July 16, 2018
National Taxpayers Union
“In any case, the IRS’s estimates of “revenue loss” due to the conservation easement deduction have been highly speculative and led to colossal revisions. In March of this year, the IRS informed the Senate Finance Committee that the total aggregate deductions involved with syndicated conservation easements could be $230 billion. This figure was subsequently adjusted by hundreds of billions to about $20 billion (!). Where the exact figure lies is unknown, but wild swings in estimates such as these are certainly not conducive to rational policymaking.
From NTU’s perspective, what is perhaps even more worrisome than just the fiscal calculus is what the IRS’s behavior toward easement deductions augurs for sound tax administration. The process for determining what is and isn’t a listed transaction is not necessarily straightforward. It may or may not be informed by public hearings, preliminary guidance, rulemakings, or other traditional deliberative mechanisms that help to prevent surprises to taxpayers and their advisors. In the case of listing certain conservation easement deduction transactions, the IRS has leapfrogged over some of these safeguards. Worse, the agency applied its decision retroactively to transactions dating back as far as 2010, a terribly disruptive move that will impose millions of dollars in deadweight costs on taxpayers who had been led to believe they were in compliance with the law. The IRS’s subsequent amendment to its December 2016 rule, granting an extra four months of time for those affected by hurricanes to submit to the new regime, is of minimal comfort.”
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Pete Sepp is President of the National Taxpayers Union.