Dec. 22 (UPI) — Two Georgia sibling tax accountants pleaded guilty Monday to federal criminal charges that they encouraged clients to swindle the Internal Revenue Service out of $250 million in tax revenue through fraudulent syndicated conservation easement tax shelters, federal prosecutors announced.
Brothers Stein and Corey Agee, of Canton and Atlanta, Ga., respectively, worked with clients between 2013 and 2019 to arrange $1.2 billion in fraudulent charitable contributions, and received $1.7 million in commissions, a statement from Richard Zuckerman, deputy assistant attorney general for the Department of Justice’s tax division said.
The brothers filed guilty pleas before federal magistrate judge Carleton Metcalf in the U.S. District Court for the Western District of North Carolina.
The Agee brothers allegedly told their wealthy clients that they could earn $4 in charitable tax credit for every $1 spent to buy a piece of real estate destined for conservation easement status, and allegedly urged clients to backdate checks and paperwork to take advantage of end-of year donation deadlines, prosecutors said.
About 1 million acres of U.S. land a year is placed into a conservation land trust by private property owners, Lori Faeth, government relations director of the Washington, D.C.-based Land Trust Alliance, told UPI in 2019.
Voluntary land trust gifts of private property allow large parcels to remain undeveloped to protect wildlife corridors or natural resources. About 15 states now allow those who give property to land trusts to declare a state tax rebate.
But in some areas of the country, a subculture of real estate tax shelter abuses popped up over the years that involved wildly inflating the valuation of parcels of land to be made into conservation easements, particularly in Georgia.
Typically in a conservation easement scheme, pass-through LLC corporations are created that then sell shares of the properties to investors based on highly inflated values for the land. Investors then file conservation easement tax deductions.
The IRS has warned that syndicated conservation tax easements are among their “dirty dozen” tax schemes to avoid.
In June, the IRS clamped down on fraudulent conservation schemes, offering settlements for those charged by federal tax authorities to claw back taxes, penalties and interest from investors.
“These abusive transactions undermine the public’s trust in private land conservation and defraud the government of revenue. Ending these abusive schemes remains a top priority for the IRS,” IRS Commissioner Chuck Rettig said in a statement.
In the past, land trust defendants accused of abusive conservation syndicates were sued in civil tax court, but Monday’s announcement was the first time conservation easement tax defendants were charged in federal criminal court.
“The defendants and their co-conspirators used conservation easement donations to personally enrich themselves and allow wealthy tax clients to evade their tax obligations,” Rettig said Monday. “The charges and guilty pleas demonstrate that participation in abusive [conservation easement syndications] will not be tolerated. Once again, the IRS recommends that anyone who participated in an abusive [scheme] consult independent counsel about coming into compliance,” he added.