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Our goal is to provide you with news and updates about IRS Code 170(h), the section of the Internal Revenue Code that deals with conservation easements. You will find relevant information about IRS Code 170(h), such as recent changes and developments in the law and regulations. Whether you are a landowner, a conservation organization, a tax professional, or simply interested in learning more about this topic, we hope you will find this page useful and informative.
November 05, 2024
Recently the DOJ/IRS has touted the DOJ’s victory in the well-known Fisher case as
evidence that donations of conservation easements by partnerships are fraudulent. This is a misdirect. While headlines might say something like “TWO TAX SHELTER PROMOTERS FOUND GUILTY IN BILLION-DOLLAR SYNDICATED CONSERVATION EASEMENT TAX SCHEME”, the substance of the case against Fisher and co-conspirators is about fraudulent actions that would be wrong in any scenario. This case was not about the overall validity of tax deductions generated from donations of conservation easements (or property). It was about fraud.
March 28, 2024
This case involves Valley Park Ranch, LLC (Valley Park) claiming a $14.8 million deduction for a conservation easement it donated in 2016. The IRS disallowed the deduction, leading to a petition to the United States Tax Court. The main issue was whether the easement deed met the requirements of Internal Revenue Code (IRC) section 170(h) and Treasury Regulation § 1.170A-14(g)(6)(ii).
Valley Park’s tax matters partner, Reed Oppenheimer, argued that the deed complied with the statute and regulation, but also challenged the validity of the regulation under the Administrative Procedure Act (APA), or suggested that the deed might be ambiguous.
The court found that the Oppenheimer easement deed did in fact satisfy the statutory requirements of being granted in perpetuity and being protected in perpetuity according to Congressional Intent. The court also ruled that the regulation in question was procedurally invalid under the APA, following a precedent set by Hewitt v. Commissioner and confirmed in the 11th Federal District. Consequently, the Oppenheimer deed was not required to comply with its requirements.
The court’s decision favored Valley Park, allowing its deduction for the conservation easement…
June 1, 2023
Breaking News: Partnership for Conservation Submits Public Comment Urging IRS to Prioritize Conservation Easement Safe Harbor Guidance
The Partnership for Conservation, a trade group that advocates for the use of conservation easements to protect natural resources and promote land conservation, has submitted a public comment to the IRS urging the agency to prioritize guidance related to compliance with the rules for conservation easement donations under IRC sec. 170(h). The public comment, authored by the Partnership for Conservation, highlights the importance of conservation easements and the need for clear guidance from the IRS to ensure compliance with the rules.
In the public comment, the Partnership for Conservation requests that the IRS issue safe harbor sample conservation easement grant deed language on which taxpayers can rely. The organization argues that this sample language is necessary to provide taxpayers with a clear set of rules to follow when donating conservation easements and to ensure compliance with the rules.
The Partnership for Conservation also requests that the IRS work with interested tax practitioners in developing the sample language and release proposed language for public comment by stakeholders. The organization believes that this collaborative approach will result in a more effective and comprehensive set of rules for taxpayers to follow.
Overall, the public comment submitted by the Partnership for Conservation emphasizes the need for clear guidance from the IRS to ensure that conservation easements are used effectively and that taxpayers are able to comply with the rules. The organization urges the IRS to prioritize the development of safe harbor guidance and to work with interested tax practitioners to develop sample language.
This public comment is an important step in the Partnership for Conservation’s ongoing efforts to promote land conservation and protect natural resources through the use of conservation easements. The organization’s advocacy work highlights the critical role that trade groups can play in shaping public policy and promoting positive change in their respective industries.
April 18, 2023
Title: Land Trusts Want More Answers on IRS’s Easement Safe Harbor
The land trust community is concerned about the IRS’s conservation easement safe harbor notice, according to a recent article by Kristen A. Parillo in Tax Notes. The notice provides a correction opportunity for taxpayers who have claimed deductions for syndicated conservation easements, but the short deadline and limited guidance may make it difficult for many donors to take advantage of the provision.
