In a previous Insight, I discussed the Senate Finance Committee’s report on conservation easements. On September 21, 2020, the Senate Finance Committee released additional statistics on conservation easements, recognizing a “significant increase in syndicated conservation easement transactions.” This Insight reproduces the Senate Finance Committee’s September 21, 2020, media release below:
WASHINGTON — Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and Senate Finance Committee Ranking Member Ron Wyden, D-Ore., today released IRS data showing a significant increase in syndicated conservation easement transactions.
Last month, the Finance Committee released a bipartisan report on syndicated conservation easement transactions.
Of note, the new IRS data show that despite IRS designating them as potentially-abusive tax shelter transactions, promoters of syndicated conservation easements have continued to push the schemes. Between 2017 and 2018 the number of individual participants increased from 14,000 to 16,900, with many participating in multiple deals. And the total amount of deductions claimed through these tax shelters increased from $6.8 billion in 2017 to $9.2 billion in 2018.
Notably, it is a small number of unscrupulous actors who make these deals possible. In its latest figures, IRS identified only 34 appraisers who provided valuations on some 296 syndicated conservation easement transactions.
“The numbers provided by IRS show that dubious syndicated conservation easement tax shelters are a growing problem. Using sham partnerships to essentially buy tax breaks like this undermines the fairness of the American tax system, deprives the Treasury of revenue and leaves all other taxpayers out to dry. Our bipartisan report detailed this exact problem and concluded that every part of the federal government needs to take further action to crack down on these schemes,” Grassley said.
“Our bipartisan report detailed serious and persistent abuse of the syndicated conservation easement program. This new IRS data, which shows a significant increase in these transactions in recent years, reinforces our findings,” said Wyden. “Of particular concern, transactions continued to increase even after the IRS flagged them as potential tax shelters. Cracking down on abusive syndicated conservation easements requires ensuring IRS has the resources and legal tools to do its job, and I’m eager to work in a bipartisan way to get that done.”
In recent years, the IRS has prioritized tax enforcement efforts against syndicated conservation easements that it believes to be abusive. Freeman Law’s tax controversy practice regularly represents clients in conservation easement tax disputes. Schedule a consultation or call (214) 984-3000 to discuss your conservation easement concerns or questions.