'Put a stop to this bad behavior'

In the midst of Land Trust Alliance Advocacy Days this week, IRS Commissioner Charles Rettig testified before the U.S. Senate Finance Committee. Among the topics discussed was the abuse of the charitable conservation deduction, which Finance Committee member Sen. Steve Daines of Montana is seeking to stop with the bipartisan Charitable Conservation Easement Program Integrity Act.

Rettig told Daines the IRS would "like to work with you on your legislation" because abuse has "absolutely not declined" despite joint actions by the IRS and Department of Justice. A transcript of their exchange follows:

DAINES: Commissioner Rettig, thank you for being here today. I appreciate your efforts to modernize the agency's IT infrastructure, reduce identity theft and combat fraud and tax evasion. Speaking of fraud, in late 2016, the IRS issued a Notice to combat the abuse of the conservation tax easement deduction. The IRS Notice considered these tax shelters as listed transactions if the deduction equals 250% of the land's initial cost. Abusing this deduction robs Montanans of their hard-earned taxes and discourages the legitimate conservation projects that are helped by it. I've introduced legislation — the Charitable Conservation Easement Program Integrity Act — to put a stop to this bad behavior permanently by codifying the parameters set out in the IRS Notice. Mr. Rettig, have the abusive transactions declined since the IRS issued its notice and, if not, why have promoters been allowed to continue to sell these abusive shelters?

RETTIG: Syndicated transactions have absolutely not declined. They're still there. I think that you may also be aware of the fact that, at our request, the Department of Justice not long ago filed an injunction action against a promoter down in Georgia. We have a number of these syndications under examination both as to the taxpayer's side and as to the promoter's side. The promoter's side, you know, indicates they have valuations that say that something that — you know, there's an example that's in one of the statements that somebody buys something for $2 million, they sell it to a syndication for $8 million and then it goes out to the taxpayers at $40 million, and all those values happened within one year. That's what we're seeing. So we'd like to work with you on your legislation. It's an area that we're focused on.

DIANES: Right. Thank you. What it does is it undermines the legitimacy of conservation easements…

RETTIG: Right.

DAINES: …which are a great tool for us in Montana. And my various land trusts are strongly supporting this legislation because they're doing it the right way. We gotta get rid of these very bad actors who are abusing it.

To learn more about the abuse of conservation donation deductions and how you can join the Land Trust Alliance's ongoing efforts to end it, read our overview of the Charitable Conservation Easement Program Integrity Act.

Josh Lynsen is media relations manager for the Land Trust Alliance.