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The Charitable Conservation Easement Program Integrity Act of 2021 (S. 2256, H.R. 4164) is a direct threat to taxpayers across the country who have donated or would donate valuable property rights in the name of private land conservation.

Rather than making common sense reforms, this legislation cuts back on important tax incentives for land conservation – and does so through ex post facto tax hikes that could stretch back more than a decade. The retroactivity of the legislation is likely an unconstitutional attack on taxpayers who, having relied on the tax incentive eradicated by the bill, won’t be able to get back their donated land rights. Members of Congress have all taken an oath to uphold the Constitution, and that means they should oppose this legislation.

Going forward, the legislation would discourage land conservation by partnerships and make it next to impossible to meet President Biden’s goal of preserving 30 percent of the country’s land by 2030.

The many faults of this bill include:

  • Limits Participation in Land Conservation: Under the bill, partnerships of unrelated individuals would be discouraged from conserving the most valuable land now under pressure of development. No tax deduction at all would be allowed for taxpayers making a partnership conservation easement donation if the amount of the donation exceeds 2.5 times the taxpayer’s basis. This arbitrary limit applies regardless of whether the donation was correctly valued.
  • Retroactive Tax/Penalty Increase of Up to 11 Years: In addition to disallowing tax deductions for future donations, the bill denies deductions retroactively for affected donations after December 23, 2016. As a result, taxpayers will be expected to amend their 2016 – 2020 tax returns to zero out donation amounts and pay additional tax and a new 40 percent penalty, discussed below. In addition, for affected donations back to January 1, 2010, if a deduction is denied for any reason, the taxpayer will be subject to the new 40 percent penalty.
  • Creates New Retroactive Penalties: In addition to loss of past deductions, taxpayers would be forced to pay a 40 percent “valuation” penalty. That is true even if the contribution was valued correctly. The bill also eliminates the existing reasonable cause exception against penalties and the procedural safeguard requiring IRS supervisory approval for a penalty.
  • Undermines Conservation Efforts: President Biden has committed to a goal of conserving 30 percent of the nation’s land by 2030, largely through local efforts. A recent report from researchers at the American University Washington College of Law determined that partnership conservation easements “are valuable tools” that “contribute to wildlife and habitat conservation objectives.” The report found that more than two-thirds of these easements help address climate change and 97 percent offer significant wildlife habitat protection. This bill would make achieving that goal all but impossible.

Similar legislation has failed to advance in previous Congresses due to weak support. Unfortunately, this bill doubles down on a failed approach instead of reflecting input from all stakeholders working towards common sense solutions. Partnership for Conservation will continue to advocate for sensible solutions that address rare instances of abuse while helping more Americans participate in important land conservation efforts.

Author: Partnership for Conservation