IRS Works to Make Progress in Combating Abuse of Conservation Tax Relief

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In recent years, the IRS has worked to crack down on investors who use tax relief intended to conserve natural resources to profit from them at taxpayer expense. It didn’t go very well.

Attempts by the federal government to prosecute the fraudulent use of syndicated conservation easements in court have been slow and not always successful, while legislative attempts to close the perceived loophole have been blocked, reports the Wall Street Journal. . Conservation easements provide tax breaks to landowners who promise to preserve the land they own based on the theoretical value of commercial development or resource extraction on that land.

Syndicated conservation easement agreements involve private investors or brokers bringing together groups of investors to purchase a parcel of land for the specific purpose of preserving it, while valuing the value of the property well above the market price. purchase on the basis of theoretical economic activity that buyers prevent. Lawsuits and criminal charges have been brought against practitioners accused of artificially inflating the assessment of potential economic value, both by private parties, financial regulators and the IRS itself, reports the WSJ.

Brokers, tax advisers, attorneys and other service professionals who promote and advise on such deals risk reaping fees for the practice, such as the seven Atlanta accountants indicted by the federal government in March for allegedly recruiting high net worth individuals for a $1.3 billion conservation easement. scheme. The practice remains widespread and some of the larger operators continue to advertise the tax benefits to potential investors.

One such practitioner, North American Land Trust, has assisted landowners with conservation easement agreements that the IRS has audited for fraud more times than any similar entity, including facilitating a 21-year easement. million dollars for President Donald Trump in a New York estate he owns, the Philadelphia Inquirer reports. Trump has taken easements on other properties, including golf courses, which New York Attorney General Letitia James says overstates the value of protected land.

The IRS has promised to devote even more resources to exploring strategies to more effectively deter the practice. His litigation has already led a major syndicator, Alabama’s Green Rock LLC, to say conservation easement investments aren’t worth it, reports the WSJ, even as he files a lawsuit against the company. IRS Alleging Reputational Damage Agency Investigations.

CORRECTION, MAY 5, 11:15 a.m. ET: A previous version of this article misrepresented the relationship between the North American Land Trust and IRS audits of conservation easement agreements. This article has been updated.

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