(a) Definitions. In this Section the following words have the meanings indicated:
Dependent means a dependent under Section 152 of the Internal Revenue Code.
Director means the Director of the Department of Finance.
Legal interest has the meaning stated in Section 9-104 of the Tax-Property Article of the Maryland Code.
Owner means an individual who has a legal interest in residential real property.
(b) Authorization; Amount of Deferral. An owner may defer payment of County property taxes due on residential real property occupied by the owner as the owner’s principal residence if the owner meets the requirements of this Section. The amount of taxes that may be deferred for any one year is the amount that County taxes due exceeds the amount of County property taxes paid in the prior taxable year.
(c) Program Eligibility. An owner is eligible for a payment deferral under this Section if:
(1) (A) the gross income or combined gross income of all individuals who actually reside in the dwelling (except a dependent or a person who pays reasonable fixed charges for rent or room and board), did not exceed $120,000 for the calendar year that immediately precedes the taxable year for which the deferral is sought; and
(B) the owner, or at least one of the owners, has resided in the dwelling as that person’s principal place of residence for 5 consecutive years and continues to occupy the property for that purpose; or
(2) (A) the owner is at least 65 years old; and
(B) the gross income or combined gross income of all individuals who actually reside in the dwelling (except a dependent or a person who pays reasonable fixed charges for rent or room and board), did not exceed $80,000 for the calendar year that immediately precedes the taxable year for which the deferral is sought.
For purposes of income determination under paragraph (c), and to the extent consistent with this Section, gross income or combined gross income must be calculated in accordance with Section 9-104 of the Tax-Property Article of the Maryland Code.
(d) Eligible Residential Property. The amount of the property eligible for a deferral is limited to the real property on which the residence is located, the curtilage, as determined by the Supervisor of Assessments, and any adjacent unimproved land on the same lot or parcel that is not assessed on the basis of agricultural use. A deferral must not be granted for taxes attributable to any improvement to the property that was not reflected in the assessment used for the base year for which taxes were paid to determine the amount of tax deferral under subsection (b).
(e) Eligible Taxes. County real property taxes that are eligible for deferral are the general County tax and, where applicable, special service area taxes.
(1) Except as provided in paragraph (2), interest accrues on the deferred taxes at a rate set annually by the Director that does not exceed the prime lending rate generally available on June 1 of the preceding fiscal year. The regulations adopted under subsection (q) must specify the source or sources that the Director must use to calculate the prime rate generally available on June 1 of each year. The annual interest rate set by the Director applies to any tax deferred that year, regardless of the year when the tax was first deferred.
(2) Notwithstanding paragraph (1), for deferrals for owners eligible under paragraph (c)(2), the interest accrues on the deferred taxes at a rate of 0.0% or another amount set by Council resolution.
(g) Annual Tax Bills. The cumulative amount of the payment deferral and accrued interest must be specified in the taxpayer’s annual property tax bill. The Director must record the amount of that deferral in the County tax records.
(h) Limits on Deferrals. The accumulation of deferred taxes and accrued interest must not exceed 50% of the full cash value of the property, as determined by the Supervisor of Assessments, or a lesser amount elected by the taxpayer and specified in the agreement required under subsection (l). When the maximum amounts have been reached, those amounts may continue to be deferred until any of the events specified in subsection (k) occur. An owner who receives a tax deferral under this Section must not also receive a tax deferral under Section 52-20. (i) Penalties. A penalty must not be charged during the period of the deferral on any taxes deferred under this Section.
(j) Liens. All taxes deferred and interest accrued on the taxes are a first lien on the property, with the priority of real property taxes, until paid or otherwise extinguished by operation of law. The deferred taxes and accrued interest are collectible by suit or by tax sale, regardless of any period of limitations imposed under law. In the event of tax sale for nonpayment of taxes, the property must be sold for all unpaid taxes and interest, including deferred taxes and interest. In addition to being a first lien on the property, the deferred taxes and accrued interest constitutes a personal liability of the person or persons who owned the property immediately before the occurrence of any event specified in subsection (k).
(k) Events Accelerating Payment. Except as otherwise provided in this subsection, all deferred taxes and accrued interest become due and payable if:
(1) ownership of the property is transferred;
(2) an owner no longer occupies the property as that person’s principal residence;
(3) the property becomes subject to tax sale; or
(4) the use of the property changes.
However, the property tax deferral remains available to a surviving spouse, or to a spouse or former spouse in possession of the residence under a written separation agreement or divorce decree, for amounts previously deferred. A spouse or former spouse may continue to defer taxes if that person is otherwise eligible under subsection (c).
(l) Applications; Agreement with Director of Finance. An application for a tax deferral under this Section must be submitted to the Director no later than September 1 of the tax year in which the taxpayer seeks to obtain a tax deferral, or any other date established by regulations. An eligible owner may receive a refund, without interest, for deferrable taxes paid for the first tax year. Applications must be on forms acceptable to the Director and must be sworn to as true by the owner or each joint owner. The Director may request information to verify eligibility under this Section, including income tax records, and may require a certification by the applicant of all joint owners, persons having an equitable interest in the property, and parties having a secured interest in the property. If the applicant is eligible, the Director or the Director’s designee must execute a written agreement with the owner or each joint owner before a tax deferral can be made. The agreement must reflect the terms and conditions of the deferral including notice of the lien. The agreement may provide for repayment of the deferred taxes and accrued interest in installments if the owner ceases to occupy the property as that owner’s principal residence but maintains ownership. Interest must be assessed at the rate specified under subsection (f). The Director must record the written agreement in the County’s land records. The agreement must include a conspicuous statement that indicates it is being recorded by or on behalf of the County.
(m) Notification of Secured Parties. The Director must notify all mortgagees or beneficiaries under any deed of trust of a payment deferral under this Section and of the amount of tax to be deferred. In selecting who to notify, the Director may rely on any certification made by the taxpayer under subsection (l). Notification must also be given when participation in the payment deferral program terminates.
(n) Program Withdrawal. A taxpayer may terminate the deferral at any time by giving written notice to the director and paying all deferred taxes and accrued interest. If a taxpayer terminates a deferral, the Director must record a notice of a termination of deferral in the County’s land records. The notice must include a conspicuous statement that indicates it is being recorded by or on behalf of the County.
(o) Penalties for False or Fraudulent Information. A person who knowingly submits a false or fraudulent application or statement, or withholds information, in order to obtain a deferral under this Section has committed a class A violation. In addition, the person is liable for and must repay to the County deferred taxes and accrued interest and penalties applicable to overdue taxes. The County may enforce this subsection by appropriate judicial action. A person who violates this Section is liable for all court costs and expenses of the County in a civil action.
(p) Appeals. Any owner aggrieved by a decision of the Director under this Section may appeal to the Maryland Tax Court. An appeal must be filed within 30 days after the owner receives written notice of the decision from the Director.
(q) Regulations. The County Executive must adopt regulations under method (2) to administer this tax deferral program.
(r) Annual Report. The Director must provide an annual report to the County Council by January 1 of each year that describes the extent of program participation, aggregate amounts of taxes deferred, interest accrued, administrative costs, and other relevant information. (1990 L.M.C., ch. 42, § 1; , § 1; , §1; , § 2.)
Editor’s note—Section 52-22 (formerly § 52-18F, , § 1) was added by § 1 of 1990 L.M.C., ch. 42; section 3 made the effectiveness of the act contingent on the enactment of House Bill 1137. It was adopted as 1990, ch. 652.
