Announcement:
The IRS has announced a time-limited settlement offer for taxpayers involved in Syndicated Conservation Easements (SCE) and similar transactions.
This applies to those under audit in the IRS’s Large Business & International and Small Business and Self-Employed divisions.
Notification:
Eligible taxpayers will receive a letter detailing the terms and timelines for responding to the settlement offer.
The settlement requires a significant concession of the income tax benefits and includes penalties.
IRS will only charge 21% tax rate and a 5% penalty
Enforcement Actions:
Taxpayers who opt not to participate will face continued IRS enforcement actions.
This includes potential full disallowance of charitable contributions related to the SCE and the imposition of a 40% and full-rate tax payments.
Eligibility:
Only taxpayers who receive a letter are eligible for the settlement offer.
Those with cases pending in the United States Tax Court are not eligible.
Legal Actions:
There have been at least nine guilty pleas and two promoters sentenced to 25 and 23 years in prison respectively for their involvement in SCE abuses.
Legislation:
The SECURE 2.0 Act, passed in December 2022, aims to curb SCE abuse by limiting deductions for certain charitable contributions under Internal Revenue Code section 170.
Disallows charitable deduction if it exceeds 2.5 times the sum of the partners basis.
IRS Stance:
The IRS has consistently disallowed tax benefits from abusive SCE transactions, which frequently appear on the IRS’s Dirty Dozen list of tax scams.
The settlement offer is part of the IRS’s ongoing efforts to combat abusive transactions and ensure sound tax administration.
The U.S. Tax Court has also issued many opinions, including the following :
Plateau Holdings, LLC v. Commissioner, T.C. Memo. 2020-93,
TOT Property Holdings, LLC v. Commissioner, T.C. Docket No. 5600-17 (unpublished bench op., Nov. 22, 2019),
Mill Road 36 Henry, LLC v. Commissioner, T.C. Memo. 2023-129,
Oconee Landing Property, LLC v. Commissioner, T.C. Memo. 2024-25,
Savannah Shoals, LLC v. Commissioner, T.C. Memo. 2024-35, and
Buckelew Farm, LLC v. Commissioner, T.C. Memo. 2024-52) in which the true value of the easement was found to be a small fraction of the claimed value.
Encouragement:
The IRS encourages taxpayers and their advisors to carefully review the settlement offer.
The offer is seen as the most effective way for taxpayers to resolve their cases and achieve tax certainty.
Taxpayers facing the complexities of Syndicated Conservation Easements should turn to Mark Sullivan Consulting for expert guidance. With decades of experience in tax controversy and audit representation, Mark Sullivan offers unparalleled expertise in navigating IRS settlements. His strategic approach ensures the most effective resolution and minimizes potential penalties. Trust Mark Sullivan Consulting to bring clarity and confidence to your tax matters.
Request a free consultation HERE with Mark W. Sullivan, EA .
About the author
Mark W. Sullivan, EA founded Sullivan Consulting in 1998. He specializes in federal tax controversy representation, appeals and consulting on behalf of individuals, businesses, law, and accounting firms nationwide. In addition, he has served as the consulting and expert witness in numerous civil and criminal cases in multiple federal district courts.
Mark has an unlimited Enrolled Agents license and is admitted to practice before the Internal Revenue Service based on his extensive experience as a Revenue Officer in New York, NY, St. Louis, MO and Washington, D.C.
Copyright 2024
Mark Sullivan Consulting, PLLC.
Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
Additional references:
IR-2024-174, June 26, 2024
"IRS Sweetens Offer for Land Tax-Break Deals It Has Blasted", Richard Rubin, The Wall Street Journal (July 17, 2024)
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