The IRS Rewrote Tax Policy Without a Single Vote. Congress Should Not Let That Stand.

By Chuck Flint, AIA CEO

In 2016, the IRS unilaterally declared an entire category of legal tax transactions “presumptively abusive.”  With no proposed rule, public comment, or vote, that decision has since pulled more than 1,100 taxpayers into audits and litigation, some into bankruptcy, for following the law as written. It’s a preview of what happens whenever an agency rewrites tax policy with no accountability to voters, and it’s why Congress needs to act.

For nearly 50 years, conservation easements have done exactly what Congress intended: landowners receive a tax incentive to voluntarily keep land out of development, and the country gains preserved forests, farmland, and open space in return. It’s the kind of program that draws support across the political spectrum. Then, in late 2016, the IRS decided it didn’t like how some taxpayers were using the deduction. Rather than asking Congress to amend the law to weed out the few bad actors abusing it, the IRS issued Notice 2017-10, branding a broad category of easement transactions “presumptively abusive,” applying that label retroactively to 2010.

As economist Stephen Moore wrote recently in Fox News, that single action reshaped this program more than any statute since 1980. And as Moore states, “there was no proposed rule, no public comment period, and no vote by anyone accountable to voters.” In a country where Congress writes tax law and agencies administer it, that process cannot occur. The fallout has matched the overreach with more than 1,100 disputes swept into audits and litigation, roughly 740 cases now clogging the U.S. Tax Court, and taxpayers pressured into costly settlements, some of whom have been pushed toward insolvency or bankruptcy, despite having followed the law as it existed.

Bad actors who inflate land valuations to game the deduction should face consequences, but finding fraud in a subset of deals cannot be license to treat an entire lawful category, and everyone behind it, as guilty by default. Most people who claimed this incentive did so honestly.

The real lesson here goes well beyond land preservation. The IRS keeps choosing enforcement over proper rulemaking, and when it can quietly rewrite tax law and move the goalposts, good-faith compliance becomes unreliable. Congress needs to shut the door on backroom tax changes by unelected officials, exactly the kind of unaccountable overreach AIA was built to expose.