The IRS is preparing to roll out one final settlement offer for taxpayers involved in syndicated conservation easement transactions, signaling a renewed effort to resolve hundreds of long-running cases and reduce a substantial enforcement backlog.
According to a recent Bloomberg Law report, the initiative is intended to move cases out of audit and litigation while reinforcing the government’s increasingly firm stance on perceived conservation easement abuse. The full Bloomberg Law article is available here:
IRS to Offer New Deal to Reduce Conservation Easement Backlog
A “Final” Offer Amid Mounting Case Volume
Treasury Assistant Secretary for Tax Policy Kenneth Kies confirmed that the IRS plans to issue one more round of settlement offers to taxpayers involved in syndicated conservation easement transactions. The effort is aimed at reducing a backlog of roughly 700 cases currently pending before the Tax Court, in addition to approximately 400 cases still under IRS examination.
The IRS has emphasized that the forthcoming settlement will not be overly generous. Kies cautioned that making the offer too favorable could “send the wrong message” to taxpayers who engaged in transactions involving inflated property valuations and outsized charitable deductions.
Prior Settlements Reduced—but Did Not Eliminate—the Backlog
This anticipated settlement round follows three prior settlement initiatives, which resulted in more than 40% of eligible taxpayers accepting offers and resolving their cases. Despite these efforts, the IRS continues to face a significant inventory of unresolved cases, prompting what it has characterized as a final opportunity for resolution.
As noted in the Bloomberg Law article, the IRS is attempting to balance administrative efficiency with deterrence—encouraging settlement while avoiding incentives for future abusive transactions.
Courts and Congress Continue to Bolster IRS Enforcement
Recent Tax Court decisions further highlight the risks associated with continued litigation. In a December ruling, the court rejected a partnership’s $10.5 million conservation easement valuation, reducing it to just $379,000, reinforcing the IRS’s strong litigation track record in these cases.
Congress has also acted. The Inflation Reduction Act imposed statutory limits designed to curb conservation easement abuse, strengthening the IRS’s enforcement posture and narrowing planning options going forward.
Key Takeaways
- The IRS is preparing a final settlement offer for syndicated conservation easement cases, expected in late January or early February.
- Hundreds of cases remain pending in Tax Court and examination, increasing pressure on taxpayers to act.
- Settlement terms are expected to be measured, not generous, reflecting the IRS’s enforcement priorities.
- Tax Court outcomes continue to favor the IRS, increasing litigation risk.
- Legislative changes have significantly limited conservation easement strategies, making informed decision-making critical.
How Wiggam Law Can Assist
Taxpayers currently under audit, in Appeals, or litigating syndicated conservation easement matters should carefully evaluate any forthcoming settlement offer in light of recent court decisions and legislative changes.
Wiggam Law represents taxpayers nationwide in complex IRS examinations, Appeals proceedings, and Tax Court litigation. Our team regularly advises clients on conservation easement disputes and helps them assess settlement options, litigation risk, and long-term tax exposure.
If you have questions about how the IRS’s final settlement initiative may affect your case, we encourage you to contact Wiggam Law to discuss your situation with experienced tax controversy counsel.
