Tax Shelter Land Deals: Conservation Easement Investments could be a Red Flag to the IRS
Brokerage firms were seeing heavy sales in these investments prior to 2019 when the Senate Finance Committee launched an investigation into conservation easements after the Brookings Institution found that these deals cost the federal government more than $3 billion dollars in 2014 alone, with that amount expected to increase each subsequent year.
Apparently, the Senate Finance Committee believed that groups of taxpayers were using syndicated conservation easements to reap tax benefits greater than their initial investments.
While there are very legitimate purposes for the conservation easement provisions of the tax code, the committee reportedly believed that the tax provisions were being abused, according to a press release.
The committee concluded “the IRS has a strong reason for taking enforcement action against syndicated conservation-easement transactions,” according to the Senate Finance Committee Report released on August 25, 2020. While these “abusive” transactions continued despite the issuance of IRS Notice 2017-10, the committee recommended the IRS and the Treasury Department should take further action. The Senate Finance Committee’s full report can be found here.
Conservation Easements Criminal Charges – Scheme Allegedly Defrauded IRS out of More than $250 Million in Taxes
On Monday, December 21, 2020, two Georgia residents, then partners at an Atlanta accounting firm, reportedly pleaded guilty to conspiracy charges related to their roles in a “wide-ranging scheme” to defraud the IRS in connection with syndicated conservation easement investments.
From 2013 through at least December of 2019, the Atlanta accounting firm partners allegedly conspired with others to develop, market, promote, and sell investments in fraudulent syndicated conservation easement tax shelters to high-income taxpayers, according to the DOJ’s press announcement.
IRS Red Flag: Is there a Tax Audit in your Future?
The White Law Group is investigating potential claims against broker-dealers for improperly selling conservation easements (tax shelter land deals) to unsuspecting investors.
These syndicated conservation easements are sold through both independent broker-dealers and directly by attorneys and CPAs who create the syndications. These products typically come with high commissions, which may be a motivating factor for broker-dealers to push the products on unsuspecting investors.
The key to advisers looking at such easement syndications is the quality of the appraisal and valuation, according to analysts.
If your broker recommended a tax shelter land deal to you and you are concerned about investment losses, The White Law Group may be able to help you.
Broker-dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Recommendations should be appropriate in light of the investor’s age, risk tolerance, net worth, and investment experience.
Broker-dealers that fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses in a FINRA arbitration claim.
For more information on the investigation, see:
- GA Tax Professionals Plead Guilty To Promoting Syndicated Conservation Easement Fraud Scheme
- Conservation Easements Investments Tax Shelters: Red Flag with the IRS?
Recovery of Investment Losses
If you have invested in a conservation easement (tax shelter land deal) and would like to speak to a securities attorney about the potential to recover your investment losses, please call The White Law Group at 1-888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois. To learn more about The White Law Group, visit www.whitesecuritieslaw.com.