TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, June 16, 2011

Forbes: The IRS's War Against Charitable Donations of Facade Easements

Trust Forbes: Feds Sue Trust Over Historic Easement Tax Breaks, by Janet Novack:

The IRS's seven year campaign against questionable charitable deductions for the donation of historic building facade easements has ratcheted up another notch. On Tuesday, the Department of Justice filed a lawsuit seeking to enjoin the non-profit Trust for Architectural Easements from practices that allegedly promote improper and inflated easement deductions.

The suit, filed in Federal District Court in Washington, D.C., also demands the names of 800 property owners in New York City,  Boston and Baltimore who have claimed charitable deductions totaling more than $1.2 billion for the donation of easements to the Trust. ...

The government’s 38-page lawsuit alleges, among other things, that the Trust  made “false and fraudulent” statements to prospective donors about the tax benefits available for donating facades; steered donors to appraisers who had been “coached” by it to go along with its questionable practices; helped donors to claim deductions before donations were final; and allowed donors to terminate easements they had already granted. ...

The IRS itself has come under criticism from some tax practitioners for its aggressive stance on historic easement donations, which it included in its “Dirty Dozen” list of tax scams for 2005 and 2006. In a 2009 report, the IRS Advisory Council said that the agency’s “strict view”  was “diluting” the tax incentive Congress created in 1976 for the donation of easements that protect a historic property by restricting facade changes or development in perpetuity. The IRS’ aggressive audits, the report added, “have added to the perception that the IRS is overreaching on this issue.”

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Tracked on Jun 17, 2011 6:15:10 AM