 11, whichever is applicable): 0.00 Decede nt s estate did n ot remit any M aryland estate tax to appellan t. On October 18, 2001 , appellant sen t a Deficien cy Notice to appellee, indicating a Maryland estate tax liability of $48,451.09 plus interest. Appellee filed a Protest, setting out a legal argument in support of his com puta tion of ze ro M arylan d estate ta x liab ility. Appellant subsequently sent appellee an Assessment for the deficient tax plus interest, 4 and appellee appealed to the Ma ryland Tax C ourt (an admin istrative agency).5 The Tax C ourt held a hearing on November 14, 2002 and issued an oral dec ision reversin g the Asse ssment, finding that no Maryland estate tax was due. The Tax Court issued an order to this effect on April 1 , 2003. Appellant sought judicial review in the Circuit Court for Talbot County. Judge William S. Horne held a hearing on November 21, 2003 and issued an opinion affirming the Tax Court on December 8, 2003. Appellant next appealed to the Court of Special Appeals. Before that court co uld consid er the case, w e granted c ertiorari on ou r own initiativ e to resolve an area of confusion in Maryland estate tax law. 381 Md. 67 7, 851 A.2d 59 6 (2004). 4 Md. Code (1988 , 2004 Repl. Vo l.), § 13-410 of the Tax -General Article mandates that a tax collector shall mail a notice of assessment under this title to the person or govern menta l unit aga inst wh ich an a ssessm ent is ma de. 5 Md. Code (1988 , 2004 Repl. Vo l.), § 13-510(a)(1) of the Tax -General Article authorizes a person ag grieved by a ta x assessm ent to appe al to the Tax Court. -6- On appeal, appellant raises one issue: whether the Maryland Comptroller may assess state estate tax against an estate that has no federal estate tax liability due to its utilization of the federal credit for tax on prior transfers.6 III. Standard of Review This case raises o nly an issue of law, as the p arties agreed to a stipulation of facts before the Tax Court. When this Court reviews an administrative agency s decision, we employ the same statutory standards as would the Circuit Court; the inquiry is whether the administrative agency erred, not whether the Circ uit Cou rt erred. See Spencer v. Board of Pharmacy, 380 Md. 515, 523-24, 846 A.2d 341, 346 (2004). Under the Maryland Administrative Procedure Act, Md. Code (1984, 2004 R epl. Vol.), § 1 0-222 of the State Government Article, we determine the correctness of the agency s legal conclusions and may substitute our jud gmen t for tha t of the a gency. Id. at § 10-222 (h)(3)(i) (iv); see Charles County v. Vann, 382 Md. 286, 295, 855 A.2d 313, 319 (2004). Specifically, in reviewing questions of law answered by the Tax Court, we have said that a reviewing court is under 6 In addition, appellee claims that it would be uncon stitutional for th e Comp troller to assess Maryland e state tax when the Maryland portion of the estate s assets did not generate any federal estate tax. Appellee raised this issue befo re the Tax Court and Circuit Court. Both found it unnecessary to address the issue, because they ruled for appellee on the statutory issue. As we affirm the Circuit Court s upholding of the Tax Court s decision on the statutory issue, w e too do no t address this c onstitutional issue. See Telnikoff v. Matusevitch, 347 Md. 561, 579, 702 A.2d 230, 239 n.15 (1997) (noting the established principle that a court will not decide a constitutional issue when a case can properly be disposed of on a non-constitutional ground ). -7- no statutory constraints in reversing a Tax Court order which is premised solely upon an erroneous conclusion of law. Comp troller v. Gan nett, 356 Md. 699, 707, 741 A.2d 1130, 1135 (1999) (quoting Ramsay, Scarlett & Co. v. Comptroller, 302 Md. 825, 834, 490 A.2d 1296, 1301 (1985). We have held, though, that agen cy legal interpreta tions of the s tatute it administers are entitled to some d eferen ce. See Vann, 382 Md. at 295-96, 855 A.2d at 319. Determining whether the Comptroller may assess estate tax in this case depends upon an interpretation o f the Ma ryland statute de fining the re lationship be tween fe deral and sta te estate taxes: Md. Code (1988, 1997 Repl. Vol., 2001 Cum. Supp.), § 7-304 of the TaxGeneral Article. The cardinal rule of statutory construction is to ascertain and effectuate the intent of the L egislatu re. Collins v. Sta te, 383 Md. 684, 688, 861 A.2d 727, 730 (2004). In ascertaining legislative inten t, we first examine the plain language of the s tatute. Melton v. State, 379 Md. 471, 476-77, 842 A.2d 743, 746 (2004). We do not examine the plain language in isolation. Rather, we consider the particular and broad objectives of the legislation and the overall p urpose of the s tatutory sc heme . See Ha ndy v. State , 357 Md. 685, 705, 745 A.2d 