New "Time-Limited" Opportunity Provides Window to Settle Conservation Easement Disputes with the IRS
Posted in Offshore Account Update on June 30, 2026 | Share
The Internal Revenue Service (IRS) announced on May 13, 2026 that it has begun sending settlement letters to eligible taxpayers with pending conservation easement disputes. Taxpayers who receive these letters must quickly decide whether to accept the IRS’ terms, and they will want to consult with an experienced Washington D.C. tax lawyer to ensure that they are making an informed decision.
In an effort to address its backlog of conservation easement deduction cases while continuing to aggressively pursue new investigations, the Internal Revenue Service (IRS) announced on May 13, 2026 that it has opened a “time-limited settlement opportunity” for eligible taxpayers. However, while settling with the IRS may be in some taxpayers’ best interests, others may need to continue pursuing their claims to avoid unwarranted liability. Learn more from Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:
About the IRS’ Conservation Easement Dispute Settlement Initiative
The IRS’ “time-limited settlement opportunity” is an effort to get taxpayers to resolve pending conservation easement disputes without litigation. According to the IRS’ announcement, it currently has more than 1,100 of these cases pending, including 740 in the U.S. Tax Court.
As part of the initiative, the IRS is sending settlement letters to eligible taxpayers. While each settlement letter is “individualized,” the announcement states that the following terms generally apply:
- No charitable deduction will be allowed;
- The taxpayer will be allowed to take an “other deduction” equal to their out-of-pocket costs;
- A gross valuation misstatement penalty of 10 percent will apply if the taxpayer accepts within 90 days;
- A gross valuation misstatement penalty of 20 percent will apply if the taxpayer accepts within 135 days; and,
- Interest will accrue in accordance with the Internal Revenue Code.
Taxpayers who accept the IRS’ offer “will [not] be required to make an upfront payment of the settlement amount, and instead the[ir] liability will be subject to post-settlement collection.” Those that do not accept the IRS’ offer within 135 days will have their offers revoked; and, in this scenario, any future settlement “will reflect a charitable contribution deduction of approximately 5% to 7% of the claimed deduction and a 40% gross valuation misstatement penalty.”
Taxpayers Who Receive Settlement Letters Must Make Informed and Timely Decisions
In light of the substantial amounts at stake in these cases, taxpayers who receive settlement letters must make informed and timely decisions about whether to accept the IRS’ offer or continue pursuing their disputed claims. When accepting the IRS’ offer is not in a taxpayer’s best interests, the available options will depend on the specific circumstances.
Schedule a Confidential Consultation with Washington D.C. Tax Lawyer Kevin E. Thorn
If you have questions or concerns about the IRS’ conservation easement dispute settlement initiative, we invite you to get in touch. To schedule a confidential consultation with Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 202-349-4033 or contact us confidentially online today.
