An Act To Preserve Farmland and Timberland following the Death of an Owner
Maine Legislature, Session 122, LD 0827
Committee Amendment CA_A_H442 (House)

of the Clerk of 
COMMITTEE AMENDMENT · .. A" to H.P. 586, L.D. 827, Bill, "An-
Act To Preserve Farmland and Timberland following the Death of an 
Owner" 
Amend the bill by striking out everything after the enacting 
clause and before the summary and inserting in its place the 
following: 
I Sec. 1. 36 MRS A §§4080 and 4081 are enacted to read: 
§4080. 
Election to deduct value of certain prgperty 
1. 
Definitions. 
As used in this section and section 4Q81. 
ynless the context otherwise indicates. the following terms have 
the following meanings. 
A. 
"Eligible farmland" means a tract of b.nd located in the 
State. 
including woqdland 
and wasteland. 
of at least 
contiguous acres on which a farming or agricyltural activity 
has contribyted to a gross annual farming income of at least 
$4« 000 per year in either one of the 2 calendar years or 3 
of the 5 calendar years preceding the death of the owner. 
The farming or agricultural activity and the income derived 
from that activity may be earned by either the owner or 
lessee of the farmland. 
For the pyrposes of this paragraph, 
"gross 
annyal 
farming 
income" 
inclydes 
the 
·value 
of 
COmmodities prodyced for consumption by the farm household. 
B. 
"Eligible timberland" means a tract of land located in 
this State of at least 10 acres ysed primarily for the 
Page l-LRI617(2) 
·COMM/rrEE AMENDMENT 
COMMITTEE AMENDMENT ,,~, to H.P. 586, L.D. 827 
growth af treesta be harvested for commercial use or sale. 
Otherwise eligible timberland may not be excluded from the 
provisions of this section due to: 
(1) 
Public recreational use of the land; 
(2) 
A statutory or 
governmental 
restriction that 
prevents commercial harvesting of trees or requires a 
primary 
use 
of 
the 
land 
other 
than 
commercial 
harvesting; 
(3) 
A 
deed 
restriction. 
restrictive 
covenant 
or 
organizational 
charter 
that 
prevents 
cOmmercial 
harvesting of trees or requires a primary use of the 
land other than commercial harvesting and was effective 
prior to January I. 1982; or 
(4) 
Past or present mineral exploration on the land. 
C. 
"Member of the decedent's family" or "member of the 
heir's family" means, with respect tp any individual. only: 
(1) An ancestor of the individual; 
(2) The spouse of the individual: 
(3) 
A lineal 
descendant of the 
individual 
or 
the 
individual '·s spouse. or a lineal descendant of a parent 
of the individual: or 
(4) 
The 
spouse 
of 
any 
lineal 
descendant 
under 
subparagraph (3). 
For purposes Of this paragraph. a legally adopted child of 
an 
individual 
must 
be 
treated 
as 
the 
child 
of 
such 
individual by blood. 
D. 
"Oualified 
heir" 
means. 
with 
respect 
to 
eligible 
farmland or eligible timberland. a member of the decedent's 
family who acquired such property or to whom suCh property 
passed 
from 
the 
decedent. 
If 
an interest in eligible 
farmland or eligible timberland passes to a trust. all of 
the 
current beneficiaries of which are 
members 
of 
the 
gecedent's family. the trust must be treateg as a qualified 
heir for purposes of this section. 
If a qualified heir 
disposes of any interest in eligible farmland or eligible 
timberlang to any member of the heir's family, that member 
must 
thereafter be 
treated as 
the qualified heir with 
respect to the interest. 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT .. A 
.. to H.P. 586, L.D. 827 
2. 
Election. 
Notwithstanding 
any 
provision 
of 
this 
chapter, if a timely election is made by the decedent's personal 
representative, the federal gross estate must be reduced by: 
A. 
The 
v~lue of eligible farmland and eligible timberland 
included, or. includable if no federal return is filed, in 
the federal gross estate that passes to or for the benefit 
of a qualified heir; and 
B. 
The 
value· of 
interests 
in 
entities 
included, 
or 
includable if no federal return is filed, in the federal 
gross estate· that 
passes 
to 
or 
for 
the 
benefit of 
a 
qualified heir, to the extent that the value of the interest 
in . the entity is attributable to eligible farmland 
and" 
eligible timberland owned by the entity. 
The election under this subsection must be made on the return of 
the tax imposed by this chapter. 
Such an election, once made, is 
irrevocable. 
The election under this suhsection is not effective 
unless it is accompanied by a written agreement in the form 
prescribed by the assessor signed by each qualified heir who has 
an interest, whether or not that qualified heir" is in possession 
of that interest, in any eligible farmland or eligible" timberland 
2"4 
or any entity owning eligible farmland or eligible timberland, or 
such qualified heir's legal representative, 
consenting to the 
application of section 4081 to such property. 
3. 
Axmual 
return required. 
When 
an election is 
made 
pursuant to subsection 2, the qualified heirs must file an annual 
return with the assessor on a form prescribed by the assessor. 
The 
return must be filed no later than 
days after the 
anniversary of the decedent's death for each of the 20 years 
following the decedent's death. 
The return must indicate whether 
any changes have occurred during the time period covered by the 
return that would result in the imposition of additional tax 
under section 4081, and such other information as the assessor 
may require. 
4." APJ!lication. 
This section applies to an estate of a 
decedent who dies on or after January 1, 2007. 
§40al. 
Additional tax on eligible farmland or eligible timberland 
1. Additional tax. 
The 
following provisions govern the 
imposition of an additional tax with respect to eligible farmland 
or eligible timberland. 
A. 
