The Internal Revenue Service headquarters in Washington, D.C., U.S., on Tuesday, April 27, 2021.
Hundreds of IRS employees are cracking down on the deals, known as syndicated conservation easements, with 28,000 taxpayers under examination and the agency challenging $21 billion in tax deductions from 2016 through 2018, Rettig told lawmakers last month.
Dozens of disputes have gone to Tax Court, where the IRS has offered a settlement program under which investors can deduct their cost of acquiring their stake but must pay a 10% penalty, while promoters aren’t allowed deductions and must pay a 40% penalty.
Cullinan, who joined the IRS in 2018 after after nearly two decades in private practice as a tax attorney, said that the crackdown on syndicated conservation easements has parallels to a tax-shelter enforcement push two decades ago.
“In that last round, a lot of people got hurt,” Cullinan said.
In 2018, the most recent year for which data is available, 16,900 people invested in the easements, claiming $9.2 billion in tax deductions.