Celebrating the Charitable Conservation Easement Program Integrity Act

The Land Trust Alliance, following discussions in various law journals, becomes aware of the existence of abusive syndicated conservation easement transactions. After reviewing the transactions in more detail, the deals appear to differ from most conservation donations in that they are not being done as truly charitable endeavors. The Alliance immediately flags these discussions for the IRS and seeks the agency’s guidance.

The Land Trust Alliance releases its first advisory to member land trusts regarding the threat of abusive syndicated tax shelters.

Congress votes to make permanent the federal conservation easement tax incentive. The incentive has and continues to serve as an important tool that has helped countless Americans conserve their land voluntarily.

The Alliance releases new guidance for land trusts concerned about abusive tax shelter schemes. The updated guidance adds recommended policies to help land trusts avoid becoming entangled in these schemes.

The Internal Revenue Service, while speaking at Rally 2016: The National Land Conservation Conference, announces it intends to issue a notice designating certain syndications of conservation easements as potentially abusive transactions.

The IRS makes good on that announcement. Spurred by Alliance actions, the agency issues IRS Notice 2017-10 identifying and classifying certain highly overvalued conservation easement transactions as “listed transactions” — a listed transaction being defined as a tax avoidance transaction by the IRS. The Wall Street Journal becomes one of the first mainstream media sources to publish an article detailing the strategy of land-tax deal promoters.

Following the issuing of Notice 2017-10, the Alliance updates its Land Trust Standards and Practices by adding Practice 10(c)(4) that specifically addresses transactions with pass-through entities of unrelated parties. Alliance members are required to pass a board resolution formally adopting the revised Standards. 

The IRS publishes Notice 2017-29, a supplement to Notice 2017-10 that made conservation easement tax shelters “listed transactions.” The new Notice makes clear that land trusts are not “material advisors”; it also notes that individuals and entities that packaged and promoted conservation easement tax shelters must meet an existing May 1 deadline to report their involvement.

Then IRS Commissioner John Koskinen responds to separate letters sent by then chairman and ranking member of the Senate Finance Committee, Sens. Orrin Hatch (R-Utah) and Ron Wyden (D-Oregon), inquiring about disclosures received in response to Notice 2017-10. Koskinen reveals preliminary data showing that for 40 specific transactions that happened since 2010, investors bought on average the equivalent of $9 of tax deductions for $1. Meanwhile, the House Appropriations Financial Services and General Government Subcommittee releases an appropriations bill that contains a rider prohibiting the IRS from using appropriated funds to enforce IRS Notice 2017-10. The Alliance rallies members in opposition of the rider resulting in the provision being killed the following month.

Reps. Mike Thompson (D-California) and Mike Kelly (R-Pennsylvania) introduce the Charitable Conservation Easement Program Integrity Act in the U.S. House of Representatives. The legislation would prevent people from profiteering from charitable donations while ensuring the vast majority of conservation easements can continue to go forward as truly charitable endeavors. In a blog post, Alliance president and CEO Andrew Bowman issues a call to all land trust members and supporters to “advocate aggressively” in support of the Charitable Conservation Easement Program Integrity Act, calling syndicated easement transactions an “overindulgence” that puts at risk the reputation of our community.

The Nature Conservancy, Ducks Unlimited, Pheasants Forever, Quail Forever, the Trust for Public Land and the Appalachian Trail Conservancy voice their support for the Integrity Act through a joint letter drafted by the Alliance and submitted to lead cosponsors, Reps. Thompson and Kelly. The same month, ProPublica’s investigative piece The Billion-Dollar Loophole is published and reports extensively on abusive tax shelters that take advantage of federal tax incentives intended to encourage private land conservation through charity. 

The Vail Daily publishes an op-ed by the accredited Eagle Valley Land Trust calling for passage of the Charitable Conservation Easement Program Integrity Act.

The U.S. Senate introduces the Charitable Conservation Easement Program Integrity Act. The bipartisan bill is introduced by Sens. Steve Daines (R-Montana) and Debbie Stabenow (D-Michigan) and serves as a companion measure to the House version introduced in November 2017. The same month, the Alliance publishes a revised tax shelter advisory that walks land trusts through the steps required under the updated Land Trust Standards and Practices when evaluating whether to participate in transactions that involve pass-through entities consisting of unrelated people. And the Conservation Fund and the Partnership of Rangeland Trusts are added as coalition partners as part of a December 2017 joint letter voicing support for the Integrity Act.

