The State Department of Assessments and Taxation is implementing procedures to enforce the new transfer and recordation tax on transfers of controlling interests in entities that own real property in Maryland. The new tax takes effect July 1. Although the Maryland Chamber and other business organizations objected to the expansive reach of the Department’s proposed regulations that were published in April, the Department adopted the regs without change.

Department officials made it clear in a meeting last week that they intend to apply the tax broadly to transactions that are structured to avoid the tax. For example, despite a statutory exemption, the Department will attempt to impose taxes on transactions that exceed 12 months in duration if the entity cannot demonstrate a legitimate business purpose. The Department will shortly post on its website a copy of the tax report that must be filed within 30 days of a controlling interest transfer, along with FAQs. Contact Ron Wineholt for further information at rwineholt@mdchamber.org.