1107, 1117 (2000) (quoting Rose v. Fox Pool, 335 Md. 351, 359, 643 A.2d 906, 910 (1994) and cases cited therein). If the plain language of the statute is unambiguous and is consistent with the statute s apparent purpose, we give effect to the statute as it is written. See Melton, 379 M d. at 477 , 842 A .2d at 74 6. When th ere is more than one reasonab le interpretation of a statute, the statute is ambig uous. Melton, 379 Md. at 477, 842 A.2d at 746. If the statut ory language i s ambigu ous o r unc lear, we look to leg islati ve histor y, -8- prior case law , and sta tutory pur pose. Deville, 383 Md. 217, 223, 858 A.2d 484, 487 (2004). The statute must be construed as a w hole so that n o word, c lause, senten ce, or phrase is rendered surplusage, superfluous, meaningless or nug atory. Rose, 335 Md. at 359, 643 A.2d at 909-910. IV. Positions of the Parties The parties present divergent interpretations of § 7-304. Section 7-304 provides:7 (a) Federal credit defined. In this section, fed eral credit means the maxim um credit f or death tax es paid to any state that is allowable under § 2011 of the Internal Revenue Code against the federal estate tax of a decedent as reduced by the proportion that the amou nt of the esta te not included in the Maryland estate bears to the a mount o f the entire es tate of the de cedent. (b) In general. (1) Except as otherwise provided in this subsection, the Maryland estate tax is the amount, if any, by which the federal credit exceeds the total of death taxes other than the M aryland estate tax that: 7 Pursuant to 2002 Md. Laws, Chap. 440 § 17, Md. Code (1988, 2004 R epl. Vo l.), § 7-304 of the Tax-G eneral Artic le now inc ludes Su bject to § 7-3 09 of this su btitle at the beginning of subsections (a) and (b)(2). As part of the same amendment, the General Assembly rewrote § 7-309, Effect of Change in Federal Estate Tax Law, to maintain the Maryland estate tax even were the federa l estate tax repe aled. Section 7-309 w as again amended in 2004. 2004 Md. Laws, Chap . 430 § 4 . The revised § 7-304 and, by extension, the new § 7-309 are not applicable to the case sub judice, because decedent died in June 2000, and the 2002 amendment only applies to decedents dying after December 31, 2001. 2002 Md. Laws, Chap. 440 § 30. We could imagine an argument that the use of allowable in § 7-309(b )(1)(i) and (2)(i) as amended in 2002 is relevant fo r interpreting allowable in § 7-304 . We will not decide or even consider this argument as neither party has raised it to do otherwise would be unfair to the parties, w ho have h ad no op portunity to brief this issue. See Md. Rule 8-131. -9- (i) are imposed by a state on property included in the Maryland estate; (ii) are allowable in computing the federal credit; and (iii) except as provided in § 13-906 of this article, have actually been paid out of the Maryland estate and received by the appropriate unit of this State. (2) T he M arylan d estate ta x ma y not exceed the amount whose timely payment in accordance with f ederal law would reduce the amount of the federal estate tax payable out of the Maryland estate had this subtitle not been enacted. (c) Failure to take full federa l credit. The Maryland e state tax is not affected by a failure to take or preserve the federal credit. According to appellant, § 7-304(c) mandate s that an estate must pay state e state tax regardless of whether the estate claimed the federal credit for state death taxes. Appellant views § 7-304(c) as dictating that appellee s choice to take the federal credit for tax on prior transfers instead of the credit for state death taxes has no bearing on the Maryland estate tax. In other words, the Maryland estate tax is based on the potential state death tax es credit, rather than the actual state death taxes credit taken. First, appellant as serts that the plain meaning of § 7-304(c) is that the estate s choice to take another credit on the federal Form 706 is irrelevant for Maryland estate tax purposes. Second, appellant argues that allowable in § 7-304(a) means potential, further indicating that § 7-304(c ) should be interpreted as making irrelevant whether the estate actually took the federal credit. Finally, appellant cites as support a statement we made in Jameson about the meaning of § 7-30 4(c): The plain meaning of this sentence is that Maryland estate tax is calculated based upon what the maximum federal credit available to the estate is; not on -10- what the exe cutor o f the est ate cho oses to c laim as a federa l credit. 3 32 M d. at 738, 633 A.2d at 100. 