A story published by The Wall Street Journal reveals that bad actors have claimed $230 billion in charitable deductions since 2010. That figure turns out later to be incorrect and is revised down to a still massive $20 billion in charitable deductions since 2010. Meanwhile, IRS Acting Commissioner David Kautter informs the Senate Finance Committee regarding conservation easement tax shelters that the IRS has scanned more than 39,000 forms received because of Notice 2017-10.

The Alliance makes the issue a key priority during Land Trust Alliance Advocacy Days, our annual legislative fly-in, preparing key messages and a fact sheet urging elected officials to support and cosponsor the Charitable Conservation Easement Program Integrity Act.

IRS Acting Commissioner David Kautter updates the Senate Finance Committee, revealing that for the 2016 tax year, 248 entities claimed approximately $6 billion in charitable deductions. Politico reports on the scope of abusive easement practices and notes the “IRS has begun enforcement activities with respect to more than 40 entities.” A Bloomberg article is also released that focuses on the top 10% of syndicated transactions, highlighting that for every $1,000 invested, syndicators received an average charitable tax deduction of $8,230.

The IRS announces that syndicated conservation transactions will be one of five focused conservation campaigns by the IRS Large Business and International Division. This major development dedicates significant IRS staff and resources to investigating potentially abusive conservation easement transactions.

The Department of Justice files a civil complaint against promoters of an allegedly abusive conservation easement syndication tax scheme in Federal District Court in Atlanta. According to the complaint, 96 transactions linked to the defendants resulted in over $2 billion in claimed federal deductions. The complaint is reported in Forbes and The Wall Street Journal. The 115th Congress fails to pass the Charitable Conservation Easement Program Integrity Act.

The U.S. Senate reintroduces the Charitable Conservation Easement Program Integrity Act. The bipartisan bill is once again cosponsored by Sens. Steve Daines (R-Montana) and Debbie Stabenow (D-Michigan). The American Society of Farm Managers & Rural Appraisers joins a coalition including The Nature Conservancy, Ducks Unlimited, Pheasants Forever, Quail Forever, the Trust for Public Land and the Appalachian Trail Conservancy in voicing support for the Integrity Act through a joint letter drafted by the Alliance and submitted to lead cosponsors Sens. Daines and Stabenow.

The Hill publishes the op-ed “Land conservation tax incentives should inspire charitable giving, not loopholes.” The op-ed is written by Alliance president and CEO Andrew Bowman and Appraisal Institute president Steven Wagner. The same month, syndicators file a response to the December 2019 Department of Justice civil complaint, denying allegations of fraud and other misconduct.

Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and ranking member Ron Wyden (D-Oregon) launch an investigation into the potential abuse of syndicated conservation easement transactions. As part of the probe, Grassley and Wyden send 14 separate letters to individuals who appear to be associated with these abusive transactions that might have unfairly profited from conservation easements. The investigation is reported by Bloomberg and The Wall Street Journal. The U.S. House of Representatives reintroduces the Integrity Act. This version of the bill is again bipartisan and cosponsored by Reps. Mike Thompson (D-California) and Mike Kelly (R-Pennsylvania).

More than 360 individuals representing the Alliance’s membership sign a letter urging members of Congress to pass the Charitable Conservation Easement Program Integrity Act. The same month, IRS Commissioner Charles Rettig testifies before the U.S. Senate Finance Committee. Rettig tells Sen. Steve Daines (R-Montana) that the IRS would “like to work with you on your legislation” because abuse has “absolutely not declined” despite joint actions by the IRS and Department of Justice.

The Joint Committee on Taxation releases a revenue estimate that the Charitable Conservation Easement Program Integrity Act will generate $6.6 billion in federal revenue if enacted in 2019.

The Senate Finance Committee issued six subpoenas as part of its continued probe of abusive syndicated conservation easement transactions. The Theodore Roosevelt Conservation Partnership also joins the Alliance’s coalition of national conservation, appraisal and historic preservation organizations in voicing support for the Charitable Conservation Easement Program Integrity Act.

The IRS announces increased enforcement actions indicating — for the first time — that a criminal investigation into these matters is underway.

The Land Trust Alliance joins 11 other organizations in calling for immediate passage of the Charitable Conservation Easement Program Integrity Act through a letter sent to congressional leaders.

