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The IRS Created an Office of Conservation Easements. Authority Will Decide Whether It Matters.

Updated: 3 days ago

What the IRS said. What the record shows.


An office is not the same thing as authority.


On August 19, 2026, the IRS announced a new Office of Conservation Easements. The agency says the office will centralize technical expertise and coordinate policy, enforcement, and case-resolution strategy across the IRS and the Office of Chief Counsel. At the same time, the IRS ended the automatic rollout of its May 2026 standardized settlement letters, withdrew existing response deadlines, and shifted future access to those terms to a request-based process.


The Office of Conservation Easements is the right institutional instinct. Conservation-easement disputes have always crossed organizational boundaries: partnership examination, valuation, promoter investigations, tax-exempt organizations, Appeals, Counsel, Collection, and, in the right cases, the Department of Justice. The IRS is also right that fixed-deadline, one-size-fits-all letters are poorly matched to partnerships with different governing agreements, insurance arrangements, procedural postures, and partner interests.

But the central claim is not yet verifiable.

The announcement does not identify the office's leader, organizational placement, staffing, budget, charter, delegated decision rights, implementation date, or performance measures. It promises centralization without showing whether the office can make anyone outside the office do anything. That distinction will determine whether this becomes a servicewide command structure or another meeting series.


What the IRS said—and did not measure

IR-2026-95 makes a forward-looking claim: the new office will promote coordination, consistency, valuation integrity, and better case resolution. The relevant population is substantial. On May 13, 2026, the IRS reported more than 1,100 pending conservation-easement cases—approximately 740 docketed in the Tax Court and 400 still in Examination.


The disclosed baseline is thin. Since 2020, prior initiatives resolved 405 cases, and the IRS says 32% of offers were accepted. The IRS also says courts have allowed, on average, about 6% of the deductions originally claimed and generally imposed 40% gross-valuation-misstatement penalties. But the agency has not identified the denominator for the 32% figure, the cases included in the 6% calculation, average cycle time, collections achieved, or the distribution of results by procedural stage.


The May initiative ran only 98 days before the IRS changed course. The August release does not say how many May offers were issued, accepted, rejected, or allowed to expire. Nor does it disclose quantified stakeholder feedback. The conclusion that standardized unsolicited offers were not well suited to the inventory may be correct. The public administrative record simply does not let us test it.


The classic SCE model is largely dead prospectively. The inventory is not.


People will say syndicated conservation easements are dead. As shorthand for the classic short-hold partnership marketed with a deduction exceeding 2.5 times an investor's basis, that is largely true prospectively.


Congress added Internal Revenue Code section 170(h)(7) in the SECURE 2.0 Act. Subject to three statutory exceptions, it denies the entire qualified-conservation-contribution deduction when a partnership's or S corporation's claimed amount exceeds 2.5 times the sum of the ultimate members' relevant bases. Treasury's final regulations in Treasury Decision 9999, now found principally in Treasury Regulation section 1.170A-14(j) through (n), implement that disallowance rule, the tiered-entity mechanics, and the exceptions.


That does not erase pre-December 30, 2022 transactions. It does not eliminate valuation disputes, statutory exceptions, transactions at or below the threshold, historic-preservation cases, or fee-simple substitutes. The factory model may be largely dead, but the warehouse is still full.


The invalidated notice made an already difficult sourcing problem worse


The Tax Court's decision in Green Valley Investors invalidated Notice 2017-10 because the IRS had identified the transaction through subregulatory guidance without Administrative Procedure Act notice-and-comment rulemaking. That holding did not validate the deductions, the appraisals, or the underlying tax results. It invalidated the notice-based listed-transaction mechanism.


Treasury and the IRS later repaired the rulemaking defect through Treasury Decision 10007 and Treasury Regulation section 1.6011-9. Those final regulations restored listed-transaction reporting through notice and comment for older transactions and for later transactions not automatically disallowed by section 170(h)(7).


The repair matters. It does not give the IRS back lost time.


Sourcing a promoted transaction requires more than locating a Form 8283. The government needs the promoter network, material-adviser lists, investor population, tiered-entity relationships, appraisal patterns, and the people who can convert that information into consistent case action. The replacement regulations can require reporting for open periods. They cannot recreate every disclosure that was not made, every list that went stale, or every experienced employee who left.


I have seen the cross-BOD conflict from both sides


I served on national syndicated-conservation-easement compliance teams in both LB&I and SB/SE. The technical issue could be the same, but the operating environments were not. Each business operating division had its own inventory, staffing pressures, field leadership, decision chain, risk tolerance, and definition of what needed to move first. A decision that made sense for one BOD could transfer work or litigation risk to another, to Appeals, to Counsel, or to Collection.


That is why the new office's authority matters more than its name.


The public record already says LB&I's Pass-Through Entities Practice Area has servicewide partnership responsibility and primary-return examination jurisdiction. The 2019 enforcement strategy also described coordination among LB&I, SB/SE, Tax Exempt and Government Entities, Criminal Investigation, Chief Counsel, and DOJ. The new announcement does not explain what failed in those arrangements, what the Office of Conservation Easements will decide, or which existing authority it supersedes.


But I can hypothesize using my experience.


At a macro level, Cross-BOD offices at the IRS typically coordinate by influence. Unless specifically delegated authority, they do not direct the field directors who control people, case assignments, and competing inventory. If the new office is staffed with personnel supplied by field executives—and those executives retain the power to pull people back or redirect their time—the conflict will be palpable. Everyone can agree that conservation easements are important while disagreeing about whose examiners, engineers, appraisers, counsel, and managers must absorb the work.


One example is data and reporting. There was notable tension was access to SCE data which was held with a gridiron fist by LB&I. Data inside the SCE program was closely held - mainly because of an age-old organizaitonal problem called "personal kingdoms." The IRS had created so many temporary, can be made permanent GS-15s (a very coveted position when not paired with leading others) tied directly to various areas - incuding data.


