Evidence That IRS Conservation-Easement Enforcement Persisted and Grew Under Biden Despite Known Flaws
The Gist
Courts found the IRS's rule for labeling conservation-easement deals as 'listed transactions' was created improperly, and watchdogs flagged fairness problems in how these cases were handled—yet the IRS kept auditing, penalizing, and prioritizing these cases (even increasing resources for it) throughout the Biden years instead of pausing or fixing the process.
Conclusion
This enforcement pattern continued and expanded under the Biden administration despite known procedural and fairness problems, rather than being corrected.
Premises
- Multiple federal courts, including the Sixth Circuit in Green Valley Investors, LLC v. Commissioner, held that IRS Notice 2017-10—the primary vehicle for designating syndicated conservation easements as 'listed transactions'—was procedurally invalid because the IRS failed to comply with the Administrative Procedure Act's notice-and-comment requirements.
- Despite these judicial rulings identifying procedural defects, the IRS continued to audit, issue deficiency notices, and litigate against conservation-easement partnerships and their investors throughout 2021-2024.
- The IRS placed syndicated conservation easement transactions on its annual 'Dirty Dozen' list of abusive tax schemes in multiple years during the Biden administration, publicly reaffirming its enforcement priority rather than revisiting the underlying legal basis.
- The Treasury Inspector General for Tax Administration and various taxpayer advocacy organizations documented inconsistencies and fairness concerns in how the IRS processed conservation-easement cases, yet no formal enforcement pause or systemic corrective action followed these findings.
- Following passage of the Inflation Reduction Act, the IRS directed a portion of its expanded enforcement budget and staffing toward large partnership and high-income compliance initiatives that explicitly included continued conservation-easement audits and litigation.
- The volume of new conservation-easement audits, penalty assessments, and Tax Court proceedings did not decline after courts identified procedural problems with the IRS's listing authority, but instead remained steady or increased through the Biden administration's tenure.
Assumptions
- Continued and expanded enforcement activity after judicial identification of procedural defects reflects a deliberate institutional choice rather than mere administrative inertia or case-specific circumstances.
- Placement on the 'Dirty Dozen' list and dedicated IRA funding allocations are reliable indicators of agency-wide enforcement policy rather than isolated or coincidental agency actions.
- The absence of a formal enforcement pause or corrective rulemaking in response to documented fairness and procedural concerns constitutes evidence that the IRS did not treat these problems as requiring correction.