Granting easements on land to charitable organizations that promote conservation can provide significant tax benefits. The easements must place strict and permanent restrictions on the use of the property to qualify.
Appraiser Pleads Guilty
According to a news release from the US Department of Justice (DOJ), an appraiser pleaded guilty to being part of a “syndicated conservation easement tax shelter scheme…that claimed more than $1.3 billion in fraudulent tax deductions.”
The DOJ said this appraiser personally submitted fraudulent appraisals on 18 conservation easements, allowing $467 million in fraudulent tax credits and a tax loss to the US Internal Revenue Service (IRS) exceeding $129 million. The fraud included “not following normal appraisal methods, making false statements, and either personally manipulating or relying on knowingly manipulated data.”
Scheme Known to IRS
According to the IRS, promoters of these syndicates promise investors “the opportunity to claim charitable contribution deductions and corresponding tax savings that significantly exceed the amount the investor invested.” This is accomplished by submitting appraisals that fraudulently overstate the property’s value. Since 2017, IRS has identified certain syndicated conservation easements as “listed transactions.” Among the applicable requirements, taxpayers, appraisers, and others involved must disclose past use of these schemes.
DOJ’s news release said the appraiser reached target appraisal values “communicated to him by coconspirators” to get the promised tax credits. This suggests others, including the promoters, have been or will be indicted; the appraiser probably agreed to give evidence against them.
To see DOJ’s news release https://www.justice.gov/opa/pr/appraiser-billion-dollar-conservation-easement-fraud-scheme-pleads-guilty
For IRS information on these schemes https://www.irs.gov/newsroom/dirty-dozen-beware-of-abusive-tax-avoidance-schemes and https://www.irs.gov/newsroom/treasury-and-irs-propose-regulations-identifying-syndicated-conservation-easement-transactions-as-abusive-tax-transactions