The Tax Scam That Won't Die

[Nevilledog]

Link to tweet

https://www.propublica.org/article/syndicated-conservation-easement-irs-tax-scam

For the past six years, government officials have tried ever harder to kill a type of tax avoidance scheme that the Internal Revenue Service has branded “abusive” and among “the worst of the worst tax scams.” The IRS has pursued tens of thousands of audits and warned of hefty penalties facing anyone who exploits it. The Justice Department has targeted top promoters of what it calls “fraudulent” deals with criminal charges and civil lawsuits, yielding several guilty pleas and a civil settlement. In Congress, Democrats and Republicans have united to sponsor legislation to abolish the practice.

But the industry has fought back with a coterie of lobbyists, including a onetime member of Congress long viewed as a liberal lion, Henry Waxman. The battle shows how even on those rare occasions when both parties agree to take action, well-funded interests can frustrate a solution.

The result: The use of the scheme continues unabated. Along the way it has cost the U.S. Treasury billions in lost taxes, according to the IRS.

“There is a tax shelter gold mine here, and they’re fighting very hard to protect it,” Oregon Sen. Ron Wyden, chair of the Senate Finance Committee, said. “There are enormous sums of money to be made as long as the number of transactions keeps increasing. This is a textbook case of the power of lobbyists.”

*snip*

[CurtEastPoint]

1. shame on Waxman for sucking off the richies

[Celerity]

17. Sen. Kyrsten Sinema, the enigmatic Arizona Democrat, who represented a potentially decisive vote in

her 50-50 chamber, put an end to that, telling the White House the syndication-killer language was among the provisions she wanted out of the bill, according to press reports. It was removed. That prompted 13 conservation groups to write Sinema on Dec. 7, pleading with her to “stand with us” to “curb abuse and restore the integrity of this cherished and worthy conservation program.”

Sinema, whose objections to the measure remain unclear, was unmoved. “All efforts to persuade the AZ Senator to reconsider her position have failed,” one advocate for the measure told ProPublica in an email. (Sinema’s staff did not respond to ProPublica’s requests for comment.)

[blogslug]

2. Two explanatory paragraphs from the article

...The government is targeting a tax deduction that goes by the cumbersome name “syndicated conservation easement,” which exploits a charitable tax break that Congress established to encourage preservation of open land. Under standard conservation easements, landowners who give up development rights for their acreage, usually by donating those rights to a nonprofit land trust, get a charitable deduction in return. When conservation easements are used as intended, both the public and the owner of the property benefit. A piece of pristine land is preserved, sometimes as a park that the public can use, and the donor gets a tax break.

The syndicated versions are different. Instead of seeking to protect a bucolic reserve for wildlife or humans, profit-seeking intermediaries have turned the likes of abandoned golf courses or remote scrubland into high-return investment vehicles. These promoters snatch up vacant land that till then was worth little. Then they hire an appraiser willing to declare that it has huge, previously unrecognized development value — perhaps for luxury vacation homes or a solar farm — and thus is really worth many times its purchase price. The promoters sell stakes in the donation to individuals, who claim charitable deductions that are four or five times their investment. The promoters reap millions in fees...

[elleng]

3. Thanks

[JudyM]

4. K&R

Interesting. Sorry to hear about Waxman’s firm, he was such a people’s advocate in Congress.

[Seeking Serenity]

5. Tax evasion is a crime

So why isn't tax avoidance likewise a crime? It merely incentivises and encourages these kinds of fraudulent schemes to rob the government of needed revenue to be used for "the general welfare."

[Zeitghost]

6. Tax Avoidance

includes things like putting money in a 401K, donating to charities and holding onto stocks for over a year before selling. Why should those things be illegal?

[Seeking Serenity]

7. I think I made that clear

If you're using schemes to avoid paying the full amount of tax you owe, IMO you're stealing from the government.

[Zeitghost]

8. So by following rules laid out by the government

You are stealing from them? That's an interesting take.

[Seeking Serenity]

9. I obviously didn't make myself clear

Yes, those are the government's rules. The government can, by right, and should change them, to criminalise tax avoidance.

[Celerity]

10. You literally just said the government should eliminate 401K's, charitable deductions, etc.

This is what you were replying to (from another poster):

They said:

Tax Avoidance includes things like putting money in a 401K, donating to charities and holding onto stocks for over a year before selling. Why should those things be illegal?

and then they said:

So by following rules laid out by the government
You are stealing from them? That's an interesting take.

To which you said:

The government can, by right, and should change them, to criminalise tax avoidance.

Are you also going to say all deductions of any type (like the standard deduction that most all non itemisers get, the EITC, dependent deductions, etc etc etc) should be removed too?



Any action, including the most mundane, widespread and profoundly LEGAL ones, that reduces your tax exposure, is by nature tax avoidance.

[Seeking Serenity]

12. Only the richies can afford tax avoidance schemes

If you're poor, you shouldn't be paying taxes anyway. It's hard enough just being poor.

[Celerity]

13. Non sequitur. 'Tax avoidance' is anything (even the most simple and utterly legal and common) that

reduces your tax load.

If I take the standard deduction when I file, I am avoiding taxes. Same if I itemise or take the EITC, or declare dependent children, or I deduct student loan expenses, or I deduct charity contributions, or I have a 401K, etc etc etc.

[Zeitghost]

15. Anyone taking any deduction and many other normal decisions

are participating in a tax avoidance "scheme". Retirement accounts, earned income tax credit, dependent exemptions, choosing a job that provides health insurance instead of buying it with post-tax dollars. I could go on and on. There isn't a person making an income that doesn't participate in some form of tax avoidance.

[Seeking Serenity]

16. All of those are "permissible" b/c the government allows them

If the government permitted tax evasion, that'd be legal too. But it would be wrong.

[Zeitghost]

14. It's not your sincerity I'm questioning...

Not working can be a form of tax avoidance. I guess we should criminalize that as well.

[uponit7771]

11. Trump did this scheme too