Advisory: Abusive tax shelters

- Blog

Keeping our eyes open and ears to the ground to prevent abusive tax shelters

Rep. Mike Thompson (CA) is a sponsor of H.R.4459 - Charitable Conservation Easement Program Integrity Act of 2017


We have seen it in the news – tax shelter abuse of conservation donations.

In these abusive transactions, unrelated investors acquire interests in pass-through entities, such as partnerships or LLCs, which hold title to land. After a short holding period, the entities then donate conservation easements (or land) to land trusts and claim deductions based on excessively high appraisal values. As a result, investors each receive tax benefits that are worth significantly more than each investor’s initial investment, which results in a tax shelter.

Washington’s land trusts operate at the highest degree of integrity and ethics. There is thankfully no evidence that this type of tax shelter transaction has occurred in Washington. However, we as a community need to be aware of this abuse and empowered to stop it in its tracks.

Enhanced tax deductions for charitable donations is a concept in our tax code that enjoys wide support. However, these syndicates take advantage of the tax code and ultimately threaten the reputation of land trusts and true conservation work.

The IRS has deemed these transactions as “tax avoidance transactions” and has taken action to stop those who promote these abuses.

Congress has also leapt into action, most recently through the Charitable Conservation Easement Program Integrity Act. This bipartisan act will continue to reward honest philanthropy, while shutting down those who would abuse this charitable incentive for profit. Currently there are no Washington cosponsors on this legislation, but we need that to change. Get in touch with WALT to see how you can encourage your legislator to support  –or cosponsor– the Charitable Conservation Easement Program Integrity Act.

The Land Trust Alliance (LTA) is on the Hill advocating heavily for this Act, as well as advising the land trust community to be vigilant for these types of abuses. WALT will continue to work with LTA and with our members to equip our members to detect and stop any potentially fraudulent activity.

To learn more about these tax shelter syndicates, the Land Trust Alliance recommends the following reading:

Important Advisory: Tax Shelter Abuse of Conservation Donations, LTA

The Billion-Dollar Loophole, Pro-publica

Private conservation efforts need congressional support, The Hill