Conservation Easement Tax Incentives Face Scrutiny After Decades

Steve Forbes, chairman and editor-in-chief of Forbes Media, champions a flat tax system where everyone pays one simple rate of 18%. In his ideal world, the IRS code would lack special breaks entirely. He argues this structure creates fairness for all citizens. Yet Congress often steers behavior through specific laws that offer incentives to businesses and individuals. Snatching these benefits away without cause feels like a bait-and-switch trap waiting to spring on hardworking people. A perfect example of such misconduct lies in the history of conservation easements.

Decades ago, the IRS launched this program via revenue ruling with clear goals: protect nature, halt unchecked development, and save working lands. Landowners received tax incentives for voluntarily removing portions of their property from the market. This law has stood since 1976, nearly fifty years now. It became permanent in 1980 and remains part of the tax code today. To further encourage this preservation policy, individuals, business partnerships, and corporations could donate to land easements while claiming a tax write-off. The result was tens of millions of acres successfully conserved across the nation.

Then late 2016 brought a sudden shift when IRS officials disapproved of certain syndicated conservation-easement transactions. They unilaterally changed the rules without waiting for new legislation. Notice 2017-10 did not formally abolish the deduction, but it branded a broad category as listed transactions. It imposed burdensome disclosure requirements and opened the door to an aggressive campaign challenging taxpayers who used them. If bad actors exist, they should face punishment for sure. However, the vast majority of these tax deals were created legally by law-abiding citizens.

The agency retroactively labeled partnerships participating in the program as presumptively abusive. This enforcement campaign swept more than 1,100 syndicated conservation-easement disputes into audits and litigation. Roughly 740 cases are now docketed in U.S. Tax Court. About 400 transactions remain under examination as of May 2026. The IRS improperly issued Notice 2017-10, branding an entire category of legal, decades-old transactions presumptively abusive retroactive to 2010. No proposed rule accompanied this move. No public comment period existed. No vote by anyone accountable to voters occurred. Just an IRS notice followed immediately by a jump to a 100% audit rate for all such transactions. The result was an abusive enforcement campaign clogging the U.S. Tax Court with over a thousand cases.

Some promoters did abuse the deduction, which requires correction. A bipartisan Senate Finance Committee investigation identified serious abuses in specific syndicated conservation-easement deals involving inflated valuations and outsized deductions. But evidence that some promoted fraud does not give the IRS license to presume every transaction was fraudulent or that every investor knowingly participated in a tax shelter. By using cookie-cutter metrics and conducting desk audits, the agency harassed law-abiding taxpayers. They pressured them to pay tens of millions of dollars in unfair settlement agreements. Some were forced to file for bankruptcy. The agency treated them like common criminals despite their adherence to the law. Clearly, the IRS changed tax law after the fact. This action is only legal regarding criminal and penal cases, not civil revenue measures. Congress makes the laws, yet sadly the IRS continued this aggressive approach during the Biden administration when it received major funding and personnel expansion.

The administration chose not to fix the procedural rot or address fairness issues within the campaign. Instead, they let the process roll on while trapping ordinary taxpayers in these long-running conservation-easement disputes.

There is a deep irony here because the IRS itself was found engaging in illegal activity. A May 2026 report from the Treasury Inspector General uncovered seven specific cases involving backdated penalty-approval documents. The agency conceded more than $68 million in penalties connected to those instances.

Despite that admission, IRS officials still hold frightening leeway to make claims of tax fraud. They then act as judge, jury, and executioner all at once. This forces people to pay bills that are not actually owed. It is a pattern of abuse that Americans have come to recognize clearly: an agency substituting its own policy preferences for the law Congress wrote. Then they use their enforcement powers to punish citizens who followed the statute exactly as written.

Congress needs to amend tax laws right now. The goal must be to prohibit after-the-fact tax changes so trust and fairness in the code can finally be restored.

The IRS also needs to issue clear guidance on making a proper donation of a conservation easement. They must show how to prudently value the deduction without creating later controversy for taxpayers.

Finally, the agency should immediately end this witch hunt against law-abiding taxpayers. These people were encouraged by Congress and the Treasury Department for decades to join conservation easement programs.

Simply put, this is weaponization at its worst. It is un-American.