National Taxpayers Union
By Pete Sepp
November 14, 2019
A fundamental principle of our system is that laws and policies should change only with sufficient public input—and notice.
Imagine the chaos, unfairness, and gradual erosion of confidence in that system if such a principle didn’t exist. A police officer could pull over a motorist for obeying a 50 mph speed limit in a zone that’s been marked that way for 40 years, and claim: “forget about what the signs say, your local government decided yesterday that beginning in 2016, the limit was 30. You should have guessed this was going to happen, so you owe us three years of speeding tickets.” Such behavior – whether by passing new laws with extreme retroactive effects or by enforcing new rules through surprise – is especially abhorrent to taxpayers. Unfortunately, it is also relevant to recent moves by the Internal Revenue Service and Members of Congress to single out a group of taxpayers and stamp out longstanding policy toward tax deductions for conservation easements.
On November 12 the tax agency announced “a significant increase in enforcement actions for syndicated conservation easement transactions” – including considering criminal prosecutions, investigation of practitioners reported to the Office of Professional Responsibility, and an even more aggressive stance in court against the most minute details of easement deductions facilitated by partnerships.
As NTU has pointed out here, here, here, and here, to give just a few examples, the IRS’s behavior toward those claiming this deduction has set ominous precedents for the rights of all taxpayers. The problem is encapsulated in the IRS’s decision to make what it calls “syndicated” conservation easement deductions a “listed transaction,” through IRS Notice 2017-10 issued in December 2016.