Lance Wallach | [email protected] | 516-236-8440 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 and representing those involved in 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, practitioners and taxpayers should anticipate that 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.