8 Appellant maintains that this sentence evince s our adoption of ap pellant s position that the executor s choice is irrelevant for determining whether to assess Maryland estate tax. Appellant argues that § 7-304(b)(2) does not contradict its interpretation of the statute. Appellant sees § 7-304(b)(2) as a counterpart to § 2011(e) of the Internal Revenue Code. Section 2011(e) sta tes: The cr edit provide d by this section s hall not exceed the amount of the tax imposed by section 2001, reduced by the amount of the unified credit provided by section 2010. I.R.C. § 2011(e) (2004). In other words, § 2011(e) mandates that the state death taxes credit may not exceed the federal estate tax. According to appellant, § 7304(b)(2) plays the same role; when the calculation of the state death taxes credit is greater than the federal estate tax, the Comptroller cannot assess a state estate tax greater than the federa l estate tax . Appellee responds by interpreting § 7-304 to impose Maryland estate tax only when federal estate tax liability exists. Appellee interprets the statute as creating a distinction between: (1) the amount allowable as the federal cred it under the § 7-304(a) s definition, and (2) the maximum estate tax that the Comptroller may impose under § 7 -304(b)(2) . While the calculation of the Maryland es tate tax is determined by employing § 7 -304(b)(1) s 8 The provision w e reviewe d in Comptroller v. Jameson, 332 Md. 723, 633 A.2d 93 (1993), was Md. Code (1957, 1983 Repl. Vol.) Art. 62A, § 2. We noted that the provision was recodified subseq uently w ithout su bstantiv e chan ge as § 7 -304(c ). Jameson, 332 Md. at 738, 633 A.2d at 100 n.7. -11- arithmetic formula using the allowable amount of the federal credit, § 7-304(b)(2) adds that the Comptroller may not impose the estate tax unless the state death taxes credit reduces the federal estate tax. In other words, § 7-304(b)(2) mandates appellee s position that the Comptroller may not assess a Maryland estate tax when the estate owed no federal estate tax even without taking the state death taxes credit. Appellee s interpretation o f § 7-304 (c) is based on his interpretation of § 7-30 4(b)(2). He asserts that § 7 -304(c) s ins truction to disregard an estate s fa ilure to take the credit only app lies when federal esta te tax liability exists. V. A. Purpose of the Statute While the specific issue we address in th is case is a ma tter of first imp ression in Maryland, we have reviewed § 7-304 and its predec essor o n a num ber of o ccasion s. See, e.g., Comptroller v. Jameson, 332 Md. 723 , 633 A.2d 93 (1 993); Page v. Comptroller, 270 Md. 725, 313 A.2d 691 (1974); Comptroller v. Davidson, Co-Exec., 234 Md. 269, 199 A.2d 360 (1964); Cross v. Downes, 164 Md. 216, 164 A. 758 (1933). We will review in depth our decision in Jameson, as our analysis in that case of the purpose and structure of the Maryland estate tax is instruc tive. In Jameson, the estate failed to file its Maryland estate tax return by the filing deadline. The estate did file its federal estate tax return and claimed the state death taxes -12- credit. Subse quently, the estate filed its two Maryland inheritance tax returns and paid the taxes due. Months later, and more than two years overdue, the estate filed its Maryland estate tax return. As the state inheritance taxes exceeded the state death taxes credit taken, the estate calculated that it owed no Maryland estate tax.9 The Comptroller, though, assessed the estate for interest on the unpaid estate tax covering the time until the inheritance tax was paid, as there was estate tax liability until the inheritance taxes reduced the liability to zero. 332 Md. at 726-28, 633 A.2d at 94-95. We held that the Comptroller could collect interest on the late payment of state estate tax, even though the subseq uent payme nt of state inherita nce tax es elimin ated the origina l estate tax liability. Id. at 740, 633 A.2d at 101. In reaching this holding, we analyzed the structure and purpose of what is now § 7304. As quoted supra, we defined the Maryland estate tax as a pick-up tax with its purpose to shift[ ] taxe s that wou ld otherw ise be paid to the f ederal gov ernment to the state treasury. Id. at 726, 6 33 A.2 d at 94. See gene rally Estate of Fasken, 563 P.2d 832 (Ca l. 1977) (en banc) ( detailing in gr eat depth th e history of the f ederal state d eath taxes credit and state estate taxes designed to pick-up the cred it). We note d that the M aryland statute provides for full use of the fed eral cred it. Jameson, 332 Md. at 726, 663 A.2d at 94. Thus, the Marylan d estate t ax is no t an add itional tax . Rathe r, it takes full advantage of federal revenue sharing by capturing the maximum amount of estate tax revenue that the federal government author izes. See Robert A. Rombro & Bonnie A . Travie so, Maryla nd Dea th 9 Under § 7-304(b)(1), M aryland death taxes other than the e state tax are deducted from th e fede ral cred it to deter mine th e Mar yland esta te tax. -13- Taxes, in 