At a Glance
The IRS has created a new Office of Conservation Easements to centralize how it manages conservation and historic preservation easement matters. At the same time, the agency is changing its settlement process, which may affect taxpayers with pending cases depending on their facts, timing and current procedural status.
The IRS is changing how it manages conservation easement matters through a newly announced Office of Conservation Easements and changes to its settlement process for certain disputes. The update affects taxpayers, partnerships and advisors involved in conservation and historic preservation easement cases, particularly those with matters still pending before the IRS. While the new office is intended to centralize coordination inside the agency, settlement options may still depend on the facts, timing and procedural status of each case.
What the New Office Will Do
The new office is intended to bring together IRS knowledge and resources in an area that often involves complicated tax requirements, property valuations, partnership structures, insurance arrangements and procedural questions. Conservation easements can support the preservation of land, historic buildings and other protected property. However, the tax deductions associated with these arrangements have also drawn IRS attention, especially when the agency questions whether claimed deductions are too high or whether all legal requirements were satisfied.
The IRS expects the office to help align the agency’s approach to policy, enforcement and case resolution. It will also work with the Office of Chief Counsel and serve as a point of connection for taxpayers, tax professionals, conservation groups, historic preservation organizations and other interested parties. The office is also expected to work with Treasury on possible administrative or legislative updates that support valid conservation goals, encourage consistent tax administration and address valuation concerns.
How the Settlement Process Is Changing
With this transition, the IRS has stopped issuing new offers under the uniform settlement initiative that began with its May 13 program. The agency will not send additional letters through that process and has removed the response deadlines tied to earlier offers. Taxpayers who already chose to participate in the May 13 settlement process will continue under that framework and their elections will still be addressed under the applicable terms.
Taxpayers with unresolved cases are not necessarily without settlement options. They may still contact their assigned IRS examination team or Chief Counsel representative to ask whether a settlement under the May 13 framework remains available. If the matter qualifies, the IRS may extend an offer using the same standardized terms. The agency also indicated that some cases may justify a different resolution when the legal or factual circumstances call for a more tailored approach.
What This Means for Taxpayers
The IRS has made clear that this change is not a new or improved standardized settlement opportunity. Rather, it moves the agency away from sending repeated settlement offers with fixed response periods. The announcement also recognizes that conservation easement disputes can vary widely. Issues such as partnership governance, insurance coverage, case status and other facts may influence whether settlement is appropriate and how a taxpayer should evaluate available options.
For taxpayers involved in a conservation or historic preservation easement dispute, the most practical step is to stay engaged with the IRS contacts assigned to the matter. Pending cases should be reviewed carefully, including the current procedural status, any prior settlement election and the effect of withdrawn response deadlines. Because these disputes often involve both tax law and valuation issues, taxpayers should seek guidance before making settlement decisions or responding to IRS correspondence.
Looking Ahead
When it is fully operational, the Office of Conservation Easements is expected to provide a centralized path for general questions and coordination. The IRS has not yet shared additional contact information and has said more details will be provided separately. Until then, taxpayers should continue working through their assigned examination or Chief Counsel contacts for questions tied to a specific case.
Taxpayers with pending conservation or historic preservation easement matters should review their options carefully before taking action. Windham Brannon can help evaluate the potential impact of this IRS update and provide guidance on next steps. If you have questions or need support, please reach out to Tomika Bullet or your Windham Brannon advisor today.
FAQ
- What is the new Office of Conservation Easements? It is a new IRS office created to help coordinate policy, enforcement and case resolution for conservation and historic preservation easement matters.
- Did the IRS create a new settlement program? No. The IRS has stopped issuing new offers under the May 13 uniform settlement initiative, though some taxpayers may still be able to discuss settlement options with their assigned IRS contact.
- Who may be affected by this update? Taxpayers, partnerships and advisors involved in pending conservation or historic preservation easement disputes may be affected by the change.
- What should taxpayers do next? Taxpayers should review their case status, prior settlement activity and IRS correspondence before making any decisions or taking next steps.