ProPublica publishes another report detailing how the IRS, Justice Department and Congress have all taken aim at abusive syndicated conservation easements to little avail.

The Senate Finance Committee shares updated IRS data showing the continuing cost of abusive conservation easement tax shelters: For tax years 2016 and 2017, syndicators claimed nearly $13 billion in tax deductions, all of which came after the IRS told the bad actors to stop the abuse.

Letters to the editor and op-eds begin appearing across the country supporting the continued abuse of conservation easement transactions. As a result, the Alliance issues several advocacy alerts asking Alliance members to counter these false narratives.

IRS chief counsel Michael Desmond, speaking at Land Trust Alliance Advocacy Days, notes that favorable court decisions and stepped-up enforcement efforts will help in stamping out abusive conservation easement transactions.

The IRS issues a settlement offer to certain taxpayers involved in syndicated conservation easement transactions. Shortly thereafter, at a Senate Finance Committee hearing, IRS Commissioner Charles Rettig confirms the agency’s commitment to halting the abuse and tells the Committee that enacting the Integrity Act would “help us significantly.”

The Senate Finance Committee releases its long-anticipated report on abusive syndicated conservation-easement transactions. The thorough and revealing report details abuse of the federal conservation tax incentive, likening it to walking up to a vending machine, putting in a dollar and getting two dollars back. It also noted how “these types of abusive tax shelters erode the Nation’s tax base and sow pessimism among all Americans about the fairness of our tax laws” before concluding that “Congress, the IRS and Department of the Treasury should take further action to preserve the integrity of the conservation-easement tax deduction.”

The Senate Finance Committee releases 2018 IRS data showing that abuse of the conservation easement tax incentive ballooned from $6 billion in illicit claimed deductions in 2016 to $9.2 billion in 2018 for a total of $36 billion since 2010.

The Justice Department announces the first criminal case in which two people pleaded guilty to conspiring with others to develop, market, promote and sell investments in fraudulent syndicated conservation easement transactions. Meanwhile, both the House and Senate introduce updated versions of the Charitable Conservation Easement Program Integrity Act that close potential loopholes identified by the Joint Committee on Taxation while remaining true to the original bill’s objectives of ending abuse. Ultimately, the 116th Congress fails to pass the Charitable Conservation Easement Program Integrity Act.

Sen. Chuck Grassley (R-Iowa) and Ron Wyden (D-Oregon) address the topic of abusive syndication transactions with attendees at the Alliance’s Advocacy Days event. In separate messages, both express a continued commitment to enacting a version of the Charitable Conservation Easement Program Integrity Act.

Congress reintroduces the Charitable Conservation Easement Program Integrity Act. The Senate version is reintroduced by Sens. Ron Wyden (D-Oregon), Steve Daines (R-Montana), Debbie Stabenow (D-Michigan) and Chuck Grassley (R-Iowa). The House version is once again reintroduced by Reps. Mike Thompson (D-California) and Mike Kelly (R-Pennsylvania). As part of the reintroduction the Alliance debuts a toolkit to assist Alliance members in advocating for passage of the legislation. The toolkit includes factsheets, contact information for senators and representatives as well as key messages.

The House Ways and Means Committee votes to advance the Charitable Conservation Easement Program Integrity Act as part of reconciliation legislation.

HuffPost reports that the Charitable Conservation Easement Program Integrity Act was included in the first version of the Build Back Better Act until Sen. Kyrsten Sinema (D-Arizona) insisted it be removed. The legislation then stalls and is not passed in 2021.

A federal grand jury returns an indictment charging seven individuals with conspiracy to defraud the United States and other crimes arising out of their promotion of fraudulent tax shelters involving syndicated conservation easements.

ProPublica issues another report, “The Tax Scam That Won’t Die,” detailing how lobbyists and a Washington trade group have helped lead a resistance to enacting the Charitable Conservation Easement Program Integrity Act. Four days later, an op-ed from Sen. Steve Daines (R-Montana) runs in Bloomberg pressing for passage of the Charitable Conservation Easement Program Integrity Act. In a Senate Finance Committee markup of The Enhancing American Retirement Now Act, Sens. Daines, Debbie Stabenow (D-Michigan) and Chuck Grassley (R-Iowa) file an amendment to advance the Integrity Act. The amendment is approved by a 23-5 vote.

Congress passes The Charitable Conservation Easement Program Integrity Act as part of its year-end “omnibus” spending bill.