IRS & DOJ Continue to Pursue and Win Conservation Easement Cases

The IRS and DOJ continue their pursuit of syndicated conservation easement deductions and those individuals who promoted them, and continue to win those disputes. Recent developments include:

• The 11th Circuit upheld the denial of a conservation easement deduction and imposition of accuracy-related penalties in TOT Property Holdings, LLC v. Commissioner. For an analysis of the decision, see Peter J. Reilly, TOT Property Holdings Highlights Fundamental Flaw In Conservation Syndications.

• In Hancock County Land Acquisitions v. United States, 2021 U.S. Dist. LEXIS 143312, 2021 WL 3197336 (N.D. Ga. July 7, 2021) (all Internet-accessible copies of the decision appear to be behind a paywall, including I assume PACER), a Federal district court rejected an attempt by a partnership and its tax matters partner to require the IRS Appeals Office to consider its conservation easement deduction dispute before forcing them to pursue litigation, even though the IRS had already issued a Final Partnership Administrative Adjustment (FPAA) notice. The court found that given the procedural poster of the case, it had to grant the government's motion to dismiss because it lacked federal subject matter jurisdiction. The dispute therefore will instead proceed in U.S. Tax Court, where the partnership and its tax maters partner have already filed a petition for readjustment of the FPAA.

• In perhaps the most ominous development for individuals involved with these claimed deductions, the Department of Justice announced the First Federal Indictment in Cases Involving Syndicated Conservation Easements. The first paragraph of the June 9, 2021 press release states:
   

  A federal grand jury sitting in Atlanta, Georgia, returned an indictment today charging an Atlanta certified public accountant with one count of conspiracy to defraud the United States; 24 counts of wire fraud; 32 counts of aiding or assisting in the preparation of false federal tax returns; and five counts of filing false federal tax returns relating to a wide-ranging, abusive tax shelter scheme. 

Lloyd Mayer