Conservation Easement Investments could be a Red Flag to the IRS

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Conservation Easement Investments could be a Red Flag to the IRS

Tax Shelter Land Deals: Conservation Easement Investments could be a Red Flag to the IRS

(STL.News) Syndicated conservation easements are private placement investments that promise tax deductions worth four to four-and-a-half times a person’s investment.

Brokerage firms were seeing heavy sales in these investments prior to 2019 when the Senate Finance Committee launched an investigation into conservation easements after the Brookings Institution found that these deals cost the federal government more than $3 billion dollars in 2014 alone, with that amount expected to increase each subsequent year.

Apparently, the Senate Finance Committee believed that groups of taxpayers were using syndicated conservation easements to reap tax benefits greater than their initial investments.

While there are very legitimate purposes for the conservation easement provisions of the tax code, the committee reportedly believed that the tax provisions were being abused, according to a press release.

The committee concluded “the IRS has a strong reason for taking enforcement action against syndicated conservation-easement transactions,” according to the Senate Finance Committee Report released on August 25, 2020.  While these “abusive” transactions continued despite the issuance of IRS Notice 2017-10, the committee recommended the IRS and the Treasury Department should take further action. 

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Author: Marty Smith