Questions Remain About the Conservation Easement Settlement Initiative


The IRS is attacking partnerships that donate conservation easements to charitable organizations and then pass along the corresponding tax deductions to their partners. In an effort to dispense with cases quickly and avoid addressing the key issue — valuation of easements — the IRS often raises a long list of technical arguments. These generally focus on unintentional flaws with the deed of conservation easement, the appraisal, or Form 8283, “Noncash Charitable Contributions.” To the dismay of many in the conservation, tax, and legal communities, the Tax Court has ruled in favor of the IRS on technical issues in several recent cases.

The IRS, leveraging the momentum from its recent victories, issued a release in late June describing a potential path to resolution (the settlement initiative). The Tax Court has a backlog  of conservation easement cases, with many more to come; the IRS has limited resources; and the IRS knows that many of the technical issues it is currently exploiting are absent in transactions after 2015. Therefore, announcing the settlement initiative makes sense from the IRS’s perspective. As this article explains, however, the settlement initiative contains severe terms and creates uncertainty, which might make it unappetizing to many taxpayers.

Read the full article here.

About Hale E. Sheppard

HALE E. SHEPPARD, Esq. (B.S., M.A., J.D., LL.M., LL.M.T.) is a Shareholder in the Tax Controversy Section of Chamberlain Hrdlicka and Chair of the International Tax Group.

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