Tax Court Rejects IRS Conservation Easement Penalty Notice

November 21, 2022

On November 9th, the U.S. Tax Court rejected a 2016 IRS notice requiring participants of conservation easement transactions to disclose it to the IRS. The court ruled that by requiring the disclosure of conservation easement transactions without first abiding by the notice and comment procedures required for federal regulations, the IRS violated the Administrative Procedures Act.

By way of the 2016 notice, the IRS has been auditing conservation easement transactions that have been alerted through the disclosure. The Tax Court ruling now strips the IRS’s main tool to identify abusive conservation easement tax shelters.

ASA continues to support the passage of the Charitable Conservation Easement Program Integrity Act which would prevent future abuse of the tax incentive and support the thousands of legitimate conservation easement transactions.

To read the ruling, click here.