IRS to Offer New Deal to Reduce Conservation Easement Backlog

The IRS plans to offer a final settlement offer for conservation easement cases to try to reduce a longstanding backlog in US Tax Court, a Treasury official said.

Ken Kies, assistant Treasury secretary for tax policy, said the settlement won’t be more generous than previous offers for illegitimate conservation easements, which is when taxpayers inflate the value of donated land and take an outsized tax break.

Offering a better settlement deal would send “the wrong message,” Kies said during a Wednesday panel at the 2026 DC Bar Tax Conference in Washington.

The settlement offer will likely come at the end of the month or early February, Kies told reporters after the panel. The IRS has yet to finalize the terms of the deal.

The IRS also plans to release a summary of agency wins in Tax Court related to the easements, he said during the panel.

“We actually think the investors don’t necessarily understand how much peril they’re in in terms of litigating,” Kies said during the panel.

Tax Court is dealing with about 700 cases and 400 more are coming from the IRS enforcement arm, Kies said. Congress in 2022 passed a law to cap conservation easement values in response to widespread fraud in the tax break.

The treatment of conservation easements is an example of how the IRS will remain tough on tax evasion, Kies said. Former government officials have said that the IRS workforce cuts and the elimination of the Justice Department Tax Division indicate tax enforcement will be a lower priority for the Trump administration.

“We are prepared to address significant tax evasion and/or other tax crimes,” Kies said.