Stephen J. Small, a former IRS Office of Chief Counsel employee who helped draft section 170(h) regulations, is among several observers who have raised questions about the notice. Small notes that many recorded easements across the country are in need of fixing due to legal uncertainty and litigation contesting the IRS’s positions.
Lawmakers and others have called on the IRS to publish model conservation easement deed language that complies with section 170(h) and related regulations. However, for organizations that hold conservation easements, the question of whether they have a legal obligation to review every easement donation recorded in the last decade remains difficult. Small suggests that the IRS could offer administrative relief to address staffing and capacity issues, donor concerns, and other challenges.
Overall, the article highlights the complexities and uncertainties surrounding the conservation easement safe harbor notice and its implications for taxpayers and land trusts. As the debate continues, it will be important for stakeholders to work together to find solutions that balance the needs of donors, organizations, and the broader public interest.
April 25, 2023
Title: IRS Accused of Using Backdated Documents to Win Ruling on Penalty Approval
Publisher: Tax Notes Today
Author: Kristen A. Parillo
The IRS is facing accusations of fraud after allegedly submitting backdated penalty approval forms and false declarations to win a ruling on section 6751(b) compliance in the Lakepoint Land II LLC case. The petitioner has filed a motion for reconsideration and a motion to impose sanctions, claiming that the IRS perpetrated a fraud on the Tax Court by failing to alert the court of its misconduct.
According to Tax Notes Today, the dispute relates to Lakepoint Land II LLC’s challenge of a March 2017 IRS notice of final partnership administrative adjustment disallowing two conservation easement deductions claimed on its 2013 and 2014 tax returns. The FPAA asserted various penalties for both tax years.
Despite these allegations, the IRS has filed its own motion for reconsideration, asserting that the penalties were properly approved despite “factual inaccuracies” contained in its earlier court filing.
If these allegations are proven true, it could have serious consequences for the IRS. Stay tuned for updates on this developing story.
January 3, 2022
Title: Eleventh Circuit Deals IRS Defeat In Conservation Easement Struggle
Publisher: Forbes Money Taxes
Author: Peter J. Reilly
The Eleventh Circuit has dealt a significant blow to the IRS in its ongoing struggle against abusive conservation easement deductions. In a recent decision, Judge Barbara Lagoa, a Trump appointee, wrote that the IRS regulation on judicial extinguishment formula for conservation easement deductions is invalid.
This decision is great news for taxpayers who have been struggling with the IRS over these deductions. The court’s ruling means that taxpayers can now claim these deductions without fear of being challenged by the IRS.
Conservation easements are legal agreements between landowners and conservation organizations that limit the use of land in order to protect its natural resources. Taxpayers who donate conservation easements can claim a deduction on their taxes for the value of the easement.
However, the IRS has been cracking down on these deductions in recent years, arguing that many taxpayers are abusing them by claiming inflated values for their donations. The agency has been challenging these deductions in court and has had some success in getting them disallowed.
But with this recent decision from the Eleventh Circuit, it appears that taxpayers may have more success in defending their conservation easement deductions. This is welcome news for those who want to protect our natural resources and receive tax benefits for doing so.
In conclusion, this article highlights an important development in tax law that will benefit many taxpayers who have claimed conservation easement deductions. It is an informative read for anyone interested in tax law or environmental protection.
February 3, 2020
National Taxpayer Advocate Recommends Stronger Safeguards for Conservation Deduction”
The National Taxpayer Advocate (NTA), an independent organization within the IRS that helps taxpayers resolve issues with the IRS and recommends changes to mitigate systemic problems, has recently recommended stronger safeguards for conservation deductions. This comes in response to ongoing debates concerning conservation easements, particularly syndicated conservation easements, which have been under scrutiny by the IRS.
