The Nature Conservancy in Iowa and Iowa Natural Heritage Foundation have been entrusted to hold conservation easements across the state, to see that special lands are protected for generations to come. A donated conservation easement is a significant gift from a private citizen to the public — landowners voluntarily relinquish certain property rights to ensure our most scenic viewsheds are preserved, that working farms are not developed and that rare native landscapes are never altered. For many landowners, such a donation would not be feasible without the federal enhanced charitable conservation easement tax deduction.
Unfortunately, this valuable program is being compromised by a few bad actors who are exploiting the incentive to make large profits. Investment partnerships purchase land and then obtain inflated property appraisals to substantiate the value of easements, leading to unjustified tax deductions distributed to the investors. According to IRS data, investment partnerships have claimed $20 billion in unwarranted charitable deductions from 2010 through 2016. In 2016 alone, 248 entities claimed $6 billion in deductions through these partnerships. For context, 2,500 legitimate easement donations made that same year protected 1.8 million acres and only claimed one sixth of that amount in donated value. This alarming discrepancy has earned the attention of the IRS, the Department of Justice, and most recently, our very own Sen. Chuck Grassley.
This March, Grassley, along with his colleagues on the Finance Committee, launched an investigation into abusive conservation easement transactions, stating that “[t]here are very legitimate purposes for the conservation easement provisions of the tax code, but when a handful of individuals cook up a scheme to cash in at the expense of federal revenue and in violation of Congress’s intent, something needs to change.” We agree. The enhanced charitable conservation tax deduction should only be available for donations made in good faith. On behalf of the Nature Conservancy, Iowa Natural Heritage Foundation and other conservation organizations led by the Land Trust Alliance, we would like to publicly thank Sen. Grassley for his initiative in stopping these abusive transactions.
Furthermore, we believe improvements to the tax code proposed in the bipartisan Charitable Conservation Easement Program Integrity Act (S.170. / H. R. 1992) will protect taxpayers while maintaining tax incentives for honest conservation donations and urge support of this legislation. Legitimate conservation easements improve water quality, save working family farms and protect Iowa’s beautiful places. We must uphold the integrity of this valuable conservation tool.
• Kristin Aschenbrenner is the state director for The Nature Conservancy in Iowa. Joe McGovern is president of Iowa Natural Heritage Foundation.