Organizers of land-conservation deals the IRS considers abusive tax shelters spent years lobbying amid an agency
The conflict involves promoters who organize syndicates that buy land, donate easements to leave it undeveloped, and generate large charitable tax deductions. IRS Commissioner
Democrats in the U.S. Senate are considering whether to include restrictions on syndicated easements in the $1.75 trillion Build Back Better Act supported by President
“We’ve worked an awful long time to defeat this,” said
Ramsay’s group was among those in the syndicated-easement business that have spent a combined $9 million on lobbyists over the past four years, records show. That includes hiring by EcoVest Capital Inc., which is fighting a U.S. lawsuit claiming it made fraudulent statements in deals that led to $3 billion in tax deductions.
Promoters also gave money to a political action committee run by Ramsay’s organization, records show. One contributor was promoter Jack Fisher, who faces a U.S. investigation after two Atlanta accountants in his network pleaded guilty and one was indicted, Bloomberg has
EcoVest and Partnership for Conservation hired lobbyists at six firms including
Ornstein-Schuler, which stopped offering syndicated easements in 2019, declined a request for comment. EcoVest and Fisher didn’t respond to emails seeking comment. On Friday, EcoVest asked a judge to narrow the U.S. lawsuit against the company and limit any financial recovery, claiming the allegations and remedies sought “are deeply flawed.”
A spokesman for the IRS declined to comment.
The chief adversary of the deal promoters in the current legislative fight is the non-profit Land Trust Alliance, which represents organizations that receive conservation easements, but not from syndicated groups. The alliance, which spent almost $789,000 on lobbying since 2017, said it is concerned that abusive deductions will tarnish all land-conservation deals.
The alliance says 296 syndicated entities claimed $9.2 billion in deductions in 2018. By comparison, non-syndicated landowners claim about $1 billion in deductions for 2,000 to 2,500 donations annually, the non-profit says.
“The IRS and Treasury Department have stepped up their efforts to halt this abuse,” said Andrew Bowman, alliance president and chief executive officer. “It is time for Congress to do its part.”
The Senate Finance Committee issued a report last year that was highly critical of syndicated conservation easements. Committee Chairman
“There have been loads of lobbyists running around standing up for policies that really flagrantly abuse” the purpose of conservation easements, Wyden said.
The proposed law cleared the House Ways and Means Committee this year but didn’t make it into the House version of Biden’s $1.75 trillion spending bill.
While there are some GOP supporters of restrictions on syndicated easements, they face intense political pressure to reject Biden’s bill. Senate Republicans
At the same time, another bill sponsor, Rep.
As with any legislation, the details are crucial. Some conservative groups oppose the plan to collect taxes years after deductions were claimed. The bill pegs collections to December 2016, when an IRS notice warned promoters and investors the deals faced more scrutiny.
Americans for Tax Reform, a powerful conservative group run by
“I don’t buy the logic that you can go back and apply tax changes back to that date,” said
Thompson acknowledged the retroactive tax increase is a key sticking point among lawmakers and said he’d agree to remove it to get the bill passed, “because it will stop this from continuing to happen.”
Michael Desmond, former chief counsel at the IRS, said having the agency audit thousands of taxpayers and litigating in Tax Court is not ideal.
“Everyone would agree that legislation is the best way to address problems in existing tax law,” Desmond said.
The IRS notice was supposed to deter the deals, but that “obviously hasn’t happened here,” he said. “It comes down to the market dynamics and the risk tolerance of taxpayers knowing full well that they’re going to get audited.”
Ramsay said that Partnership for Conservation wants Congress to “reject policies that unfairly change the tax code retroactively, eliminating tax benefits for donations that cannot be undone.” Those policies “would set a dangerous precedent for taxpayers and undermine public confidence in all tax incentive programs.”
(Updates with legal filing by EcoVest.)
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