Conservation Tax Notice Ruling Likely to Hit IRS Data Collection

The IRS’s data collection and enforcement will likely be hobbled by a US Tax Court ruling that blocked the agency from imposing certain penalties for understating taxes tied to a conservation tax arrangement.

The Tax Court concluded on Wednesday that penalties against Green Valley Investors LLC and three other companies for understating taxes related to an IRS reportable transaction weren’t appropriate because the agency didn’t properly create the reporting requirement. The IRS should have gone through the Administrative Procedure Act process of giving notice and responding to public comments on the IRS Notice 2017-10 requirement, the ...