IRS Promoter Investigations, Enforcement Actions, and Penalties: Syndicated Conservation Easements, Micro-Captives

Recording of a 90-minute premium CLE/CPE video webinar with Q&A


Conducted on Tuesday, September 14, 2021

Recorded event now available

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Course Materials

This CLE/CPE course will guide tax professionals through new IRS enforcement actions focused on promoters of syndicated conservation easements and micro-captive arrangements. The panel will discuss recent IRS investigations of promoters of what they determine as abusive tax avoidance transactions, navigating the processes involved for examinations, new procedures of the IRS Office of Promoter Investigation, penalties, and key strategies for tax professionals. The panel will also discuss structuring micro-captives and conservation easement transactions to minimize IRS assessments and audits.

Description

Recently, the IRS announced the new Office of Promoter Investigations to combat abusive tax avoidance transactions. As the IRS expands its operations and enforcement actions, tax professionals and advisers must prepare to defend targeted taxpayers on syndicated conservation easements and micro-captive insurance arrangements.

Over the past year, the crackdown on conservation easement transactions has forced taxpayers, tax counsel, and advisers to recognize critical tax issues in structuring these transactions. Conservation easements are legally enforceable perpetual land preservation agreements between a landowner and either a government agency or a qualified land protection organization (such as a land trust) to conserve land and its resources. Grantors within these transactions enjoy significant tax benefits if the easement meets IRS approval for a donation.

In addition, the use of captive insurance companies, particularly Section 831(b) "micro-captives," has come under increased IRS scrutiny as well. The IRS has explicitly recognized micro-captives as a legitimate form of risk protection but has expressed concern that these vehicles are being used more as a wealth transfer device than legitimate insurance.

The popularity of conservation easement transactions and micro-captive arrangements makes them prime targets for promoters and investors seeking to take advantage of their tax benefits. However, the IRS may consider these transactions to be abusive tax avoidance schemes based on their structure, leading to potential IRS audits and investigations.

Furthermore, although the IRS has focused investigations on promoters of syndicated conservation easements and micro-captive insurance arrangements, the Service will investigate other transactions that they deem abusive tax avoidance practices.

Listen as our panel discusses recent IRS enforcement actions on promoters, navigating the processes involved in abusive tax avoidance transaction cases, and key tax professionals' strategies.

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Outline

  1. IRS Office of Promoter Investigations
  2. Key items of focus for promoter investigations
    1. Syndicated conservation easements
    2. Micro-captive arrangements
    3. Other areas of IRS focus
  3. Avoiding or minimizing examination and penalties
  4. Best practices for tax professionals

Benefits

The panel will review these and other key issues:

  • Overview of new IRS enforcement initiatives aimed at promoters of abusive tax avoidance transactions
  • Key considerations and issues for fund managers and advisers
  • Applicable rules and strategies to avoid IRS scrutiny for syndicated conservation easements
  • Rules and planning to avoid IRS scrutiny for micro-captive arrangements
  • Managing tax audits and collection cases
  • Avoiding or minimizing penalties

Faculty

Brown, Sandra
Sandra R. Brown

Principal
Hochman Salkin Toscher Perez

Ms. Brown’s practice focuses on individuals and organizations who are involved in criminal tax investigations,...  |  Read More

Deitrich, Lois
Lois E. Deitrich
Acting Director, Office of Promoter Investigations
Internal Revenue Service

Ms. Deitrich has 20 years of experience with the IRS, having begun her career as a revenue officer in 2001. Prior to...  |  Read More

Stein, Michel
Michel R. Stein

Principal
Hochman Salkin Toscher Perez

Mr. Stein specializes in tax controversies, as well as tax planning for individuals, businesses and corporations. For...  |  Read More

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