The Land Trust Alliance: Public Policy - Tax Benefits for Conservation

4/25/2008 Promising News on the Easement Incentive in the Farm Bill
Your efforts to persuade the House of Representatives to include the conservation tax incentive in the Farm Bill are working! We still need your help to seal the deal as House-Senate negotiations continue under a new one-week extension. Rep. Earl Pomeroy (D-ND) was quoted yesterday as saying that a two-year extension of the conservation easement incentive was among the items the conferees on tax items have “agreed to,” but "agreed to" has some wrinkles… More.

We have had several reports that 2007 conservation easement donors may find that their tax preparation software (such as TurboTax) -- or their accountant's – may not properly allow them to deduct 50% of their adjusted gross income (or 100% if they are a "qualified farmer or rancher"). Please make your donors aware of this possibility, and have them speak with their tax preparer about the glitch.

Review of Glass vs Commissioner: A Tool for Land Trusts and Attorneys (updated 9/24/2007)
The Land Trust Alliance requested attorney Rob Levin to provide an issue by issue analysis of the Glass case that was brought to tax court by the Internal Revenue Service. See the analysis here (pdf 134 KB).

IRS sends letter to Senator Salazar (updated 9/10/07)
The Land Trust Alliance and representatives of the Colorado's conservation community met with IRS officials in late July to discuss the conservation easement audits in Colorado. See the IRS's letter to Senator Salazar about the meeting. (pdf 688 KB)

IRS Still Concerned About Conservation Easement Donations
A June 28, 2007 letter from the Internal Revenue Service to Senator Charles Grassley discussed their continuing concerns regarding exempt organizations and other issues. The letter briefly touched upon concerns about land trusts monitoring and enforcing conservation easements. See the relevant section of the letter here (pdf 457 KB). (updated 8/01/2007)

New Form 990 Analysis Coming Soon
The IRS just released a draft of a new, completely revised Form 990 – the tax return form for land trusts and other nonprofits. The Alliance is analyzing the new draft, so watch for additional guidance coming soon!

IRS Releases Guidance in Response to Request for Clarification on New Conservation Tax Incentive
In early 2007, the Land Trust Alliance submitted questions to the IRS and requested guidance on several questions regarding interpretation of the new law. See the document below for details. We will soon post a summary of the IRS' guidance. See the IRS notice here and the Alliance's shortened version.

Form 990 Includes New Question on Conservation Easement Donations
On the Form 990 for tax year 2006, there is a new question on conservation easements. Some land trusts have missed this new question due to the fact that some tax preparation software may skip over the question. See the ADVOCATES alert! Updated on 3/14/07.

New and Old Rules for Conservation Donors and Donees
New Information about IRS Records and Instructions for Form 8283
In recent audits, the IRS has asked conservation easement donors to provide them “contemporaneous written substantiation” of their donations from their donee. If you are not providing such a letter to conservation easement donors, you should! Learn more about this letter the IRS recommends.

There is also a new Form 8283 this year. But for conservation donors, even more important than the new form are the new instructions, which include new requirements for conservation easement donors that aren’t reflected on the form. See those instructions for Form 8283 here.
(updated 10/23/06)

IRS Update
New Amicus Brief Submitted in Glass v. Commissioner Case
The Land Trust Alliance collaborated with the Little Traverse Conservancy as a "friend of the court" to submit an Amicus brief in response to the IRS's appeal of a Tax Court verdict validating the conservation easement deductions taken for easements donated to the conservancy some years ago. See the Amicus brief and other easement case law information. (updated 12/05/2006)

Recent U.S. Tax Court Decision on Conservation Easements
The U.S. Tax Court recently disqualified a conservation easement tax deduction for failing to meet the standards of the law - a decision that Land Trust Alliance applauds. Learn more about the decision here. You can also read a speech on easements by the IRS Commissioner for Tax Exempt and Government Entities, or learn about changes to the tax forms land trusts use: the 8283 and the 990.(updated 6/9/2006)

Federal Tax Deductions - Key Documents
The Law Governing Federal Tax Deductions for Easements
US Code Section 26 170(h) creates a federal income tax deduction for the donors of qualified conservation easements. Treasury regulations (PDF) on this deduction are an important resource for land trusts.

Timeline: Major Actions on Conservation Tax Incentives
Learn more about the history of Congressional' action on conservation tax incentives from 1999 through 2006. (updated 08/2006)

Local, State and Federal Tax Incentives for Conservation Easements
Former South Carolina Director of Revenue, Burnet Maybank, published an excellent resource on tax incentives for conservation. It focuses on South Carolina law, but will be useful to anyone interested in conservation tax incentives.(posted 7/21/2006) View the PDF or learn more about other State Tax Credits

New Federal Requirement for Taxpayers Making Charitable Donations of Property
There is a new federal requirement for taxpayers making charitable donations of property (including donations of conservation easements) worth more than $500,000. The language in the law (Public Law No: 108-357) requires that the taxpayer include the full, unabridged appraisal with their tax return. This provision is retroactive, and covers all donations made after June 3, 2004. The Treasury Department may provide regulations further interpreting the law soon. Read the full text of the law. (posted 11/16/04)

Proper - and Improper - Deductions for Conservation Easement Donations, including Developer Donations
Stephen Small's article in Tax Notes reviews the tax law concerning donations of conservation easements, and highlights abuses of that law that are raising concerns with the IRS.
Download the PDF file, 68KB
(updated 12/3/04)

Senate Finance Committee Hearing on Land Conservation
Land Trust Alliance President Rand Wentworth testified before the Senate Finance Committee at a hearing on "The Tax Code and Land Conservation: Proposals for Reform". At the hearing, a number of Senators spoke up in support of land conservation. (posted 6/10/2004)