IRS Chief Counsel Offers Settlements in Syndicated Easement Cases

Date01 September 2020
Published date01 September 2020
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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Analysis of current developments in tax
and related law for nonprofit organiza-
tions and their professional advisors.
Volume 37 Number 9
September 2020
Also in This issue...
Foundation’s Eased Property
Value Ruled Excluded From
Payout Base 2
GAO Thoroughly Analyzes,
Critiques IRS Examination-
Selection Processes 2
Easement Deduction Toppled
Because of Extinguishment
Provision; No Penalties 4
Other Easement Gift Litigation 4
Supreme Court Update 4
IRS Chief Counsel Fights Against
Remainder Trust Abusive
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

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