IRS Toughens Scrutiny of Land Gifts

The Internal Revenue Service announced yesterday that it is cracking down on improper tax deductions taken by people who give real estate and cash to environmental groups, warning that taxpayers could face penalties and charities could lose their tax-exempt status.

The IRS is specifically targeting gifts of "conservation easements" -- deed restrictions that limit some types of real estate development. The easements have become the environmental movement's key tool for preserving fragile ecosystems and millions of acres of open space.

The IRS is focusing on easements that have questionable public benefit or have been manipulated to generate inflated deductions.

"We've uncovered numerous instances where the tax benefits of preserving open spaces and historic buildings have been twisted for inappropriate individual benefit," IRS Commissioner Mark W. Everson said in a statement. "Taxpayers who want to game the system and the charities that assist them will be called to account."

The IRS warned that it intends to levy penalties on charity executives and board members who collect or knowingly help secure improper deductions claimed in connection with such transactions.

The announcement did not name individual taxpayers or charities. It comes as the IRS is conducting a major audit of the Arlington-based Nature Conservancy, the world's largest environmental organization....