Following several years of IRS investigation, Wednesday Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Ore.) launched their own probe into the potential abuse of syndicated conservation easement transactions. They allege these easements may have allowed some taxpayers to profit from gaming the tax code and deprived the federal government of billions of dollars in revenue.
The cases in question appear to involve land promoters selling interest in tracts of land to people looking for a tax deduction, according to release from the senators. They then get an appraisal and grant conservation easements on the land. The charitable deductions are then split among the investors, the senators explained in the release.
“There are very legitimate purposes for the conservation easement provisions of the tax code. But when a handful of individuals cook up a scheme to cash in at the expense of federal revenue and in violation of Congress’s intent, something needs to change. There’s no reason that the rest of the taxpaying American public should be left with such a raw deal,” Grassley said. “This is just our first step in getting to the bottom of how these tax provisions are being abused, and it will inform what else ought to be done to fix the problem.”
Wyden is particularly concerned about the black eye this will give the conservation easement program.
“Our first concern is preserving the integrity of the conservation easement program, which has helped protect critical habitat across the country. The goal of our bipartisan investigation is to ensure a few bad actors don’t threaten the program by selling off deductions based on exorbitant appraisals. The program must not be abused and used as a lucrative tax shelter for the wealthy,” Wyden said.
These taxpayers use syndicated conservation easements to reap tax benefits larger than their investments, according to Grassley.
The Brookings Institution found that this practice cost the federal government more than $3 billion dollars in 2014 alone, and estimated that it has cost even more in the years since.
This week Grassley and Wyden sought documents and information from individuals who appear to be associated with these investor groups that might have unfairly profited from conservation easements.