Gary Mauney of Mauney PLLC represents victims of abusive tax shelters.
The United States recently filed a complaint in federal court seeking an order stopping Nancy Zak, Claud Clark III, EcoVest Capital Inc., Alan N. Solon, Robert N. McCullough, and Ralph R. Teal, Jr., from organizing, promoting, or selling the IRS "listed" tax shelter known as the syndicated conservation easement. The United States' lawsuit contends that the conservation easements sold by EcoVest "rely on grossly overvalued appraisals as part of their scheme." The lawsuit also contends that the "fraudulent conservation easement shelters [at issue] were based on willfully false valuations."
The United States' complaint against the EcoVest conservation easement shelter promoters can be read here.
According to the USDOJ, the conservation easement syndicates "lack economic substance and are shams." As a result, of course, the government asserts that the shelters "do not meet the requirements for a 'qualified conservation contribution' under the Internal Revenue Code." According to the DOJ complaint, the "defendants knew, or had reason to know, that the statements they made to customers regarding the tax benefits were false or fraudulent."
According to the government, EcoVest organized, promoted, and sold at least 96 syndicated conservation easements. EcoVest caused the syndicates to report over $2.0 billion of tax deductions from "overvalued" and "improper" qualified conservation contributions, and "have passed those tax deductions though to the thousands of customers of defendants' scheme, resulting in hundreds of millions of dollars of tax harm."
On December 23, 2016, the IRS issued Notice 2017-10. In that Notice, the IRS announced that the syndicated conservation easement tax shelter was a "listed transaction" if entered into after January 1, 2010. The IRS's "listed transactions" are, in essence, a sort of "Black List," in that the listed transactions are considered "tax avoidance transactions" that "recognized as abusive" and require affirmative IRS disclosure by the taxpayer. This reporting obligation is known as a Form 8886, and if you participated in a syndicated conservation easement tax shelter, the failure to timely file one of these forms could subject you to IRS penalties and host of other problems. If you invested in a conservation easement shelter after December 23, 2016, the promoters of the shelter should have advised you about the consequences of entering into a listed transaction.
If you invested in a syndicated conservation easement tax shelter, you may have legal recourse against the promoters. Promoters of unlawful tax shelters frequently advise their investors to "fight the IRS," and make claims that the shelters are "defensible." However, basically no shelter based on a false or fraudulent factual foundation is defensible. Many times, the promoters will suggest that a civil suit will somehow harm the outcome of an IRS audit or will harm a taxpayer's court challenge to the IRS's position. Or they will claim that an attorney or accountant's opinion letter will protect them, so why undermine the opinion letter by launching a civil malpractice or fraud suit abasing the promoters? These are false arguments (e.g., the opinion letter writers are often considered promoters themselves, thus disqualifying the opinion letter's bona fides), and taxpayers often make challenges to the IRS's shelter positions at the same time they sue the promoters - because the tax arguments (e.g., good faith) are not necessary the same as the litigation arguments (e.g., fraud). The real motivation for this advice is typically self-interest: the avoidance of liability for malpractice or fraud, and the motivation to push your civil case beyond applicable statutes of limitation.
Don't let evidence disappear or allow a civil statute of limitations run against you before you take action. Gary Mauney of the law firm Mauney PLLC is one of the most experienced tax shelter litigators in the United States. He has represented taxpayers in multi-million dollar cases against promoters of tax shelters such as Son of BOSS, CARDS, BLIPS, FLIP, OPIS, SC2, SOS, POPS, and many others. His work has been featured in major media outlets such as The New York Times and The Wall Street Journal. For a confidential evaluation of your potential tax shelter case, contact Mauney PLLC by email at info@mauneypllc.com or by telephone at 704/945-7185.