Recent Conservation Easement Tax Cases are Settling Favorably for Taxpayers

A recent headline in Tax Analysts reads: “Reasonable IRS Appraisal Triggers Conservation Easement Settlement.”

The article describes a long battle involving what the IRS calls “syndicated” conservation easement transactions. Hale E. Sheppard Esq. an Atlanta Georgia based Attorney stated in review of the ruling: “after the IRS was unable to win the case on technical issues by filing a Motion for Summary Judgment, after the partnership provided proof that any post-donation improvements would not materially change the value, and after the partnership submitted a Qualified Offer, the IRS agreed to settle the case before a Tax Court trial, allowing the partnership to claim 85 percent of the original tax deduction.”

It is interesting to note that the IRS was insistent that any settlement include language that they were not responsible for taxpayer legal fees, which could provide insight into concerns for its mountain of cases and the potential to be held liable for legal costs of those who were falsely denied due process and others who had properly followed tax code rules. 

A another article about another recent case: USCA11 Case: 20-13700 Date Filed: 12/29/2021, David and Tammy Hewitt vs the IRS in a tax court appeal also had a good outcome for “the people.” This outcome helps to show that the IRS has been trying to go after the syndicated conservation easement industry on a case by case basis, using strong arm tactics and technical issues, instead of simply working with the industry to create a set of “Blue Sky” rules (much like what was done with the charitable planning industry) and then moving on to other areas of the tax code that they do not like!

We can only hope that this shows it is time for that approach to be considered.