The Land Conservancy would like to notify all conservation easement landowners of a recent development in conservation easement law. Based on this update, you may want to take action if you received an income tax deduction in recent years for your conservation easement donation.
Passage of the Conservation Easement Integrity Act & IRS “Safe Harbor” Language
In December 2022, Congress passed the Charitable Conservation Easement Program Integrity Act as part of its year-end omnibus spending bill. This extremely important legislation, which prevents abusive syndicated conservation easement transactions, will help protect the integrity of donated conservation easements and the associated tax incentives. As part of this legislation, conservation easement donors have been provided the opportunity to correct certain specific conservation easement language pertaining to boundary line adjustments and extinguishment proceeds.
IRS Notice 2023-30, which details these “safe harbor” provisions, does not require conservation easement donors to cure their easement language. Rather, it provides an opportunity for donors who have the specifically identified problematic language to amend their easements in order to potentially protect their federal tax deductions from an audit because of the problematic language. However, it is important to understand that correcting the problematic language does not guarantee protection from an audit nor does it protect a deduction being denied by the IRS on other grounds. The deadline for conservation easement donors to correct easements with the problematic language is July 24, 2023.
Who May Be Affected?
The Land Conservancy cannot provide you with legal or tax advice and we have not reviewed the language in your specific conservation easement or assessed your specific tax situation. Therefore, you are encouraged to obtain your own legal counsel or tax advisor in order to assess your specific situation. Below are some questions that may be helpful in working with your advisors in reviewing IRS Notice 2023-30:
- Did you take, or plan to take, a federal tax deduction associated with the donated value of your conservation easement?
- Is your most recent deduction associated with the donated value of the conservation easement within the federal audit period?
Based on your answer to these questions, a determination on whether or not you need to consider a correction to your easement needs to be made in consultation with your tax and legal advisors. If after such consultation, you are interested in completing a correction to your donated conservation easement, please reach out to Land Conservancy staff as soon as possible so that any requested correction can be made by the July 24, 2023 deadline.
Please note, that any request for an amendment to your conservation easement based on this safe harbor language is subject to the approval of the Land Conservancy. You may also incur costs with any such amendment, including but not limited to, title work, legal expenses, and recording fees.
Please contact your land steward if you and your advisors would like to discuss an amendment.
Pete McDonald at 440.528.4171 or email@example.com
Shane Wohlken at 440.528.4177 or firstname.lastname@example.org
Sarah Kitson at 440.528.4183 or email@example.com
George Warnock at 440.528.4150 or firstname.lastname@example.org
More information can be found in IRS Notice 2023-30, available at www.irs.gov/pub/irs-drop/n-23-30.pdf.