While some advocate for a simplified, low-rate tax system without numerous special deductions, the current tax code includes various incentives designed to guide individual and business activities. However, concerns arise when these established incentives are suddenly revoked, a practice some describe as a "bait-and-switch." A notable example of this alleged misstep involves the Internal Revenue Service's (IRS) recent actions regarding conservation easements.
Decades of Land Preservation Incentives
Over six decades ago, the IRS established the conservation easement program through a revenue ruling. This initiative aimed to preserve natural landscapes, curb unchecked development, and protect working agricultural lands. Landowners who voluntarily committed portions of their property to conservation received a tax incentive. This legal framework has been in place since 1976, nearly half a century, and was made a permanent fixture of the tax code in 1980.
To further encourage this land preservation policy, individuals, business partnerships, and corporations were permitted to contribute to these land easements in exchange for a tax deduction. The program has been credited with conserving tens of millions of acres across the nation.
IRS Initiates Aggressive Enforcement Campaign
In late 2016, IRS officials, expressing disapproval of syndicated conservation-easement transactions, unilaterally altered the prevailing regulations. Although Notice 2017-10 did not formally eliminate the conservation-easement deduction, it broadly categorized these transactions as "listed transactions," thereby imposing stringent disclosure requirements and initiating an aggressive campaign to challenge taxpayers who utilized them.
The IRS retroactively designated partnerships involved in the program as "presumptively abusive." This assertive enforcement effort has drawn more than 1,100 syndicated conservation-easement disputes into audits and litigation. As of May 2026, approximately 740 of these cases were docketed in the U.S. Tax Court, with around 400 transactions still under examination.
Procedural Concerns and Taxpayer Impact
Critics argue that Notice 2017-10 was improperly issued, branding an entire class of legal, decades-old transactions as presumptively abusive, with retroactivity extending to 2010. This action occurred without a proposed rule, public comment period, or a vote by any elected official. The IRS notice was swiftly followed by an increase to a 100% audit rate for all such transactions, resulting in an enforcement campaign that has overwhelmed the U.S. Tax Court with over a thousand cases.
While acknowledging that "bad actors" should face consequences, and a bipartisan Senate Finance Committee investigation did identify serious abuses in some syndicated conservation-easement transactions—particularly those involving inflated land valuations and excessive deductions—critics emphasize that evidence of isolated misconduct does not grant the IRS authority to presume every transaction was fraudulent or that every investor knowingly participated in a tax shelter.
Through the use of standardized metrics and desk audits, the IRS has allegedly subjected law-abiding taxpayers to harassment, pressured them into unfair "settlement agreements" totaling tens of millions of dollars, driven some into bankruptcy, and treated them as criminals despite their adherence to existing laws.
Allegations of IRS Overreach and Own Misconduct
It is contended that the IRS effectively changed tax law after the fact, a practice generally permissible only for criminal and penal cases, not for civil revenue measures. Furthermore, the IRS, as an enforcement agency, does not possess legislative authority; that power rests with Congress. This aggressive stance reportedly persisted during the Biden administration, even as the agency received substantial funding and personnel to expand its enforcement capabilities. Rather than addressing the procedural and fairness issues inherent in the campaign, the administration allowed it to continue against taxpayers embroiled in these long-standing conservation-easement disputes.
Adding to the controversy, the IRS itself has been implicated in illegal activities. A May 2026 report by the Treasury Inspector General identified seven instances of backdated penalty-approval documents, leading the IRS to concede more than $68 million in penalties in those specific cases.
Despite this, IRS officials reportedly retain significant discretion to make allegations of tax fraud, effectively acting as "judge, jury, and executioner," compelling individuals to pay tax liabilities that may not be legitimately owed. This pattern is described as an agency substituting its own policy preferences for statutory law enacted by Congress, subsequently employing its enforcement powers to penalize compliant citizens who relied on the law as it was written.
Calls for Congressional Action and IRS Reform
To restore trust and fairness within the tax code, there are calls for Congress to amend tax laws to explicitly prohibit retroactive changes to tax regulations. Additionally, the IRS should be required to issue clear guidelines on the proper procedures for donating a conservation easement and how to prudently value the associated deduction, thereby preventing future controversies.
Finally, critics urge the IRS to immediately cease what they term a "witch hunt" against law-abiding taxpayers who were encouraged for decades by both Congress and the Treasury Department to participate in conservation easement programs. This approach is characterized as a severe form of governmental overreach and fundamentally un-American.
