Wednesday, February 12, 2020

The bill for Colorado's conservation easement fiasco is coming due

Paula Noonan

...Which brings up the next tax input-output fiasco. In 1999, the state ramped up its conservation easement program. This allows landowners to set aside property for non-development in perpetuity. The landowners receive income tax credits that they can use to reduce their state tax liability. About 2003, landowners caught on to the idea that they could sell their income tax credits to wealthy Coloradans who wanted a tax reduction. Tax salespeople, also known as brokers, lawyers, appraisers, land trust managers and accountants showed up at farmers’ and ranchers’ porches enticing these landowners with the prospect of cashing out some of their property. Not all of these so-called professionals were on the up and up. The state’s oversight was lackadaisical until the IRS started disallowing credits. Suddenly aroused, the state Department of Revenue tossed out easements for tax credits. Over 400 farmers and ranchers who’d bit on the prospect of ready cash and the people who bought their tax credits were suddenly hit with huge tax bills on upaid taxes plus interest plus fines. The tax salespeople, lawyers, appraisers, land trust managers and accountants slid back into their caves. This catastrophe of $140 million-plus has boiled on the state’s burner now for almost two decades. A bill is coming to help the farmers, ranchers and tax credit purchasers. The state currently sets aside $35 million/year in tax credits for easements. If the legislature decides to refund the money, it should cease the easement program until the account is settled. At a billion in tax credits already dished out, perhaps the legislature should go further and end the program entirely until the $8 billion school debt is paid...MORE

No comments: