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Group Seeks Changes for Historic Conservation Easement Donations

AUG. 1, 2019

Group Seeks Changes for Historic Conservation Easement Donations

DATED AUG. 1, 2019
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August 1, 2019

The Honorable Steve Mnuchin
Secretary of the Treasury
US Department of the Treasury
1500 Pennsylvania AV NW
Washington DC 20500

Dear Mr Secretary,

I'm writing to you today because a powerful historic preservation tool, the historic conservation easement, is under fire.

The easement is a critical preservation tool because, once placed on a historic property, that property will enjoy protection from demolition in perpetuity. In return for donating partial control over changes to the historic property to a federally-recognized 501(c)(3), the federal government has long recognized the right of the property owner to take a tax deduction on the value of the development rights that are lost due to the placement of the easement.

However, the Internal Revenue Service has begun engaging in the practice of punishing owners taking advantage of this tax deduction: putting taxpayers (and preservation-based organizations) under audit, and under undue financial burdens as they are forced to employ legal representation in the defense of their charitable contribution, and dragging the audit process out over the course of years. The IRS' zeal for auditing each and every easement donated has put a chilling effect on subsequent easement donations. Owners think twice, and decide not to donate an easement. As development pressures mount, we continue to see historic buildings lost for new development. As these effects are multiplied across the country, fewer historic buildings that deserve and need easement protection will have it.

While we're not advocating for the IRS to turn a blind eye to every easement donation included in a tax return, we are advocating for: the publication of common-sense easement guidelines, and a streamlined audit process. When the IRS encounters a blatantly over-inflated appraisal, the tax return should be rightly scrutinized. However, established appraisal practices, including the review of comparable properties in establishing appraisal value, should help to differentiate abusive easement donation practices from acceptable charitable contributions.

These reforms would help to ensure the conservation easement program operates efficiently and legally, without placing every donor under a senseless cloud of suspicion. We hope you, in coordination with the Historic Preservation Caucus, will lead the way in ensuring that this legal charitable contribution tool, the conservation easement, will continue to play a role to encourage the protection of our valued collective heritage.

Please contact me with any questions. I would be happy to discuss how the conservation easement used to preserve our historic buildings is a critical tool in accomplishing our organization's mission.

Sincerely,

Joyce Barrett
Executive Director, Heritage Ohio
Heritage Ohio
Columbus, OH

CC:
The Honorable David Kautter, Assistant Secretary for Tax Policy
The Honorable Charles Rettig, IRS Commissioner
Members of the US Senate Finance Committee, Ohio Delegation

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