Interest and Penalty Charges

If the Maryland estate tax liability is not paid on or before the due date of the estate tax return, Maryland law provides for the assessment of interest and late payment penalty. There is also a penalty for undervaluation of assets.

Interest

The interest rate is set annually and applies to late payments, including an increase in the tax that is due to a change resulting from action taken by IRS or the estate, and to payments made under an alternative payment schedule. For current interest rates, see Administrative Release No. 14 - Interest Rates for Refunds and Delinquent Taxes.

Penalty

A penalty not exceeding 10 percent of the unpaid tax will be assessed if the tax is paid after the due date. A penalty of 25 percent will be assessed for failure to comply with a notice and demand for a return. In addition, the Comptroller shall assess a penalty of 25 percent of the amount of the underpayment of tax which is attributable to any substantial estate tax valuation understatement. A substantial estate tax valuation understatement occurs if the value of any property claimed, or should have been claimed, is 60 percent or less of the amount determined to be the correct amount of that valuation. The underpayment penalty cannot be assessed unless the portion of the underpayment attributable to substantial estate tax valuation is greater than $5,000.