Senators Taking on IRS About Audits of Conservation Easements in Colorado

CCLT Letter to Senators Allard and Salazar (2/13/08)

Senator Allard and Salazar’s Letter to the IRS 12/7/07 Senator Allard and Salazar wrote to the IRS “about recent developments related to the Internal Revenue Service’s (IRS) ongoing investigations of conservation easement donations in Colorado.” First, the Senators emphasized their strong support of the effort to identify and deal with abusive transactions and with those who promote them. Second, they stressed the need for a swift and just resolution to IRS investigations. Finally, the Senators requested an extension of the deadline for accepting IRS settlement offers by an additional 30 days.

IRS Letter to Senator Salazar 8/21/07 “The IRS wrote this letter to Senator Salazar as a follow-up to a meeting between Senator Salazar and Steve Miller from the IRS on July 25, 2007. It summarizes the meeting with IRS representatives, Jill Ozarski from the Colorado Coalition of Land Trusts, Russ Shay from the Land Trust Alliance, and Mike Strugar from Conservation Resource Center on July 27, 2007 and discusses plans for issuing guidance in the future.”

IRS Letter to Senator Allard 8/16/07 “The IRS wrote this letter to Senator Allard in response to his July 25, 2007 letter to Commissioner Brown and questions he asked at a May 9, 2007 appropriations committee hearing. The letter includes a status report on the audits of conservation easements in Colorado as well as a proposed timeline for resolving the cases. The IRS also summarized a meeting with IRS representatives, Jill Ozarski from the Colorado Coalition of Land Trusts, Russ Shay from the Land Trust Alliance, and Mike Strugar from Conservation Resource Center on July 27, 2007.”

CCLT Letter to Senator Salazar with IRS Stories 4/9/07

CCLT Letter to Senator Allard with IRS Stories 4/9/07
The CCLT sent these letters to Senator Salazar and Senator Allard in response to a request from the Senators for more information about the IRS audits including detailed examples of some of the conservation easements under audit. The letters include stories from landowners and conservation professionals about their interaction with IRS auditors who are investigating over 200 conservation easements across the state. It is these stories, plus many others, that are the basis for our concern that the IRS has an overall bias against conservation easements.

Senator Allard notes IRS "Hostile" actions toward conservation easements   In his opening statement at a March 28 Senate Appropriations Financial Services Subcommittee hearing, panel ranking minority member Wayne Allard expressed concern about "increasingly hostile IRS actions towards conservation easements," saying that the IRS should not punish most taxpayers because of a few abuses. "It would appear that the IRS is attempting to dramatically narrow the number of legitimate conservation easements by applying a standard that has been struck down by federal courts two different times. . . There is a significant need for conservation easements in Colorado, and a few abuses should not end the charitable tax credit for everyone."

CCLT Letter to Senator Allard 1/31/07 (Identical Letter Sent to Senator Salazar)
In this letter, the CCLT asked the Senators to call a joint briefing from the Department of the Treasury to find out three things: (1) What specific guidance is the local IRS using to evaluate whether a conservation easement has "conservation purpose", (2) How has the IRS investigation changed in light of the Glass decision, and (3) What properties are IRS engineers using as "comparable values" in their valuation assessments?

Senator Salazar Letter to IRS 12/19/06
Senator Salazar wrote this letter to IRS Commissioner Mark Everson to inform the IRS of his concerns that the IRS audit process in Colorado could deter legitimate and important conservation transactions from happening. He also expressed concern that the IRS is "advancing a redefinition of how conservation easements qualify for a deduction under IRC 170(h), one that is not at all consistent with past audits, private letter rulings, or practice by the IRS," and noted that "[i]t is particularly troubling to me that the Service would advance this new policy not through regulations or even written guidance to taxpayers, but rather through mass audits in one state."

CCLT Letter to Senator Salazar 12/18/06
CCLT Letter to Senator Allard 12/18/06
In response to a Senate briefing, the CCLT sent these letters to Senator Allard and Senator Salazar expressing concerns that the IRS "intends to go well beyond sanctioning fraudulent cases of tax abuse. Instead, the Service's later rounds of findings will target over 100 cases that involve well-intentioned conservation easements done in accordance with the best practices of the industry."

Senator Allard Press Release 12/7/06
Senator Allard's office put out this press release describing a meeting with IRS officials in which the Senator told the IRS "that there is a significant need for conservation easements in Colorado, and [I] don't want a few people who have abused the system to end the charitable tax credit for everyone." The IRS told Senator Allard that it would work at the federal level to make sure Colorado citizens claiming a tax credit for a conservation easement would be treated fairly.

Senator Allard Letter to IRS 11/13/06
This letter from Senator Allard to IRS Commissioner Mark Everson expresses concerns that there are a large number of IRS audits of conservation easement donations in Colorado and that the IRS should "focus on identifying and dealing with abusive transactions and with those who promote them." The Senator also requested that "[i]f . . . the IRS's efforts seem to be moving in a different direction, . . . we immediately schedule a meeting and develop other forms of information sharing so that we can preempt problems before they develop."