Syndicated Conservation Easements, Go to Jail

In December of 2020, two CPAs pled guilty to tax fraud that resulted in over $1.2 billion in fraudulent charitable deductions and defrauded the IRS of more than $250 million in taxes. Consider the impact of this first criminal prosecution on the defendants, their co-conspirators, and others who claimed charitable deductions stemming from the Agee’s Syndicated Conservation Easements. Two Georgia-Based CPAs Plead Guilty to SCE Fraud S. Agee and C. Agee, both CPAs with offices in Atlanta, Georgia, were charged with conspiracy to defraud the IRS in separate 25-page criminal Informations. The Department of Justice filed the criminal Informations on December 16, 2020. This was the first-ever criminal case involving syndicated conservation easements (SCE). Five days later, both S. and C. Agee pled guilty. The IRS and Department of Justice announced that there will be future criminal investigations and prosecutions of those who have illegally utilized syndicated conservation easements deductions to defraud the IRS. What Are Syndicated Conservation Easement Deductions? Congress created conservation easements tax deductions as a key tool for protecting environmentally and historically important land. Typically, a donated conservation easement restricts land use and development to protect and preserve its unique qualities. When they comply with IRS laws, legitimate conservation easements protect the environment and provide tax incentives for the donor. Like any other form of tax incentive, conservation easements can be abused. The IRS and the Department of Justice believe that syndication of conservation easements are a major source of tax fraud. The criminal charges against S. and C. Agee, and their pleading guilty, will motivate both the IRS and the DOJ to vigorously prosecute fraudulent SCE deductions. The Department of Justice and the IRS believe that criminal prosecution for fraudulent SCE deductions is necessary to stop the fraud and loss of tax revenue. The amount of the tax deduction available through legitimate conservation easement charitable donations is significant. A taxpayer may use the charitable deduction to offset up to 50% of taxable income for the year in which the conservation easement donation was made. If the amount of the donation deduction is not completely used in that year, the deduction may carry forward for up to 15 years. Because of this favorable provision, many refer to the conservation easement donation as a deduction for the rich. More Criminal Investigations and Prosecutions Will Be Forthcoming and Will Not Be Limited to Those Who Dealt with the Agees The DOJ and the IRS announced that more criminal investigations and prosecutions will be coming. While the Agee cases were the first criminal prosecutions, many civil cases in the United States Tax Court involve the disallowance of SCE deductions. The Tax Court cases stemmed from IRS audits that rejected the SCE deductions. The audits resulted in large increases in tax plus interest and monetary penalties. So many of these cases exist that the IRS Office of Chief Counsel offered a settlement option. The settlement option was announced on June 25, 2020, and is available only to those who had cases pending on that date. Anyone under IRS criminal investigation is excluded from the settlement. Lance Wallach receives hundreds of calls annually to help people fight the IRS and get their money back from the promoters of these scams. As an expert witness, Lance's side has never lost a lawsuit. Google Lance Wallach and your advisor, who do you trust? 516-236-8440 Wallachinc@gmail.com