New easement office established, May framework replaced

The IRS announced the office in an August 19 news release, ending the uniform settlement initiative it began in May. The agency said the new office will centralize expertise for the more than 1,100 conservation easement cases pending in the U.S. Tax Court and under IRS examination. The office will coordinate policy, enforcement, and case-resolution strategy with the Office of Chief Counsel and work with the Treasury Department on administrative and legislative options and on valuation integrity.

In recent litigation, the government has generally prevailed, the IRS said, with the Tax Court on average allowing about 6% of the claimed deduction and imposing a 40% gross valuation misstatement penalty, plus interest.

The August announcement was a pivot from the settlement program the IRS detailed on May 13. That initiative offered standardized terms to a broad group of taxpayers, requiring them to give up the disputed charitable deduction and accept a 10% penalty, with 90 days to decide. O’Brien said the move to a dedicated office may reflect limited uptake of that offer.

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