You may think - data is data. But you have to understand access, presentation and the story you're telling with the data matters. The one analyst who had access to the data - remember the personal kingdoms - would receive data from other BODs and compile It. Now this process took forever and there was little to not transparency in the process by other BODs.


Who cares, right? Well - here's the sticking point. SB/SE who is often viewed as an underdog or "lesser" BOD by the "elite" LB&I could turn over SCE cases like a well oiled machine. They excelled In this work. The dollars per hour ($ of adjustment / hours spent on case) was high. The months in process (time until examination starts via the reporting system to the close date) was far shorter.


Herein lies the conundrum.

SCE cases were cash cows. What do I mean by cash cow? Well, the employees working these cases ALWAYS got awards, monetary awards, and the management chain would then use those stats to write to their year-end performance appraisals. While SCE may not have been an explicit commitment - the IRS has this performance system that 50% of your rating falls into 3-5 other categories - one of them being business results. See - here's where the rubber hits the road. If you want to know more about competition amongst leaders - see my LinkedIn post here - https://lnkd.in/p/gWVzdPec


While I can't say data was the reason for a better approach for the compliance strategy - I can say the behaviors associated with this one particularly hairy Issue were pervasive In other aspects. But, a cross-BOD office without delegated decision rights is a coordination body, not a command structure. Coordination is useful. Overcoordination is problematic, and it is not enough when field directors remain accountable for separate inventories and supply the very resources the office needs.


The litigation pile cannot be wished away

The inventory creates a second hard limit: litigation capacity.


The approximately 740 docketed Tax Court cases are principally the responsibility of IRS Chief Counsel, not DOJ. DOJ becomes central in refund litigation, appellate matters, promoter injunctions, and criminal enforcement. That distinction is important, and the public record does not provide a clean SCE-specific DOJ staffing number. I will not invent one.


The resource problem is still visible. A four-figure legacy inventory requires trial teams, valuation experts, discovery, partner-level computations, collection work, appellate decisions, and consistent settlement authority. DOJ budget materials show 439 actual FTE in the former Tax Division in FY 2024 and 366 estimated for FY 2025; the FY 2026 request proposed another 107-position reduction. That request does not establish the Tax Litigation Branch's actual August 2026 staffing after DOJ's reorganization, but it documents capacity risk rather than excess capacity. Meanwhile, the National Taxpayer Advocate reports that the IRS workforce fell from about 102,000 employees at the beginning of 2025 to about 74,000 by year-end—a 27% reduction. The losses included roughly 38% in SB/SE, 26% in LB&I, 29% in Appeals, and 18% in Chief Counsel.


GAO found the IRS reductions were not targeted or strategic and that ordinary workforce-demand planning was suspended. Effective tax administration does not improve because an org chart gains a box while the people who develop, settle, try, compute, and collect the cases disappear.


The new office is therefore a small chance to repair a problem the administration has compounded. It should be praised for creating a possible point of accountability. It should not be mistaken for replacement capacity.


Settlements resolve compliant participants—not the whole population


Settlement is necessary here. The May terms recognized litigation hazards and removed the upfront-payment requirement that had blocked some taxpayers from electing. The August transition also correctly acknowledges that timing and procedural posture vary.


But settlements work only for taxpayers and partnerships that will engage, provide information, obtain required approvals, sign the documents, and comply with the resulting obligations. They do not, by themselves, source undisclosed participants, develop missing valuation records, resolve promoter liability, collect from insolvent entities, or dispose of excluded cases. The taxpayers easiest to settle are often those already willing to regularize their affairs.


That is why settlement cannot substitute for a population strategy. It is a disposition tool within one.


The office needs a framework that reaches beyond conservation easements


The best version of this office would become a model for servicewide issues affecting a national—and sometimes global—taxpayer population. Those issues do not respect BOD lines. The IRS needs a repeatable framework with:

  • one accountable executive with published decision rights;

  • a servicewide inventory and a single definition of the issue population;

  • transparent rules for staffing across BODs and resolving field-priority conflicts;

  • integrated sourcing, promoter, examination, Appeals, Counsel, Collection, and DOJ pathways;

  • common legal, valuation, development, and settlement standards with documented case-specific exceptions;

  • outcome measures for cycle time, disposition, collection, consistency, and taxpayer-rights effects; and

  • a short escalation path that does not die by a thousand requests to “run it up the chain.”


The Office of Conservation Easements deserves credit for recognizing that the problem is bigger than a stack of individual cases. Now the IRS must show that the office has authority over the stack, a workforce capable of moving it, and a framework that can survive the next servicewide compliance problem.


The bottom line


What the IRS said is directionally sound: centralized expertise and individualized case resolution are better than fragmented ownership and mechanically timed letters.

What the record shows is more cautious. The classic abusive SCE model is largely shut down prospectively, but the legacy inventory remains enormous. The invalidated notice cost visibility and time. Existing cross-BOD coordination did not prevent the backlog. Workforce cuts have stripped capacity from the functions expected to solve it. And the IRS has not yet disclosed whether its new office can direct field resources, resolve BOD conflicts, or measure results.


The Office of Conservation Easements may be the right office. Whether it has the authority to matter is still an open question.


Need help evaluating a conservation-easement dispute, settlement posture, or administrative record? EXFEDTax helps taxpayers and practitioners identify the procedural path before inventory pressure becomes the strategy.


We left the IRS. You're welcome.


This article provides general information and is not legal or tax advice. This article only provides the opinion of the authory and does not reflect the position of the Internal Revenue Service. Every matter depends on its facts, procedural posture, governing partnership documents, valuation record, and applicable law.


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