Ugh! Tax Court Invalidates Conservation Easement Regulation
Yesterday, the Tax Court released an opinion about the validity of a quite technical regulation about what constitutes a valid conservation easement. It held that the regulation is not valid, following 11th Circuit precedent, reversing its prior position, and stating that it will follow the 11th Circuit precedent in the future. Forbes has a good explanation of the case, to which I have nothing much to add.
The “Ugh!” in my headline is on purpose, primarily because this trend in administrative law (invalidating long-standing regulations because of deeply retrospective and somewhat strained application of the Administrative Procedure Act) has the potential to do a lot of harm to the possibility of regulating the nonprofit sector far beyond conservation easements, as pointed out, e.g., in a forthcoming article by Ellen P. Aprill. But the secondary reason for the “Ugh!” is that the IRS has been doing a quite remarkable job of shutting down dramatically abusive uses of conservation easements. It would be a serious bummer if this weird technical battle over a particular regulatory requirement prevents the Service from continuing to devote resources to protecting the integrity of the nonprofit sector against abuse.
–Benjamin Leff