Conservation easements are a critical tool in preserving land for future generations. They allow landowners to permanently restrict the use of their property to protect its conservation values, in exchange for tax deductions. However, these deductions have been targeted by the IRS due to alleged overvaluations.
The NTA’s recommendation suggests the need for a more balanced approach to handling conservation deductions. While there have been cases of abuse, the majority of conservation easements serve a valuable role in land preservation. Stronger safeguards could ensure the integrity of these transactions, protect legitimate easements, and deter potential misuse.
These recommendations, if adopted, could help to sustain the important role of conservation easements in land preservation, while also providing greater clarity and security for taxpayers. More details on the NTA’s recommendations can be found here.
October 19, 2019
Trump Administration’s Executive Orders Bring Transparency and Accountability to Federal Bureaucracy, Applauded by NTU.
The National Taxpayers Union (NTU) has recently released a press release applauding the Trump Administration’s two executive orders on bureaucratic transparency and accountability. The Improved Agency Guidance Documents Executive Order and the Transparency and Fairness Executive Order will bring accountability to the vast federal bureaucracy and allow for American taxpayers to better understand and challenge guidelines put out by government agencies.
One area where these executive orders could have a significant impact is in stopping unfair attacks by the IRS on conservation easements. In recent years, the IRS has been aggressively auditing taxpayers who have claimed deductions for conservation easements, often disallowing these deductions even when they are clearly legitimate.
Under the new executive orders, government agencies like the IRS will be required to provide more transparency in their decision-making processes, giving taxpayers a better understanding of how they are being audited and why. This should help to prevent unfair attacks on conservation easements by ensuring that the IRS is held accountable for its actions.
The NTU believes that these reforms will ensure that unaccountable bureaucrats can’t exercise outsized control over businesses and taxpayers. Americans everywhere stand to benefit from these reforms, which will make it easier for them to understand how government agencies operate, how they make decisions, and how they can be held accountable.
In conclusion, the NTU applauds the Trump Administration’s efforts to bring greater transparency and accountability to the federal bureaucracy. These executive orders are a significant step forward in ensuring that government agencies like the IRS are held accountable for their actions, which should help prevent unfair attacks on conservation easements.
July 29, 2019
“Environmental Tax Deduction At Risk Due to Overzealous IRS” – A Must-Read Article by Bryan Hickman
The National Taxpayers Union (NTU) has published an informative article titled “Environmental Tax Deduction At Risk Due to Overzealous IRS” by Bryan Hickman. The article highlights the current state of the Environmental Tax Deduction and how it is at risk due to the actions of the Internal Revenue Service (IRS).
For over half a century, the U.S. Tax Code has provided incentives to encourage private conservation, with the most prominent being the deduction for conservation easements under Section 170(h). This provision furnishes a charitable tax deduction for taxpayers who place easements on their property for conservation purposes and then donate the easements to qualified conservation organizations.
However, Notice 2017-10 issued by the IRS marks deductions claimed by “syndicated” conservation partnerships as “listed transactions,” subjecting them to more burdensome disclosure and filing requirements. The added obligations apply to any participant in an easement partnership since 2010 that resulted in a deduction greater than 2.5 times the amount originally invested in the partnership.
The article also sheds light on how this deduction has enjoyed broad bipartisan support, even as the divide between Republicans and Democrats on broader tax policy has widened considerably. From its inception, it was intended to promote private stewardship of environmental resources.
Overall, this article is a must-read for anyone interested in understanding how current IRS actions are putting this important tax deduction at risk. It provides valuable insights into how this deduction has encouraged private conservation efforts in the past and why it is crucial that we protect it moving forward.
In conclusion, if you want to learn more about how you can help protect this important tax deduction or simply want to stay informed about current environmental policies, be sure to check out “Environmental Tax Deduction At Risk Due to Overzealous IRS” by Bryan Hickman, published by the National Taxpayers Union.
