IRS Releases Information on Syndicated Conservation Easement Transaction Initiative

The IRS has released additional information to help address questions related to syndicated conservation easement (SCE) transaction initiative. See here.  Further, the IRS Chief Counsel has released Chief Counsel Notice 2021-001 (CC Notice), which contains information regarding Chief Counsel’s settlement initiative for certain pending Tax Court cases involving abusive SCE transactions described in Notice 2017-10, I.R.B. 2017-4, 544.  See here.

The IRS will soon publish updates to the Conservation Easement Audit Technique Guide, which will set out new arguments that taxpayers can expect the IRS to make in cases involving SCE transactions. Notably, the newly established Office of Fraud Enforcement and the National Fraud Counsel are coordinating with examining agents and Chief Counsel attorneys to canvas cases for additional fraud considerations, which might include assertion of the 75 percent civil fraud penalty, or where applicable, referrals to Criminal Investigation. The CC Notice entails the following:

It responds to a recurring question raised by several groups of partners. The CC Notice explains that, in rare cases, Chief Counsel may permit less than all the partners to settle on some terms. In most cases, however, the IRS will require settling groups of less than all partners to pay an additional 5 percent penalty, reflecting the lost efficiencies of the IRS having to proceed with the partnership case.

It indicates that the IRS would settle with individual partners (or groups of individual partners) only when they own a significant percentage of the partnership and they cooperate with Chief Counsel. The CC Notice provides that partners or groups of partners interested in resolving their cases on these terms have 30 days from the date of this Notice to elect to settle.

It also explains that Chief Counsel would consider a variety of factors in deciding whether to extend an offer in the Tax Court, including whether the partnership fully cooperated with the IRS during the audit.

Finally, it answers numerous procedural questions related to the settlement terms.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group is exclusively comprised of former IRS litigators and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division and Criminal Division.

For further information or to arrange a consultation, please contact Wilson Tax Law Group, APLC at either of our office locations in Newport Beach and Yorba Linda, California.

Tel: (949) 397-2292 (Newport Beach Office)

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