1 Maryland Taxes § 5.52 (MICPEL 2001) (noting that The Maryland estate tax is not an additional tax impose d on the taxpayer, since it only causes to be paid to the state, rather than the federal government, the difference between the inheritance tax paid to any state and the maximum credit allowable by the federal statute with re spect to dea th taxes paid to any state ); H. V ernon E ney, Death and Taxes Maryland Style, 17 Md. L. Rev. 101, 111 (1957) (noting that The Maryland estate tax is, therefore, not an additional tax at all since it is carved out of the Fede ral estate tax ).10 Applying Jameson to the case sub judice, we conc lude that appellant s position is inconsistent with the purpose o f § 7-304. M aryland s estate tax is integrated co mpletely with the federal esta te tax; it is a pick -up tax ca lculated by sub tracting the oth er state death taxes from the federal state death taxes credit. This integ rated structure reflects the credit s purpose of diverting some federal estate tax revenue to the states and § 7-304's purpose of capturin g that rev enue. Appellant would a ssess Ma ryland estate tax e ven wh en an estate has no fe deral estate tax liability and, conse quently, has no t taken the fe deral credit for state death taxes. In other words, in situations in which an estate h as no federal liability, appellant would transfo rm 10 The Office of the Attorney General has long recognized that the Maryland estate tax is a pick-up tax, rather than an additional tax. In 1933, Judge William L. Henderson, then Assistant Attorney General, described the Maryland estate tax as M aryland s right to share with the Federal Government in the tax imposed upon the Maryland estate. 18 Op. Att y Gen. 511, 512. In 42 Op. Att y Gen. 432, 433 (1957), the Attorney General and Assistant Attorney General cited Judge Henderson s description and concluded, Thus, the Maryland and fe deral es tate taxe s are vie wed a s a single entity. -14- Maryland s estate tax from a revenue sharing instrum ent that does not increase the e state s tax burden into a new tax. That position is inconsistent w ith the integrated relationship between the federa l and state taxe s. Simply put, M aryland cannot benefit from revenue sharing when there is no revenue to share. In the absence of statutory authorization, the Comptroller may not transform § 7-304 into a tax increase. To hold otherw ise would ignore the Maryland estate tax s purpose of accepting the federal government s of fer to share revenue. B. Statutory Provisions Appellant s reading of allowable in § 7 -304(a) as potential is contrary to the plain language of the statute . There is no reason to believe tha t the word allowab le is meant to remove the federal state death taxes cre dit and the Maryland estate tax from the role of revenue sharing instruments. Appellant only can reach this strained result by viewing allowable as an isolated word. The entire phrase reads: federal credit means the maximum credit for death taxes paid to any state that is allowable under § 2011 of the Internal Revenue Code against the fed eral esta te tax of a dece dent. 11 The plain meaning of 11 Neither party refers us to any case law or legislative history explaining the use of the word allowab le in the statute . It appears tha t § 7-304 u ses allow able to cor respond w ith I. R. C. § 20 11 (2004 ), which es tablishes the c redit. Section 2011 defines and limits the credit allowed. For example, § 2011(b)(1) states that the credit allowed by this section shall not exceed amounts listed in a table of the maximum credit for estates of varying sizes. By using the term allowable, the Maryland legislature made clear that § 7-304 refers to the credit as defined by the federal definition and limitations. Thus, corresp onding to I.R.C . § 2011(b)(1), [i]f, because of the size of the estate, no credit was allowed on the federal esta te tax return, n o Ma ryland est ate tax is impos ed. A llan J. G ibber, Gibber on Estate (contin ued...) -15- this phrase is that calculating the Maryland estate tax under § 7-304(b)(1) s formula requires using as much of the fed eral state death taxes credit as federal law permits. The purpose of the provision is to ensure that the State picks up the entire amount made available to it by the federal credit. When no federal estate tax is owed, because the estate has taken the tax on prior transfers credit or for any other reason, then there is no state death taxes credit allowable. Our reading of § 7-304(a) is compelled by the phrase against the federal estate tax of a decedent. Appellant s interpretation of § 7-304(a) ignores this phrase. This phrase indicates that the federal credit should not be viewed as an abstract figure; instead, it must be seen as a sum re distributed from th e fede ral estate tax. See Riethmann Trust v. Dir. of Revenue, 62 S.W.3d 4 6, 48 (M o. 2001) (e n banc) (h olding that n ear identical lan guage in the Missouri statute sugge sts that in order to be oblig ated to p ay the state s tax, some federal tax must be assessed ). As with § 7-304(a), we can understand § 7-304(b)(2) by looking at its plain language. Section 7-304(b)(2) states, The Maryland estate tax may not exceed the amount whose timely payment in accordance with federal law would reduce the amou nt of the fe deral estate tax payable ou t of the M aryland e state had this sub title not b een en acted. 