With 
respect 
to 
any eligible 
farmland 
or eligible 
timberland for which an election is made under section 4080, 
a 
tax is imposed 
on 
any qualified heir if any of the 
COMMITTEE AMENDMENT 
-'" 
COMMITTEE AMENDMENT ,A .. to H.P. 586, L.D. 827 
following disqualifying events occurs within 20 years of the 
. decedent's death: 
(l) 
The qualified heir transfers more than 10% by 
value of the eligible farmland or eligible timberland 
included in the decedent 's estate to any person other 
than a member or members of the decedent's family or to 
an entity that is not more than 50% owned or controlled 
by a member or members of the decedent's family; 
(2) 
The qualified heir transfers more than 10% by 
value of the ownership interest in any entity owning 
eligible farmland or· eligible timberland included in 
the decedent's estate to any person other than a member 
or members of the decedent's family or to an entity 
that is not more than -50% owned or controlled by a 
member or members of the decedent's family: or 
(3) 
The 
eligible 
farmland 
or 
eligible 
timberland 
ceases to satisfy the definition of eligible farmland 
or eligible timberland provided in section 4Q80. 
Each 
qualified heir 
shali 
file 
a 
return 
in 
the 
form 
prescribed by the assessor and pay the additional tax, to 
the extent of the heir's interest in the eligible farmland 
or eligible timberland or to the extent of the· heir's 
interest in any entity owning eligible farmland or eligible 
timberland. 
The return is due on the 15th day of the 4th 
month following the anniversary date of the decedent's death 
that follows the calendar year in which . any disqualifying 
event specified in this paragraph occurs .. 
B. 
The tax imposed on each qualified heir by this section 
equals the applicable percentage of the amount of Maine 
estate tax that would have been due with respect to all of 
the eligible farmland or eligible timberland includable in 
the decedent's estate if the election under section 4080 had 
not 
been 
made, 
plus 
interest 
thereon 
calculated 
under 
section 186, multiplied by a fraction, 
the numerator of 
which is the value of the qualified heir's interest in the 
eligible farmland or eligible timberland or the qualified 
heir's interest in any entity owning eligible farmland or 
eligible timberland and the denominator of which is the 
value 
of 
the 
eligible 
farmland 
or 
eligible 
timberland 
includable in the decedent's estate if the election under 
section 4080 had not been made. 
The amount of Maine estate tax that wOuld have been due with 
respect 
to 
all 
of 
the 
eligible 
farmland 
or 
eligible 
timberland 
includable 
in 
the 
decedent's 
estate if the 
COMMITTEE AMENDMENT 
,,,it. 
COMMITTEE AMENDMENT ,A .. to H.P. 586, L.D. 827 
election under section 4080 had not been made equals the 
amount by which the tax imposed by this chapter without 
excluding the eligible farmland or eligible timberland or 
the 
decedent's 
interest 
in 
any 
entity 
owning 
eligible 
farmland or eligible timberland exceeds the amount of tax 
imposed on the decedent's estate excluding the eligible 
farmland or eligible timberland or the decedent's interest 
in 
any 
entity 
owning 
eligible 
farmland 
or 
eligible 
timberland. 
As used in this paragraph. "applicable percentage" means: 
(1) 
One 
hundred percent. if the disqualifying event 
occurs on a date that is. 10 years or. less after the 
decedent's death; 
(2) Fifty percent if the disqualifying event occurs on 
a date that is more than 10 years but less than or 
equal to 12 years after the decedent's death; 
(3) Forty percent if the disqualifying event occurs on 
a date that is more than 12 years but less than or 
equal to 14 years after the decedent's death; 
(4) Thirty percent if the disqualifying event occurs on 
a date that is more than 14 years but less than or 
equal to 16 years after the decedent's death; 
(5) Twenty percent if the disqualifying event occurs on 
a date that is more than 16 years but less than or 
equal to 18 years after the decedent's death; or 
(6) Ten percent if the disqualifying event occurs on a 
date that is more than 18 years but less than or equal 
to 20 years after the decedent's death. 
The 
additional 
tax 
due 
under 
this section is 
the personal 
liability of each qualified heir. 
2. Application. 
This section applies to an estate of a 
decedent who dies on or after January I. 2007.' 
SUMMARY 
This 
amendment 
changes 
the definitions in the bill of 
"eligible farmland" 
and "eligible timberland." 
The 
amendment 
provides for recapture of a portion of the estate tax exemption 
if the land is not maintained as eligible farmland or eligible 
timberland for at least 20 years after the death of the decedent 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT ·A" to H.P. 586, L.D. 827 
and requires annual returns to be filed for that period to verify 
continued compliance. 
The amendment changes the effective date 
of the new exemption to apply to deaths occurring after January 
1, 2007. 
FISCAL ~OTE REQl,;lRED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 05118/05 ~ac:.. 
LD827 
LR 1617(02) 
An Act To Preserve Farmland and Timberland following the Death of an Owner 
Fiscal Note for B~II as Amended by Committee Amendment 'A" . 
. 
Committee: Taxation 
Fiscal Note Required: Yes 
Fiscal Note 
Projections 
2005-06 
2006-07 
2007-08 
Net Cost (Savings) 
General Fund 
$0 
$0 
$3,251,256 
Appropriations! Allocations 
General Fund 
$0 
$0 
$99,677 
Revenue 
Projections 
2008-09 
$4,433,293 
$104,877 
General Fund 
$0 
$0 
($3,151,579) 
($4,328,416) 
Fiscal Detail and Notes 
This bill is expected to reduce General Fund revenue by $3,151,579 in fiscal year 2007-08 and $4,328,416 in fiscal 
year 2008-09. Maine Revenue Services will also require annual General Fund appropriations of approximately 
$100,000 in the 2008-2009 biennium for the administrative costs associated with this change.