November 14, 2019
Government Missteps on Conservation Easement Deductions
In an article titled “More Government Missteps on Conservation Easement Deductions,” published by the National Taxpayers Union and written by Pete Sepp, the author highlights how recent moves by the Internal Revenue Service and Members of Congress have singled out a group of taxpayers and attempted to stamp out longstanding policy toward tax deductions for conservation easements.
The article argues that these actions violate a fundamental principle of our system, which is that laws and policies should change only with sufficient public input and notice. The author also notes that government missteps like these can trample taxpayers’ rights, as evidenced by the PBBM-Rose Hill case.
The PBBM-Rose Hill case involved a group of taxpayers who had donated conservation easements on their property but were denied tax deductions by the IRS. The IRS claimed that the easements did not meet certain requirements under the tax code, despite having previously approved similar easements. The case has been ongoing for years and has highlighted how government missteps can affect taxpayers’ rights.
The article calls on both the IRS and Congress to get increasingly clumsy tax policy toward conservation easements on a surer footing now. It emphasizes that conservation easements are an important tool for protecting our natural resources and should not be undermined by misguided policy changes.
We recommend reading “More Government Missteps on Conservation Easement Deductions” to gain a better understanding of recent policy changes affecting conservation easements and how they can affect taxpayers’ rights.
November 29, 2018
IRS’s Shortsighted Campaign Against Conservation Easement Deductions Threatens Taxpayers and the Environment: A Call for Action
The National Taxpayers Union Foundation has published a policy paper that delves into the IRS’s campaign against conservation easement deductions. The article, written by Pete Sepp, highlights how this shortsighted approach threatens not only taxpayers but also the environment. Conservation easements are an essential tool for preserving natural resources and wildlife habitats. The IRS’s decision to impose new form filings, expand the circle of parties subject to its enforcement, create new penalties, and assert its new positions in court against common features of easements is a daunting compliance task going forward. To force taxpayers and their advisors to look back eight years and be prepared to meet this task for past returns sends the unmistakable message that the IRS is substituting its own opinion rather than that of Congress on the legitimacy of the deduction. The article recommends several solutions to address this issue and protect taxpayer rights. These include clarifying statutory language, providing clear guidance on procedural requirements, ensuring consistency in enforcement actions across regions, and establishing an independent appeals process. In conclusion, this policy paper highlights how important it is for conscientious public officials in all branches of government to right current wrongs and avoid future ones. By taking proactive steps to address these issues now, we can ensure that conservation easements continue to play a vital role in protecting our natural resources for generations to come.
Publisher: National Taxpayers Union Foundation
Author: Pete Sepp
Article Name: Shortsighted: How the IRS’s Campaign Against Conservation Easement Deductions Threatens Taxpayers and the Environment
Read the article here: https://www.ntu.org/publications/page/shortsighted-how-the-irss-campaign-against-conservation-easement-deductions-threatens-taxpayers-and-the-environment
July 16, 2018
New Article Highlights IRS Abuse Aimed at Conservation Easements
We are excited to share with you an informative article titled “Abusive Tax Shelters: IRS Should Learn Difference or Abuse of Taxpayers?” published by the National Taxpayers Union. The author of this article highlights the recent findings from the Internal Revenue Service regarding unwarranted windfalls received by certain taxpayers with deductions for “syndicated conservation easements.” The article sheds light on how the tax agency too often uses blunt tools for jobs that need refined instruments, which can stamp out legitimate taxpayer rights to appeal audit results. The author argues that taxpayers should take greater note of this seemingly obscure issue and encourages the IRS to use more refined instruments in their tax administration. Furthermore, the article explores how the IRS adopted the vaguely sinister epithet of “syndicated” to describe easement deductions that are structured to allow groups of people to contribute land to conservation and share the tax incentive benefits. This decision is troubling for the integrity of tax administration writ large, and there are a few possibilities as to why. In conclusion, we highly recommend reading this informative article by National Taxpayers Union if you want to learn more about abusive tax shelters and how they relate to syndicated conservation easements. It is a must-read for anyone interested in protecting their rights as taxpayers.