IRS sending settlement offer letters in July to certain taxpayers who participated in Syndicated Conservation Easement transactions

IR-2024-174, June 26, 2024

WASHINGTON — The Internal Revenue Service today announced the mailing of a time-limited settlement offer for certain taxpayers who participated in Syndicated Conservation Easements (SCE) and substantially similar transactions that are under audit in the IRS’s Large Business & International and Small Business and Self-Employed divisions.

The IRS will notify eligible taxpayers by letter with the applicable terms and timelines to respond. The settlement offer requires substantial concession of the income tax benefits and the application of penalties. Taxpayers under examination who receive a letter but opt not to participate, will continue to face IRS enforcement actions, including potential full disallowance of charitable contributions associated with the SCE and the imposition of all applicable penalties.

Taxpayers who don't receive a letter are not eligible for this resolution, and the IRS will continue enforcement-related actions. Taxpayers with cases pending in the United States Tax Court are not eligible for this settlement offer.

The IRS has consistently disallowed the tax benefits claimed by taxpayers in abusive SCE transactions, which have appeared on the IRS’s Dirty Dozen list of tax scams multiple times.

The U.S. Tax Court has also issued many opinions, including the following :

• Plateau Holdings, LLC v. Commissioner, T.C. Memo. 2020-93,
• TOT Property Holdings, LLC v. Commissioner, T.C. Docket No. 5600-17 (unpublished bench op., Nov. 22, 2019),
• Mill Road 36 Henry, LLC v. Commissioner, T.C. Memo. 2023-129,
• Oconee Landing Property, LLC v. Commissioner, T.C. Memo. 2024-25,
• Savannah Shoals, LLC v. Commissioner, T.C. Memo. 2024-35, and
• Buckelew Farm, LLC v. Commissioner, T.C. Memo. 2024-52) in which the true value of the easement was found to be a small fraction of the claimed value.

In addition, there have been at least nine guilty pleas and two promoters found guilty and sentenced to 25 and 23 years in prison.

In December 2022, Congress passed the SECURE 2.0 Act, which applies to contributions of property made after Dec. 29, 2022, to the help curb SCE abuse by limiting deductions for certain charitable contributions under Internal Revenue Code section 170.

After careful consideration and input from external stakeholders, the IRS is taking this additional step of offering time-limited settlements in the interest of sound tax administration. The IRS encourages taxpayers and their advisors to carefully review the settlement offer. The settlement offer is the most effective and efficient way for taxpayers to bring finality to the transactions and achieve tax certainty.