by Glenn Marx, MALT Executive Director
With the Senate Finance Committee investigation ongoing, with June 30 IRS vocal support of Senator Daines’ anti-syndication legislation, with a string of IRS court victories against syndicators, and with an IRS one-time “take it or leave it” settlement offer on the table, coordinated efforts to stop abusive syndicated conservation transactions seem to be gaining traction.
At a June 30 Senate Finance Committee hearing, Montana Senator Steve Daines, lead sponsor of the Charitable Conservation Easement Program Integrity Act, asked IRS Commissioner Charles Rettig if the IRS would support legislation stopping the syndication of conservation easement tax benefits. The Commissioner’s response was: “The IRS would welcome legislation with respect to syndicated conservation easements — the abusive transactions. Under this commissioner, the IRS will aggressively go after everybody involved in one of those transactions.”
The Charitable Conservation Easement Program Integrity Act (S.170) is the Land Trust Alliance’s top federal policy priority, and is legislation strongly supported by the Montana Association of Land Trusts membership. The Alliance’s blog featured the June 30 exchange between Senator Daines and Commissioner Rettig. In an example of the abusive nature of a syndicated transaction, Daines cited a property that had been valued at $30 million, then with a conservation easement placed on it the property had an alleged value of $155 million. Such transactions cost taxpayers billions of dollars each year…in 2016 alone, 248 syndicated deals claimed $6 billion in charitable deductions.
In related action, Bloomberg reported on June 25 that the IRS was offering syndicators a chance to settle, with a warning “that it is the best deal participants will get.” The settlement offer would “specify that the deduction for the contributed easement will be completely disallowed and the partnership will have to pay the full amount of tax, penalties, and interest owed. But investor partners would be allowed to deduct their cost of acquiring their partnership interests and pay a penalty reduced by between 10% to 20%.”
Bloomberg reports the IRS has prevailed in a series of court decisions which provides the IRS a position of strength in any settlement discussions.
“This is no sweetheart deal—and it should not be one,” said Andrew Bowman, president and CEO of the Land Trust Alliance, a national conservation organization that has consistently opposed the deals. “This is an emphatic reminder to all investors that they should steer clear of abusive conservation easement tax shelters.”
“Recent decisions by the U.S. Tax Court demonstrate what we have long known: that abusive syndicated conservation easement deals are costing taxpayers billions and tarnishing the reputation of this very valuable conservation tool,” Daines said in his comments to IRS Commissioner Rettig.
The syndicators themselves, led by a group named Partners for Conservation, voiced opposition to the proposed settlement terms.