12 The plain 11 (...continued) Administration, § 8.63 (MICP EL 2001). 12 This provision remains almost unchanged from the 1929 statute creating the Maryland estate tax. The wording in that statute was as follows: (contin ued...) -16- language of this subs ection is that the Maryland estate tax may not be greater than the additional federal estate tax an estate would owe were there not a state de ath taxes cre dit. Thus, the subsection mandates a calculation of what the federal estate tax liability would be without the credit for state dea th taxes. Th at the federa l estate tax liability with out the cred it for state death taxes is reduced b y another cred it is irrelevant un der this subs ection. In this case, in the absen ce of a state d eath taxes c redit, the estate would have ow ed no fed eral estate tax. Accordingly, § 7-304(b)(2) precludes appellant fro m assessin g appellee M aryland estate tax. Unlike §§ 7-3 04(a) a nd (b)(2 ), § 7-30 4(c) is am biguou s. Appellant reads § 7-304(c) as stating that an estate s decision to take another federal credit instead of the credit for state death taxes does not affect the Maryland estate tax. Appellee reads the section as stating that when an estate has fe deral estate tax liability, its failure to take o r preserve th e federal cre dit does not affect the Maryland estate tax. Viewed without reference to the leg islati ve histor y, 12 (...continued) . . . provided, h oweve r, that such M aryland Estate Tax hereby imposed shall in no case exceed the extent to which its payment will effect a saving or diminution in the amount of the Federal Estate Tax, payable by or out of the Estate of th e Deced ent had this Article n ot been enacte d. 1929 Md. Laws, Chap. 275. The provision was altered for the first time in 1978 when the legislature changed payment will to timely payment in accordance with federal law would . 1978 M d. Laws , Chap. 10 9. This cha nge wa s part of the le gislature s attempt, discussed infra, to prevent e states failures to meet federal filing deadlines from impacting the state estate taxes due. The provision was reworded and recodified into § 7-304(b)(2) of the Tax-G eneral A rticle wi thout su bstantiv e chan ge in 19 88. 1988 Md. Law s, Chaps. 2 and 110. -17- both parties interpretations are reasonable. We, thus, look to the legislative history of § 7304(c). In this pursuit, we are aided again by Jame son. In Jameson, we analyzed the meaning and purpose of § 7-304(c) in response to one of the Jameson estate s arguments. The Jameson estate argued tha t since it had n ot paid the Maryland inheritance taxes at the time it paid its federal estate tax, a tax preparer had to enter zero as the amount of federal state death taxes credit available. The e state continu ed that as the re was no federal cred it allow able, it owed no M aryland e state tax and co uld not be orde red to p ay interest. 332 Md. at 737-38, 633 A.2d at 100. Our response to the estate s argument was based on our determ ination that § 7-304(c) was passed to prevent such attempts to avoid esta te tax through the timing of filing the respective inheritance and estate tax form s. We disagreed w ith the estate s argument about the effect of the timing of payment, holding that the General Assemb ly directly rejected the argument through its enactment of what is now § 7-304(c). We stated as follows: Although the above creative reasoning may have at one time had some m erit, a 1978 amendment to Article 62A, § 2 clearly rejected this app roach. See Acts of 1978, c h. 109. In Hous e Bill 220, which becam e chap ter 109 , the legislature close d this potentia l looph ole. Id. at 738, 633 A.2d at 100. After quoting the language of § 7-304(c), we noted that the plain meaning of the provision is that the Maryland estate tax is calculated based on the maximum -18- federal credit available to the estate, not based on what the executor of the estate chooses to claim as a federal credit. Id. That our observation was limited to the timing of estates filing returns is clear from the following few sentences, in which we discussed the legislative history of 1978 Md. Law s, Chap. 109. For example, we quoted a Hou se