U.S. SENATE – Last week, 13 conservation groups from across the nation expressed their support for Senator Steve Daines’ bipartisan “Charitable Conservation Easement Program Integrity Act.” Daines’ bill will stop abusive syndicated conservation easements, save taxpayers billions of dollars and promote conservation in the United States.
The groups include: Land Trust Alliance, Ducks Unlimited, The Nature Conservancy, the American Society of Farm Managers and Rural Appraisers, American Society of Appraisers, Appalachian Trail Conservancy, Appraisal Institute, National Trust for Historic Preservation, Partnership of Rangeland Trusts, Pheasants Forever, Quail Forever, The Conservation Fund, Theodore Roosevelt Conservation Partnership and The Trust for Public Land.
To view the letter text, click HERE, or read below.
As national representatives for the land conservation, appraisal and historic preservation communities, we write to underscore the importance of taking immediate action to pass the Charitable Conservation Easement Program Integrity Act (H.R. 4164 and S. 2256).
Abusive syndicated conservation easement transactions continue to cost taxpayers billions of dollars – and threaten one of our nation’s most important voluntary private land conservation tools. Abuse of this very successful charitable program will continue unless Congress acts now to outlaw the abuse. This legislation is consistent with Congress’ ongoing efforts to preserve the integrity of our tax laws and to “close the tax gap.” The fact that a few bad actors engage in this unlawful profiteering under the guise of philanthropy exemplifies the tax gap and must be stopped.
Despite the Internal Revenue Service designating these abusive easement syndications as “listed transactions” in Notice 2017-10 published at the end of 2016, aggressive marketing of these transactions persists. According to the most recent publicly available IRS data, investors claimed nearly $36 billion in unwarranted deductions between 2010 and 2018. This includes $6 billion in 2016, $6.8 billion in 2017 and $9.2 billion in 2018. This means $22 billion in unwarranted tax deductions were claimed in the three years after the IRS put these bad actors on notice. While data for tax years 2019 and 2020 have not yet been released, it is expected to confirm a continuing problem. Congress must act now to halt further abuse.
Last year, the Senate Finance Committee issued a bipartisan and authoritative report on this abuse. The report concluded that people engaging in these abusive transactions were not driven by a desire to conserve land or pursue other legitimate business ventures. Indeed, the committee reviewed emails between promoters and investors that showed “no interest in a wide variety of land-investment possibilities; they just wanted to buy tax deductions.” The report likens the abuse to an automated dollar machine, where each investor who puts in one dollar gets back two. The report also made it clear that Congress must act to end the abuse.
The bad actors defending these abusive transactions claim that passing the Charitable Conservation Easement Program Integrity Act would hinder land conservation. This is false. Each year, approximately 2,000 to 2,500 conservation donations are made by private landowners not involved in syndications for truly charitable purposes. In aggregate, these truly charitable donations total about $1 billion in claimed deductions per year. That stands in sharp contrast with the $9.2 billion claimed by syndicators for 296 entities in 2018. Passing this bill will safeguard the taxpaying public while ensuring that the federal tax incentive for land conservation and historic preservation remains available for genuine philanthropists.
Additionally, those defending the abusive transactions claim the effective date of the bill is retroactive. But that’s a disingenuous argument. The effective date of the legislation mirrors the date the IRS placed these bad actors on notice and warned them to halt their abusive transactions. Maintaining the effective date in the legislation will ensure that funds improperly taken from taxpayers will be recovered. Moreover, maintaining the effective date saves taxpayers potentially tens of millions of dollars in unnecessary IRS enforcement costs and expensive litigation. Fair and repeated warnings to the bad actors negates any argument about retroactivity. Changes to the effective date would only serve to protect the massive profiteering enjoyed by the bad actors.
Some have argued that this issue is best resolved not by Congress, but by other entities. Unfortunately, despite forceful actions by the IRS and the U.S. Department of Justice, these abuses continue. In December 2020, the Department of Justice announced its first criminal case; two people pleaded guilty to conspiring with others to develop, market, promote and sell investments in fraudulent syndicated conservation easement transactions. And more recently, in June of this year, a federal grand jury returned an indictment charging a certified public accountant with promoting a syndicated conservation easement tax scheme involving fraudulent charitable deductions. While we applaud these efforts, the piecemeal nature of these enforcement actions and their lack of deterrent effect make clear the need for Congress to act now to shut down these types of transactions.
The Charitable Conservation Easement Program Integrity Act is the most effective and efficient way to halt this egregious and ongoing abuse. The legislation has the support of our respective organizations and the full backing of all those who work tirelessly and ethically to conserve our country’s irreplaceable farmlands, forests, ranches, wetlands and historic sites. We respectfully ask you to stand with us – and all in our community – by taking immediate action to curb abuse and restore the integrity of this cherished and worthy conservation program.
It’s time to pass the Charitable Conservation Easement Program Integrity Act.
American Society of Farm Managers and Rural Appraisers
American Society of Appraisers
Appalachian Trail Conservancy
Appraisal Institute Ducks Unlimited
Land Trust Alliance
National Trust for Historic Preservation
Partnership of Rangeland Trusts
Pheasants Forever Quail Forever
The Conservation Fund
The Nature Conservancy
Theodore Roosevelt Conservation Partnership
The Trust for Public Land
The Honorable Richard Neal
The Honorable Kevin Brady
The Honorable Ron Wyden
The Honorable Mike Crapo
The Honorable Mike Thompson
The Honorable Mike Kelly
The Honorable Steve Daines
The Honorable Debbie Stabenow
The Honorable Chuck Grassley
The Honorable Janet Yellen
The Honorable Charles Rettig
The Honorable Merrick Garland