Bloomberg, IRS Previews Deal to Shrink Conservation Easement Backlog, Abuse:

The IRS said it will soon release details on a time-limited settlement offer for conservation easement cases as it tries to ax the backlog of litigation in the US Tax Court.

Aggressive tax planners have for years assembled investors to claim tax deductions for charitable donations of land. The IRS has argued that deductions are often highly inflated appraisals of what the donated rights are worth.

After the settlement is released, the IRS will extend offers to eligible partnerships so they can resolve the federal tax consequences of these types of transactions, the agency said.

“Congress created the conservation easement deduction to encourage genuine preservation, not to subsidize abusive tax shelters,” IRS CEO Frank Bisignano said in a statement. “The updated information on IRS.gov explains why the IRS continues to challenge these transactions and highlights the serious risks taxpayers face when they are sold inflated tax benefits disguised as conservation.”

Earlier this year, Ken Kies, the assistant Treasury secretary for tax policy, said the IRS was dealing with about 700 cases and 400 more coming from the agency’s enforcement arm. The agency has been racking up a series of wins as it focuses on valuations rather than quirks in the law.

Congress in 2022 passed a law to cap conservation easement values in response to widespread fraud in the tax break.