Ways and Means Committee finding that the provision would e nsure that th e State will never again reimburse an individu al who fa ils to submit the claim for the fe deral tax credit on time. Id. Thus, Jameson provides n o basis for interpreting § 7-304(c) to authorize Maryland estate tax when an estate has no federal estate tax liability with out utiliz ing the s tate dea th taxes credit. A review of the available legislative history of the 1978 amendment makes clear that § 7-304(c) was adopted to address timing problems. There is no indication in the committee bill file for House Bill 220, which became Chapter 109, that the committee even considered the issue of when there is no federal estate tax liability without utilizing the state death taxes credit. Instead, the file makes clear that the bill aimed to prevent the timing of the estate s filings from having a ny impact on the state estate tax. In a letter to the Chairman of the House Ways and Means Committee, an official from the Comptroller s office explained the rationale for the bill: An incident occurred whereby I. R. S. disallowed a credit due to a technicality of timely filing under the Federal regulations. Since the cred it was n ot allow ed by I. R . S., the personal representative filed with the State of Maryland, for refund of the tax that was paid. -19- The Maryland Tax Court upheld the refund of the taxes paid. The Attorney General s office recommended the changes suggeste d in House Bill 220. The amount of the Maryland Estate tax payable under this section is not altered, diminished, or affected in any way by the failure of the estate s representative to properly take and preserve th e maxim um state death ta x credit a llowab le unde r Feder al law. Letter from B. T. Stehley, Chief of the Miscellaneous Revenue Division, Comptroller of the Trea sury, to the Chairman of the House Ways and Means C ommittee (Feb. 2, 197 8).13 Thus, the bill s purpose was to address a specific case requiring the State to refund the state estate tax, because the estate s representative had made a filing error in the federal returns i.e. had failed to prese rve the f ederal c redit as stated in § 7-30 4(c). That § 7-304(c) prevents estates timing failures from having an effect on the calculation of the Maryland estate tax is further supported by a review of the Committee Findings section of the House Ways and Means Com mittee s report summarizing House Bill 220. We quoted these Committee Findings in part in Jameson. 332 M d. at 738, 633 A.2d at 100. The entire Committee Findings consisted of two sections: (1) a Present Situation section w hich briefly summarized the integrated relationship between the federal and state estate taxes and quoted part of Stehley s letter, and (2) a With Bills Passage section w hich stated in full: 13 The bill file contains an identical letter, dated March 10, 1978, addressed to the Chairman of the Senate Finance Committee. -20- Failure of an indiv idual to file for the Federal tax credit will in no way alter, dimin ish or affec t the amou nt of the Maryland Estate Tax due. In other words, the State will never again reimburse an individual who fails to submit the claim for the tax credit on time. House Ways and Means Comm ittee, House Bill 220 (1978). The first sentence paraphrases the word ing of th e amen dmen t. The second sentence defines that wording as preventing an estate s untime ly filings fr om co sting the State rev enue f rom the federa l gover nmen t. In sum, § 7-304(c) p rovides no support fo r appellant s p osition that an estate is liable for state estate tax even when the estate is not liable for federal estate tax. After interpreting each provision, we mu st ensure that our construction of § 7-304 as a whole d oes not ren der any of its pa rts superfluo us or mea ningless. C onsidering all the provisions together, § 7-304 is a coh erent whole. Tog ether, § 7-304(a), (b), and (c) provide that the Maryland estate tax picks up the entire amo unt that the fe deral credit o n state death taxes redistrib utes to th e State no mo re, no les s. Subsection (a) states that Maryland picks up the full amount of the federal credit; (b)(1) provides the formula for calculating the tax, subtracting other death taxes; (b)(2) lim its the Marylan d estate tax to the federal credit; and (c) ensu res that a n estate s failure s canno t cost the State rev enue. After reviewing the purpose and the meaning of the statute, we reject appellant s position. Accordingly, we hold that when an estate ha s no f eder al estate tax lia bility, without -21- utilizing the federal credit for state death taxes, the Comptroller may not asse ss the estate Maryland estate taxes.14 Our holding is consistent with the holdings of other states addressing this issue. The facts in each