Main tax breaks for conservation measures end in IRS management

The Internal Revenue Service (IRS) building is located in Washington, USA on September 28, 2020. REUTERS / Erin Scott / File Photo

Over the past few decades, conservation efforts have managed to save millions of acres of open space and wildlife in the United States and have become the premier method of protecting land from development.

These reliefs have also generated billions in tax deductions for wealthy owners and developers, sometimes for properties with little or no public benefit, according to tax authorities, tax law specialists and members of Congress.

In the past, government agencies took care of its conservation. But Congress in 1980 made conservation tax deductions an integral part of US tax law. Since then, private landowners have increasingly made withdrawals in return for promising not to develop their land.

While many property owners are motivated by conservation concerns, others are drawn to financial incentives. Tax laws say owners must get a valuation to prove the value of the donation, which should be the difference in the property’s fair market value before and after the donation. However, according to tax law specialists and the Internal Revenue Service (IRS), the judgments are often inflated.

“We have seen that taxpayers, who are often encouraged by promoters and armed with questionable assessments, make inappropriately high deductions for easements,” the tax authority says on its website.

New York authorities are investigating whether former President Donald Trump gave improper tax breaks on two conservation measures – a $ 21.1 million deduction on his Seven Springs, New York estate and one for $ 25 million on his Driving range at Trump National Golf Course near Los Angeles. Continue reading

The IRS began reporting conservation action information in 2003. That year, more than 2,000 people filed returns that included relief deductions totaling $ 1.5 billion. By 2018, the latest data available, the number of prints increased to 10,000 and the amount claimed rose to $ 6.5 billion.

Proponents of the tax breaks for nature conservation say that the easements were a valuable tool for the preservation of open spaces and habitats.

The public gets a pledge that a particular property will never be developed, said Sylvia Bates, director of standards and educational services at the Land Trust Alliance, an association that represents land trust organizations. “This ensures that the land always remains as a working farm, woodland, habitat for wildlife, or some other important place for the community.”

However, a non-partisan Senate panel found last year that the generosity of conservation tax breaks has led to a practice known as syndicated easements, in which investors acquire an interest in a property with the expectation that the land will be donated to conservation purposes . You will receive a high tax deduction for this. The report identified widespread abuses, including inflated judgment and fraud. This month the IRS announced the creation of a new office to target these businesses and other abusive tax systems.

The IRS has also examined the public benefits of conservation measures on golf courses like Trump’s. The agency has declined tax deductions on some donations for courses that are technologically advanced and often require the use of chemicals to maintain greens and fairways, raising questions about the environmental benefits of relief.

For example, the IRS denied a $ 7.9 million deduction for easements placed on a North Carolina golf course to preserve open space and wildlife habitats. According to court records, an IRS appraiser observed very little wildlife while surveying the property in 2013. He discovered that a border collie was being used on the golf course to remove geese from the grounds.

Our standards: The Thomson Reuters Trust Principles.