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The Irs Commissioner Wants Congress to Amend the Law on Land-rights Tax Settlements!

The Irs Commissioner Wants Congress to Amend the Law on Land-rights Tax Settlements

Commissioner of the Internal Revenue Service Charles Rettig asked Congress on Tuesday for help in stopping land-rights deals that the government considers to be abusive.

Mr. Rettig claimed that despite years of increased IRS enforcement, which now includes assured audits, attempts to assert civil fraud penalties, litigation, and criminal investigations, so-called syndicated conservation easements have continued.

In answer to queries from Sen. Chris Van Hollen, he remarked at a Senate subcommittee hearing, “We’ve put a lot of resources into this sector” (D., Md.). “We have had no effect on slowing down the pace of these transactions… We require assistance from Congress. We need a lawyer to assist us to put a stop to this.”

A landowner can claim an income tax benefit for giving development rights to a nonprofit land trust through a conservation easement. That basic framework is used in the syndicated deals that promoters have established over the last decade, and they do impose permanent limits on land usage.

However, according to IRS officials, those promoters frequently use inflated appraisals and predictions about possible desirable development to claim that they are giving up far more in value than the site may have just sold for.

Investors frequently try to claim deductions that are more than four times what they spend, and these breaks are so big that they can benefit quickly at the expense of the public.

IRS officials have attempted to put a stop to the trades through enforcement, and several promoters have left the business. However, the IRS’s case-by-case approach to enforcement is time- and resource-intensive, and the agency has recently faced judicial challenges.

A bipartisan bill has been introduced that would prohibit deductions in some circumstances where the tax incentives are worth more than 2.5 times the amount invested.

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Last year, the House Ways and Means Committee included identical wording in a Democratic tax bill, which would raise $12.5 billion over ten years. Before the full House voted, the clause was removed, and the bigger bill has yet to become law.

The Land Trust Alliance and other conservation organizations support the bill. The Partnership for Conservation, which was created shortly after the IRS began enforcing it, has been opposed to it, notably because of its retroactive effective date.

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