IRS creates conservation easements office, ends uniform settlement letters

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IRS conservation easement update

Highlights

The IRS established the Office of Conservation Easements to centralize technical expertise, policy, and case-resolution strategy for conservation and historic preservation easements.
Effective Aug. 19, the IRS is ending its uniform settlement initiative for conservation easement cases and will no longer issue uniform settlement letters or fixed response deadlines.
Taxpayers with pending cases can request settlements through assigned representatives, but new offers will match prior standardized terms unless litigation risks justify alternate resolutions.

Centralized oversight for easement cases

As reported by the Internal Revenue Service, the new Office of Conservation Easements is being set up to centralize technical expertise and coordinate policy, enforcement and case-resolution strategy across the agency and with the Office of Chief Counsel.

The IRS says conservation and historic preservation easements present specialized tax, valuation, contractual and procedural issues, and that experience with the initiative and engagement with taxpayers show a one-size-fits-all settlement process is not well suited to the full range of cases. Differences in partnership agreements, insurance arrangements and procedural posture can materially affect when and how taxpayers assess settlement options.

The office is also expected to support engagement with taxpayers, practitioners, conservation and historic preservation organizations and other stakeholders. In addition, it will work with Treasury on administrative and legislative options aimed at advancing Congress's conservation and historic preservation objectives, promoting consistent tax administration and strengthening valuation integrity.

Settlement process shifts for taxpayers and advisers

The IRS is concluding its current uniform settlement initiative effective Aug. 19 and says it will not issue any additional uniform settlement letters. Deadlines for accepting previously issued offers are being withdrawn, although prior elections to participate in the settlement framework remain in effect and will be processed under their existing terms.

Taxpayers with pending cases may still request settlement through their assigned IRS examination or Chief Counsel representative. If a case remains eligible, the agency says it will issue a new offer on the same standardized terms, while some matters may still be resolved on different terms when litigation risks warrant that approach.

The agency says the transition does not represent a new or more favorable standardized offer, but instead ends the issuance of uniform offers and fixed response deadlines. Taxpayers are being told to continue working directly with assigned representatives on case-specific matters until the new office becomes operational and separate contact details are announced.

In our earlier article on the Treasury and IRS proposal to tighten eligibility for refundable tax credits, we explained that the agencies aim to treat the refunded portions of several major credits as federal public benefits. We noted that this would restrict who can receive cash refunds—while still allowing eligible filers to use the nonrefundable portions to reduce tax owed—and that the plan was opened for public comment ahead of any final rule and effective date.

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