Comptroller of the Treasury v. Phillips

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 federal government has shared estate tax revenue 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.…