The IRS is Prioritizing Conservation Easement Fraud Enforcement in 2026: What NY Taxpayers Need to Know

The Internal Revenue Service (IRS) is prioritizing enforcement of conservation easement fraud in 2026. In addition to conducting intensive investigations, the IRS has launched a “time-limited” settlement program to resolve outstanding cases without litigation. Taxpayers that are under investigation or that have received a settlement letter from the IRS should promptly engage an experienced New York tax attorney to help them make informed decisions.

While claiming the federal conservation easement deduction can yield significant tax savings, improperly claiming it can lead to substantial liability. The Internal Revenue Service (IRS) has begun prioritizing enforcement in this area in 2026. We have seen an uptick in investigations targeting high-income taxpayers suspected of conservation easement fraud, and the IRS recently began sending settlement letters to taxpayers that have outstanding cases. Learn more from New York tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group:

The IRS is Ramping Up Conservation Easement Fraud Investigations

The IRS is aggressively targeting partnerships and other high-income taxpayers suspected of claiming fraudulent conservation easement deductions. Strict rules apply to these deductions under the Internal Revenue Code, and syndicated conservation easements are now classified as “listed transactions” in some cases. IRS investigators are pursuing cases in which taxpayers are suspected of forms of conservation easement fraud, including (but not limited to):

• Relying on artificially inflated appraisals
• Failing to disclose syndicated easements that qualify as “listed transactions”
• Backdating subscription agreements and other documentation
• Claiming exorbitant deductions for conservation easements
• Claiming deductions for non-existent properties and other tax fraud scams

Again, these are just examples. For targeted taxpayers, it is critical to have a clear and comprehensive understanding of the specific allegations at hand. Once targeted taxpayers know what they need to defend against, then they can shift their focus to building an informed defense strategy.

The IRS is Sending Settlement Letters to Taxpayers Suspected of Conservation Easement Fraud

Taxpayers who have received settlement letters from the IRS also need to make informed decisions. Under its “time-limited” settlement program, the IRS is sending individualized settlement letters to taxpayers that are involved in ongoing conservation easement-related disputes. Upon receiving a settlement letter, taxpayers have 90 days to respond and accept the IRS’ proposed terms—or face additional consequences.

That said, accepting the IRS’ terms is not necessarily the best approach in all cases. If taxpayers have grounds to dispute the IRS’ allegations of fraud, they can—and should—continue to pursue their disputed claims. To ensure they make informed, strategic decisions with their long-term best interests in mind, taxpayers who receive settlement letters should promptly consult experienced tax counsel.

Contact New York Tax Attorney Kevin E. Thorn

New York tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, provides experienced legal representation for taxpayers facing high-stakes federal tax controversies. To request a confidential consultation, please call 914-534-6004 or inquire online today.