IRS Chief Counsel Offers Settlements in Syndicated Easement Cases

• DOI: http://doi.org/10.1002/npc.30759
• Date: 01 September 2020
• Published date: 01 September 2020

THE LAW OF TAX-EXEMPT ORGANIZATIONS MONTHLY

IRS CHIEF COUNSEL

OFFERS SETTLEMENTS

IN SYNDICATED

EASEMENT CASES

The IRS, on June 25, announced a time-limited settlement offer to certain

taxpayers with pending docketed US Tax Court cases involving syndicated conser-

vation easement transactions (IR-2020-130). This settlement requires concession

of claimed income tax benefits and imposes penalties.

The key items of the settlement offer include: (1) disallowance in full of the

claimed charitable deduction for the contribution of the easement; (2) agreement

by all partners to settle; (3) payment by the partnership of the full amount of tax,

interest, and penalties involved; (4) deductibility by investor partners of their cost

of acquiring their partnership interests and payment by them of a reduced penalty

of 10 to 20 percent, depending on the ratio of the claimed deduction to partner-

ship investments; and (5) payment of the maximum penalty (generally 40 percent)

by partners who provided services in connection with any syndicated conservation

easement transaction, with no deduction for costs.

In the news release, the IRS stated that taxpayers “should not expect to settle

their docketed Tax Court cases on better terms.” The agency added: “Based on

cases the Independent Office of Appeals has encountered to date, and the exist-

ing state of the law, taxpayers should not later expect a better result than what is

provided in this settlement offer.”

This settlement offer was reiterated by the IRS on July 13 (IR-2020-152), in the

aftermath of four victories by the government in conservation easement cases on

July 9 (see the article beginning on p. 4).

An article in the July 15 Bloomberg Law Daily Tax Report states that a “fairly

significant contingent” of IRS officials was opposed to this settlement proposal.

They apparently wanted to litigate every case and secure the 40 percent accura-

cy-related penalty. The IRS’s Chief Counsel stated in a webcast that the notion

that the offer was made, or may have to be improved, because the agency cannot

handle the conservation easement caseload is “total nonsense.” [9.7] ◆

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DOI:10.1002/npc

Analysis of current developments in tax

and related law for nonprofit organiza-

tions and their professional advisors.

Volume 37 Number 9

September 2020

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Easement Deduction Toppled

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Provision; No Penalties 4

Other Easement Gift Litigation 4

Supreme Court Update 4

IRS Chief Counsel Fights Against

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Promotion 5

How Could This Be Otherwise? 5

New Taxpayer Advocate

Perpetuates Form 1023-EZ Bash 5

IRS Announces 2020 Tax Scams 6

Charitable Giving Soared Last

Year 6

IRS Data Book for 2019 Published 6

GAO Report Provides Insight as

to IRS EO Examinations Processes 6

Other Developments 7