of these cases are near identical to th e facts o f this ca se. In ea ch case , a decedent inherited assets from a relative or friend less than two years before the decedent died. The dec edent s estate representative claimed a credit for tax on prior transfers on the federal estate tax return, resulting in zero federal estate tax liability. With no liability, the estate did not claim the federal credit for state death taxes. The Comptroller then assessed the estate state estate tax. In Riethmann Trust v. Dir. of Revenue, 62 S.W.3d 46 (2001) (en banc), the Missouri Supreme Court app lied a statute w ith similar wo rding to the M aryland statute 15 and reached 14 At least one Maryland commentator has reached the same conclusion. Allan J. Gibbe r wrote , The other federal deductions and credits are first utilized to determine if any federal tax is due. It is not necessary to first utilize the allowable state credit before reducing the tax by the unified credit. The Maryland estate tax is only imposed if by reason of the cred it there would be a reduction of federal taxes. Gibbe r, supra note 11, § 8.63. 15 Mo. Rev. Stat. § 145.011 (2004) provides as follows: A tax is impose d on the tran sfer of ev ery deceden t's estate which consists in whole or in pa rt of prope rty having a tax situs within the state of Misso uri. The M issouri estate tax shall be the maximum credit for state death taxes allowed by Internal Revenue Code Section 2011 but not less than the maximum credit for state death tax es allowab le to the estate of a decedent against the federal estate tax by Section 2011 or any other (contin ued...) -22- the same result as we do. Based on the state estate tax s purpose of picking up the federal credit, the court concluded that the overall tax liability of the estate is not increased by Missouri law; the state only gets to take a piece of the federal tax pie. 62 S.W.3d at 47. The court then held that the term allowable meant the amount of credit permitted against the actual federal estate tax payable after all other credits are taken . . . Id. at 48. The court offered a series of rationales for its holding. First, the clear legislative purpose w as to ensure the state sha red in the fed eral tax p ie, not to create a new ta x. Id. Second, as cited supra, by augm enting allowa ble w ith aga inst the f ederal e state tax , the legislature expressed its intent that fed eral tax mu st be assesse d in order f or their to be a state estate tax. Id. Third, under Missouri law, an ambiguous statute imposing a tax normally is constru ed in fa vor of the taxp ayer and agains t the Stat e. Id.16 In In re Estate of Lacks, 662 N.W.2d 54 (2003), the Michigan Court of Appeals also reached the same conclusion based on a statute with similar language.17 After noting that 15 (...continued) provisio n of the laws o f the U nited S tates. 16 We also find persuasive the Missouri Supreme Co urt s response to the State s argument that the state death taxes credit must be tak en before the tax on prior transfers credit, because th e state death taxes credit is listed above the tax on prior transfers credit on the federal estate tax form, Form 706. The court responded that the order on the form is irrelevant, as the federal government does not care which credit an estate takes, and the order on the fed eral form re veals nothin g about the state legislature s intent. Riethmann Trust v. Dir. of Revenue, 62 S.W.3d 46, 49 (2001) (en banc). 17 Mich. Comp. Laws § 2 05.232(1) (2003) provides as follows: (contin ued...) -23- Michigan s estate tax was a pick-up tax and that the federal credit for tax on prior transfers is unrelated to the credit for state death taxes, Id. at 56, 58, the court held that respondent s position that state estate tax should be computed before and independent of federal deductions or credits is clearly contrary to our state and federal estate tax scheme. Id. at 58. In Dickinson v. Maurer, 229 So.2d 247 (1969), the Florida Supreme Court reviewed the State s constitutional provision authorizing Florida estate pick-up taxes18 and the statu te 17 (...continued) A tax is imposed upon the transfer of the estate of every person who at the time of death was a resident of this state. The tax is equal to the maximum allowable federal credit under the internal revenue code for estate, inheritance, legacy, and succession taxes paid to the states. This tax shall be reduced by the amount of all estate, inheritance, legacy, and succession taxes paid to states other than Michigan, which amount shall not exceed an amount equal to the proportional share of that maximum allowable federal credit that the gross value of all real and tangible personal property located in states other than this state bears to the gross value of all property included in the decedent's gross estate wherever located. 