Syndicated Conservation Easements Named on IRS 2019 “Dirty Dozen” Tax Scams

The Internal Revenue Service announced a significant increase in enforcement actions for syndicated conservation easement transactions, a priority compliance area for the agency. Syndicated conservation easements are private placements that promise tax deductions worth four to four-and-a-half times a person’s investment. Some syndicated conservation easement deals are offering investors charitable contribution deductions on taxes for large amounts. According to the IRS, coordinated examinations are being conducted across the IRS in the Small Business and Self-Employed Division, Large Business and International Division and Tax Exempt and Government Entities Division. Separately, investigations have been initiated by the IRS' Criminal Investigation division. These audits and investigations cover billions of dollars of potentially inflated deductions as well as hundreds of partnerships and thousands of investors. According to an IRS Notice: The Treasury Department and the IRS have become aware that some promoters are syndicating conservation easement transactions that purport to give investors the opportunity to claim charitable contribution deductions in amounts that significantly exceed the amount invested. In such a syndicated conservation easement transaction, a promoter offers prospective investors in a partnership or other pass-through entity (“pass-through entity”) the possibility of a charitable contribution deduction for donation of a conservation easement.