IRS Announces Updates to Conservation Easement Enforcement Initiatives

The Internal Revenue Service (IRS) recently announced a couple of significant changes to its ongoing enforcement efforts related to conservation easements. While the IRS is ending the uniform settlement initiative it launched earlier this year, it is also consolidating enforcement under a newly formed Office of Conservation Easements. The new office will pursue enforcement on a case-by-case basis, with a particular focus on “promot[ing] consistent tax administration, and strengthen[ing] valuation integrity.”

Fraudulent conservation easement deductions remain an enforcement priority for the Internal Revenue Service (IRS). The IRS has long viewed conservation easements as potential vehicles for tax evasion and has launched various initiatives to uncover tax evasion in high-income taxpayer cases. Texas tax defense lawyer Lawrence Brown represents clients in these cases, and he has significant experience defending high-income taxpayers accused of using fraudulent deductions to pay less than they owe.

Earlier this year, the IRS announced a standardized settlement initiative to reduce its backlog of conservation easement enforcement cases. However, the IRS has now announced that it is abandoning this initiative and instead focusing on targeted, case-by-case enforcement.

How is the IRS Targeting Fraudulent Conservation Easements Going Forward?

As stated in the IRS’ August 19, 2026, announcement, its new approach “ends [the] issuance of uniform offers and deadlines.” Acknowledging that its prior approach “[was] not well suited to the full range of conservation easement cases,” the IRS is shifting to a case-specific approach that will be managed by a newly formed Office of Conservation Easements. While taxpayers can continue to request settlement under the IRS’ outgoing framework, the IRS made clear that it will evaluate proposed settlements based on “the hazards of litigation.”

What Does This Mean for Taxpayers Who Received a Standardized Settlement Offer from the IRS?

According to the IRS’ August 19 announcement, “[a]ny deadlines for accepting previously issued offers are withdrawn.” Taxpayers who have already elected to participate in the IRS’ outgoing framework can continue to do so, but those who have not yet opted in are no longer eligible. These taxpayers can request a settlement through the appropriate channels, but the IRS is not required to offer the same terms it offered previously.

What Should High-Income Taxpayers Do if They Have Concerns About Their Conservation Easement Deductions?

With the IRS continuing to prioritize enforcement in this area, high-income taxpayers with concerns about their conservation easement deductions need to make informed, strategic decisions about how to protect their interests going forward. In particular, these taxpayers should:

• Conduct a Thorough Risk Assessment – High-income taxpayers who have claimed charitable deductions for conservation easements (including as participants in syndicated conservation easements) should work with their tax counsel to thoroughly assess their risk of facing liability for back taxes, interest, and penalties.
• Evaluate the Viability and Desirability of Requesting a Settlement – Those at risk of additional liability should evaluate both the viability and desirability of requesting a settlement under the IRS’ outgoing framework.
• Evaluate Other Options for Coming Into Compliance as Warranted – When evaluating their settlement options, taxpayers should also evaluate their other options for coming into compliance. Depending on the circumstances, this may include evaluating the possibility of submitting a voluntary disclosure.

Going forward, high-income taxpayers should also prioritize compliance with respect to future conservation easement deductions. Among other things, this means ensuring accurate appraisals, ensuring that they do not claim deductions for existing restrictions, and ensuring that they grant easements for valid conservation purposes in perpetuity.  

FAQs: IRS Enforcement Related to Conservation Easement Deductions

Why is the IRS targeting conservation easement deductions?

The IRS is targeting conservation easements because of widespread abuse, particularly in the syndicated conservation easement sector. While the IRS acknowledges that conservation easements “can provide an important public benefit by helping protect environmentally or historically significant property for the benefit of communities and future generations,” it also recognizes that they are commonly used in abusive tax schemes.  

Is the IRS focusing solely on syndicated conservation easements?

No. While the IRS is targeting syndicated conservation easements, it is also targeting individual high-income taxpayers’ conservation easements. As a result, all conservation easement deductions pose enforcement risks.

What are the penalties for improperly claiming a federal conservation easement deduction?

Penalties for improperly claiming a federal conservation easement deduction depend on the circumstances. While improper deductions expose taxpayers to liability for back taxes, interest, and civil penalties in most cases, the IRS’ Criminal Investigation division (IRS CI) works with the U.S. Department of Justice (DOJ) to pursue criminal penalties when warranted. This includes criminal penalties for tax evasion and other federal offenses.

How Our Law Firm Can Help

Our law firm represents high-income taxpayers in high-stakes federal income tax matters, including charitable deductions for conservation easements. If you are facing IRS scrutiny related to a conservation easement deduction—or are concerned about it—we can provide the advice and insights you need to make informed, strategic decisions. We provide assistance with:

• Federal income tax compliance and risk assessments
• IRS settlement negotiations
• IRS audits and appeals
• IRS CI investigations and enforcement proceedings
• Voluntary disclosures and other means of resolution

Whether you have the opportunity to pursue a proactive resolution or are already the target of an audit or investigation, we can guide you forward and communicate with the IRS on your behalf as warranted. We also represent you in the U.S. Tax Court and federal district courts as needed.

Request a Call with Texas Tax Defense Lawyer Lawrence Brown

If you need to know more about the IRS’ ongoing efforts to target conservation easement deductions, we invite you to get in touch. To request a confidential consultation with Texas tax defense lawyer Lawrence Brown, please call 888-870-0025 or tell us how we can contact you online today.