18 At the time of Dickinson v. Maurer, 229 So.2d 247 (1969), Article IX, § 11 of the Florida C onstitution of 1885 pro vided in pa rt: . . . but the power of the Legislature to levy such Inheritance taxes, or Estate taxes in this State, shall exist only so long as, and during the time, a similar tax is enforced by the United States against Florida Inheritances or Estates and shall only be exercised or enforced to the extent of absorbing the amount of any deduction or credit which may be permitted by the laws of the United States . . . as a deduction o r credit against such similar tax of the United States applicable to Florida Inherita nces or Estates . Id. at 247. -24- implementing the provision.19 The cou rt held that thes e provision s were inten ded to ava il Florida of the federal credit s revenue sharing without increasing by one jot or one title the total tax b urden on Flo rida esta tes. Id at 249 (citation omitted). 20 Similarly, in Estate of Turner v. Dep t of Revenue, 724 P.2d 1013 (1986) (en banc), the Washington Supreme Court held that a voter initiative authorizing the Washington estate tax was intended as a pick-up tax, and, thus, the state estate tax applied only to estates required to pay federal estate tax.21 Id. at 1016. To hold otherwise, the court reasoned, would defeat the revenue sharing purpose of the pick -up tax and wo uld increase the estate s tax obligati ons. Id. See also New York Trust Co. v. Doubleday, 128 A.2d 192, 197 (Conn. 19 At the time of Dickinson, Fla. Stat. Ann. § 198.02 provided as follows: A tax is imposed upon the transfer of the estate of every person who, at the time of death, was a resident of this state, the amount of which sh all be a sum equal to the amou nt by which th e credit allowable under the applicable federal revenue act for estate, inheritance, legacy and succession taxes actually paid to the several states shall exc eed the ag gregate am ount of all constitutiona lly valid estate, inheritance, legacy and succession taxes actually paid to the several states of the United States (other than this state) in respect to any property owned by such decedent or subject to su ch taxes as a part of or in c onnectio n with hi s estate. Id. at 247-48. 20 While the statute was similar to the Maryland statute, the court relied primarily upon the con stitutiona l provisi on, wh ich has no para llel in M aryland la w. 21 The court reviewed Wash. Rev. Code § 83.100.020(3), which, at the time the decision was written, stated in part: Federal credit means the maximum amount of the credit for esta te death taxes allowed by [I.R.C.] section 2 011 for the deced ent s net estate . . . Estate of Turner v. Dep t of Revenue, 724 P.2d 1013 , 1014 (1986) (en b anc). -25- 1956) (holding that a widow who had no federal estate tax liability because of the federal marital deduction had no sta te estate tax liab ility, since our statute incorporate s within itself the provisions of the federal estate tax statute, governing the computation of the federal esta te tax, including all of the provisions of the latter statute for exemptions and deductions ).22 But see Estate of Eberbach v. Dep t of Revenue, 512 N.E.2d 902, 905 (Ind. Tax Ct. 1987) (holding that the State could not assess estate tax when the federal prior transfers credit eliminated all fe dera l esta te tax liabi lity, but partially relying upon the Indiana statute s use of the word allow ed instead of allow able ). We have found one contrary case, but it is distingu ishable . In Estate of Kelly v. Commissioner of Revenue, 1991 WL 278273, the Minnesota Tax Court held that an estate was liable for Minnesota estate tax even though the tax on prior transfers credit had eliminated all federal estate tax liability. The Tax Court relied upon the Minnesota statute s use of (1) not less than in declaring the intent of the statute to be that Minnesota obtain the benefit of not less than the maximum credit allowed for state death taxes under the federal estate tax law, and (2) allowed in its intent section juxtaposed to allowable in the section imposing the tax. Id. at 3-4. We are not persuaded that the relied upon language supports the Minnesota Tax Court s conclusion. In any case, the Maryland statute does not contain the language relied upon by the Minn esota Tax Court. 22 The Conne cticut statute is clearer in its intent than Maryland or the other referenced states statutes as it spec ifically identifies the s tate estate tax liab ility as eighty per cent of the federa l liability. New York Trust Co. v. Doubleday, 128 A.2d 192 , 197 (Conn. 195 6). -26- JUDGMENT OF TH E CIRCU IT COURT FOR TALBOT COUNTY AFFIRMED. COSTS TO BE P AID BY THE APPELLANT. -27-

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