After the IRS issued its Notice making conservation easement tax shelters "listed transactions," some questions emerged as to how much land trusts should be worried. We know now that organizations following Land Trust Standards and Practices have nothing to worry about.
Notice 2017-10 explicitly says the IRS does not require land trusts to report these transactions, sparing land trust boards from having to make technical tax determinations on donations. Additionally, the IRS notice says land trusts will not be subject to penalties merely because they received such a donation. But other portions of the Notice could be read in such a way where land trusts might feel they face other disclosure requirements regardless of the above exemptions.
Thanks to Colleen Murphy, a Bureau of National Affairs reporter, we definitively know that’s not the case. In a recent article, she reported the IRS has verified that only land trusts "more involved in setting up these agreements and setting up these partnerships" on the front end could be obligated to report the listed transactions. All other land trusts are in the clear.
This affirms our own conclusions, which we made available in two reference documents explaining IRS Notice 2017-10: What Land Trusts Need to Know and What Landowners Need to Know.
The Land Trust Alliance will continue to keep you abreast of significant developments regarding the IRS Notice and the transactions it targets. In the meantime, feel free to contact me with any questions.
Russ Shay is public policy director for the Land Trust Alliance.