Senate committee releases report on abusive conservation easements

On August 25, Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) released a final report on their investigation into the abuse of syndicated conservation easement transactions.

In a conservation easement, the owner enters an agreement with a government or charitable organization to permanently limit use of the land or property to preserve environmentally sensitive or historical sites. A syndicated conservation easement is simply a property acquired on behalf of multiple investors, who receive the tax benefits.

While these easements can be a legitimate tool for protecting sensitive areas, the IRS and Congress have had ongoing concerns about abusive practices. The IRS started cracking down on such schemes in 2017.

The transactions in question involved promoters selling interests in tracts of land to investors, obtaining inflated appraisals of the properties’ values, and providing the investors with substantial tax deductions, in many cases $2 or more of deductions for every $1 invested.

Grassley and Wyden believe Congress and the IRS should take further action to preserve the integrity of the conservation easement deduction. The Charitable Conservation Easement Program Integrity Act of 2019 (S. 170/H.R. 1992) would attempt to address abuse in syndicated conservation easement transactions by limiting the amount that could be deducted. The legislation was introduced by Sen. Daines (R-MT) and Rep. Thompson (D-CA).