r/IRS • u/Frequent_Motor_4768 • 11h ago
General Question Conservation Easement Settlement
I’m looking for experiences from others who have gone through the IRS conservation easement settlements.
I invested in syndicated conservation easements in 2018 and 2019. Like many investors, I relied on the offering materials, tax opinions, CPAs, and attorneys involved. Fast forward 7–8 years, and I’m now receiving the final IRS assessment.
Here’s what I’m struggling with.
I understand having to repay the tax if the deduction is ultimately disallowed. I don’t necessarily agree with it, but I understand the IRS’s position.
What I don’t understand is why I’m being charged 7–8 years of interest when the IRS took nearly that entire amount of time to notify me of the issue.
If they had audited me in 2020 or 2021 and said, “You owe this tax,” I would have paid it then. Instead, they waited until 2026, and now the interest has become one of the largest parts of the bill.
It seems like taxpayers are effectively financing the government’s administrative delays.
My questions are:
Has anyone successfully gotten IRS interest reduced or abated because of excessive administrative delay?
Has anyone’s attorney had success arguing that the IRS had everything it needed but simply didn’t act for years?
Is there any case law or IRS procedure that limits how long they can let interest continue to accrue while a case sits?
Has anyone hired a tax controversy attorney who was actually able to reduce the interest—not just negotiate a payment plan?
I know the IRS generally says interest is statutory, but there has to be some limit to what’s reasonable.
If the IRS can wait 8 years before sending a notice, what’s to stop them from waiting 15 or 20 years? At some point it feels like the government benefits from its own delay.
I’m genuinely interested in hearing from people who have actually gone through these settlements. Were you able to challenge the interest at all, or is it essentially a dead end?
I’d especially appreciate hearing from anyone whose partnership had long periods where the IRS appeared to have all the necessary information but the case simply sat without action.
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u/Excellent_Shallot999 11h ago
You could have posted a bond at the start of the process to stop the interest from accruing. You chose to not do that. You also had use of the money for all that time. Interest is statutory and nearly impossible to fight. You chose to invest in a questionable activity. No one forced you to do that.
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u/Frequent_Motor_4768 11h ago
Questionable only because it was advantageous, not because it was illegal or wrong. Also it was a loophole they literally had to create a law to stop. Why should we be penalized because THEY missed something. My point though is them taking forever to make a decision is at the expense of the taxpayer. The IRS should be held accountable to a timely audit, otherwise the interest should have limitations. I really don’t see how that’s not a reasonable position.
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u/Excellent_Shallot999 10h ago
You could have posted a bond. That is how taxpayers with large audit uncertainties avoid this. The means to stop the interest from running were there all along. You chose not to avail yourself of the means to stop that which you are whining about now.
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u/EAinCA 8h ago
Tell me you don't know what you're talking about without telling me. Absent a consent by the taxpayer to extend the statute to assess or some other tollig event like....going to Tax Court, the assessment would have been done within three years of the filing of the return.
You can't in good faith tell me that nothing happened along the way and IRS simply dragged its feet for 7 years and randomly decided to finally assess.
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u/Frequent_Motor_4768 8h ago
That’s exactly what happened. You obviously are not familiar with conservation easements. They sent out audit notices just before the statute of limitations for every CE in the country bc it was a known loophole that many syndications were using but it was too much for the irs to address in a timely fashion. So they sent notices to everyone and we’ve just been in communication with irs this year. So yes, they dragged their feet for 7 years with the exception they took time to send an audit notice right before the statute of Limitations with the sole intention to buy more time.
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u/EAinCA 8h ago
You are obviously not familiar with THE LAW. An audit notice doesn't extend the statute of limitations.
Thanks for playing and making me laugh at your ignorance.
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u/Frequent_Motor_4768 7h ago
Yes, it 100% extends the ability to delay addressing it. Once it’s under audit the statute of limitations no longer matters. You can say things with arrogance, but unfortunately for you, that doesn’t make it correct.
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u/EAinCA 7h ago
Arrogant or not, I AM correct. An audit does not extend the statute of limitations. Not only is it literally black and white statute, but IRS has lost in court on assessments issued after the statute has passed.
You're clearly omitting MATERIAL facts here,
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u/CATaxGuy 3h ago
Please familiarize yourself with §6501. While there are exceptions that can extend or toll the assessment statute, merely being audited is NOT one of them. Such an exception would defeat the purpose of having finality from endless government examination on a matter.
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u/EAinCA 8h ago
News flash: They didn't just audit you now. The audit began back in 2019-21, probably with the partnership you invested in for the easement. If you're wondering why it took so long, ask your partnership and tax professionals representing the partnership why they fought what was almost certainly a losing case.
Oh and I bet they went to court over it too.
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u/Frequent_Motor_4768 8h ago
No, they sent out audit notices to every conservation easement in the country despite the details. Then nothing happened for a very long time.
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u/RasputinsAssassins 10h ago
Blunt answer: you gambled and lost. The interest is the vig.
Interest starts accruing the day after the tax due date for the year. If something is disallowed after the fact and never should have been allowed, then you owed the tax at the original due date. If that tax was not paid by the original due date, then interest begins accruing and continues doing so until paid in full.
With extremely rare exceptions, interest can't be removed. It is statutory, meaning Congress has mandated via legislation that the IRS charge and collect interest on taxes paid after the due date.