Conservation easement investments involve bundling investors’ funds and in turn purchasing conservation easements on private land. The easements are then donated, but at an appraised value that is substantially higher than what EcoVest and similar companies paid for them. Because the land in question was appraised well above fair market value, investors are able to reduce their own tax burdens by several multiples of their principal investment.
IRS Targeting Investors for Improper Write-Offs
As discussed in Silver Law Group’s blog about conservation easements, the United States Department of Justice filed a Complaint against EcoVest alleging that these conservation easements are “nothing more than a thinly veiled sale of grossly overvalued federal tax deductions under the guise of investing in a partnership.”
While the DOJ took aim at EcoVest, the IRS is now looking to the investors who invested in these conservation easements to foot the bill. As the DOJ stated in its lawsuit: “Defendants’ customers . . . remain liable for any unpaid federal tax laws they owe” as well as “interest that has accrued on their unpaid federal tax obligations” and “substantial federal tax penalties as a result of participating in Defendants’ conservation easement syndication scheme.”
Conservation easement syndicates landed on the IRS’ 2021 “Dirty Dozen” tax scam list. This demonstrates the attention the IRS is paying to these investments and the IRS’ increased efforts to crack down on investors who benefitted from EcoVest’s and other conservation easements’ tax deductions.
In June 2020, the IRS Chief Counsel announced a time-limited settlement offer to those with docketed Tax Court cases involving syndicated conservation easement transactions. That is, the IRS offered to settle with those conservation easement investors who were already engaged in litigation with the IRS. These settlements resulted in investors having pay sums of money to the IRS for participating in this scheme. Moreover, the IRS also announced the formation of two new enforcement arms to investigate the tax shelters.
EcoVest Investors Face Potential Tax Penalties And Repayment Of Unpaid Income Tax
Silver Law Group is investigating claims on behalf of investors who bought interests in conservation easement syndicates offered EcoVest and similar companies. Many stockbrokers and financial advisers recommended EcoVest and other conservation easements to their clients as a way to reduce their tax burden. Unfortunately, investors allege brokerage firms and advisers failed to investigate and understand the flaws in these products and/or failed to disclose these risks and flaws to their customers. If you have suffered losses, in the form of a tax penalty or otherwise, the seller may be liable to you for damages.
If you face losses because your broker or financial advisor recommended an EcoVest conservation easement investment, contact Silver Law Group for a confidential consultation at (800) 975-4345 or email ssilver@silverlaw.com.