Conservation Easement Amendments
Every year, the IRS publishes its Priority Guidance Plan. This year, item 23 on page 12, regarding new guidance on conservation deductions, caught our eye. The IRS is looking at amendments — the Land Trust Alliance is fully engaged in this process and will advocate for guidance to follow the 2007 Amendment Report principles (second edition available in early 2017) and prepublication report available here.
Two other conservation topics made the 281 projects listed in the plan: item 22 (appropriate water rights) and item 24 (final regulations to the draft proposed regulations issued in 2008 relating to the Pension Protection Act).
The Priority Guidance Plan states priorities for the allocation of IRS resources from July 2016 through June 2017, and represents projects the IRS intends to work on actively during the plan year. It does not place any deadline on completion of projects.
In conversations with the IRS, the Alliance learned that the proposed guidance of item 23 relates to the recent audit division practice of challenging all amendment clauses. The Alliance has strongly stated — and will continue to firmly address with the IRS — that amendments are an important stewardship tool.
Amendments allow land trusts to carry out the promises they’ve made in a changing world. Thoughtful amendments facilitate the perpetual nature of conservation easements — the use of amendments to conservation easements is expected to increase as easements age, protected land changes hands, and on-the-ground conditions evolve. Perpetuity is enhanced by the ability to appropriately respond to change.
The Alliance will also evaluate legislation that will make the law clear that amendments following the principles articulated in the 2007 Amendment Report should be allowed. It has also recommended that easement drafters include an “amendment clause” in their easements specifying the process and guidelines for any amendment.