The IRS has been accused by three Georgia businesses of backdating proposed penalty approvals for improperly claimed tax breaks on conservation deals, court filings show.
Conservation easements are legal agreements in which property owners agree to restrict the use of their land for conservation purposes. By donating these easements as charitable gifts, they can claim tax breaks.
The IRS has been subjecting conservation easements to greater scrutiny, claiming that they’re subject to abuse by, for instance, overvaluing.
Michael Todd Welty, an attorney representing the three Georgia businesses, filed three separate “requests for admission” at the Tax Court on Aug. 16, requesting that the IRS admit that a revenue agent’s supervisor backdated his signature on penalty approval lead sheets.
Mr. Welty said in the filings that the IRS revenue agent’s supervisor “backdated the penalty consideration lead sheet for this Matter by exactly 8 months from March 14, 2022, to July 14, 2021.”
The latest filings come during ongoing litigation against the IRS that the three businesses initiated on March 21, with Mr. Welty requesting in the recent documents that the tax agency admit to the accusations within 30 days.
The IRS didn’t respond to a request from The Epoch Times for comment by press time.
This isn’t the first time the IRS has been accused of backdating signatures on penalty approval sheets.
LakePoint alleged that not only did the IRS intentionally backdate a document needed to impose steep penalties for the misvaluation of a conservation easement, but IRS attorneys also failed to notify the Tax Court about the backdating and tried to hide that the IRS used the documents in penalty assessments.
Conservation Easements
A conservation easement is a legal agreement that restricts the development or use of a property for conservation purposes, such as to protect natural habitat or to preserve land for use by the general public for outdoor recreation or education.By transferring a conservation easement to a charitable trust, the owner of the property can claim a charitable contribution tax deduction for the fair market value of that easement.
A subset known as syndicated conservation easements has come into the IRS’s crosshairs in recent years, with the agency suspecting that some of these transactions were being used mostly for tax avoidance rather than genuine conservation.
“In abusive arrangements, promoters are syndicating conservation easement transactions that purport to give an investor the opportunity to claim charitable contribution deductions and corresponding tax savings that significantly exceed the amount the investor invested,” the IRS states on its website.
“These abusive arrangements, which generate high fees for promoters, attempt to game the tax system with grossly inflated tax deductions.”
“We will not stop in our pursuit of everyone involved in the creation, marketing, promotion and wrongful acquisition of artificial, highly inflated deductions based on these aggressive transactions. Every available enforcement option will be considered, including civil penalties and, where appropriate, criminal investigations that could lead to a criminal prosecution,” then-IRS Commissioner Chuck Rettig said in a statement.