Conservation easements are designed to protect lands, water, wildlife, and historic structures...so why did the American College of Environmental Lawyers issue a warning about their financial properties?
According to the group, conservation easements carry a federal income tax deduction and, as such, have become somewhat of a tax shelter for individual promoters or independent brokers looking for large deductions—for themselves and their clients—as an element of a larger financial/investment strategy.
When the Internal Revenue Service caught onto this practice, it issued IRS Notice 2017-10, categorizing conservation easement syndications as "listed transactions" such that these activities must be reported to the IRS or risk penalties (fines).
By 2018, the IRS specifically targeted conservation easement abuse in a compliance campaign and in March 2019, added conservation easements to its list of "Dirty Dozen" tax scams while launching an inquiry with several individuals suspected of participating in such transactions.
Brokers with an outside business in real estate or land banking may be inclined to suggest unsuitable conservation easement investments—which are not securities, meaning that any sales of easements would be considered an (unauthorized) outside business activity that most likely would qualify as the illicit practice of selling away from the firm.
If you have invested with a broker who recommended a conservation easement as a charitable donation or other method to decrease tax liability, and subsequently faced penalties or fines from the IRS, that broker and/or employing firm may be responsible for damages you may have incurred. If unsuitable conservation easements have proven harmful to your financial interests, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.