The IRS Set a 135-Day Clock on Your Conservation Easement Case. Here’s What That Means.

On May 13, 2026, the IRS announced a time-limited settlement opportunity for investors and partnerships still holding open conservation easement disputes. The window is shorter than most people realize — and the penalty math changes significantly every 45 days.

If you invested in a syndicated conservation easement transaction and your case is still unresolved, this is the most consequential piece of news you’ll see this year.

The attorneys at Cumberland Law Group, with offices in Atlanta, GA and across North Carolina in Raleigh, Charlotte, and Durham, have been tracking this announcement closely. What follows is a direct breakdown of what the IRS offered, what the numbers actually look like, and what a high-net-worth investor in this position needs to understand before the clock runs out.

What the IRS Announced on May 13, 2026

The IRS released IR-2026-65, a new time-limited settlement initiative for eligible taxpayers involved in conservation easement or historic preservation easement disputes. This is not the first attempt. The IRS has offered settlement programs since 2020, resolving 405 cases with a 32% acceptance rate. Those prior programs were structured to be punishing: no charitable contribution deduction at all, full penalties upfront, and no flexibility on payment.

This new program is structured differently — and the terms get significantly worse the longer you wait.

Here’s the current state of the enforcement environment by the numbers:

• Over 1,100 conservation easement cases are currently open: approximately 740 docketed in U.S. Tax Court and 400 still in IRS Exam
• Nearly 450 cases that previously required upfront payment at settlement no longer do
• Up to 500 cases where prior offers expired or were rejected now have a renewed chance to settle
• Up to 175 cases that never had a settlement opportunity before are now eligible for the first time

The IRS is not offering this because taxpayers are winning. It’s offering this because 1,100 open cases is a backlog problem, and because the litigation record is so one-sided that a structured settlement makes administrative sense.

The Three Windows: What You Pay Depends on When You Decide

Settlement letters are being issued to eligible partnerships on a rolling basis. The clock starts from the date your individualized letter arrives. From that date, three distinct windows apply:

In all three windows, the charitable contribution deduction is disallowed. What the IRS will allow is an “other deduction” based on the partnership’s approximate out-of-pocket costs — typically the cash contributed amounts from Schedule M-2.

Accepting in Window 1 means a 10% penalty rate with no upfront cash due now. Waiting for litigation means a 40% penalty rate plus years of accruing interest and legal fees. That’s the full scope of what the timing decision costs.

Did you receive an IRS settlement letter? Don’t respond before getting an attorney review. Call Cumberland Law Group at (800) 960-5359 for a free consultation — Window 1’s lower penalty rate expires at Day 90.

What Litigation Actually Produces

IRS Commissioner Frank Bisignano put the court record plainly in the settlement announcement: the Tax Court has, on average, allowed only 6% of the original claimed deduction and has generally imposed a 40% gross valuation misstatement penalty, plus interest.

Recent cases confirm the pattern. In Capitol Place II, a court disallowed a $23.9 million deduction after finding the building didn’t qualify as a certified historic structure. In Corning Place Ohio, the court rejected a $22.6 million deduction based on what it described as speculative “air rights,” limiting the deduction to $900,000 and sustaining a 40% penalty. The Tax Court has used words like “ludicrous,” “baseless,” and “outrageous” in its written rulings on easement valuations.

There are exceptions. In a small number of cases, the IRS has faced procedural problems of its own. A May 2026 TIGTA report found the IRS improperly backdated penalty approval forms in seven cases, which resulted in the agency conceding over $68 million in penalties. Those procedural defects are case-specific and not transferable. Having a tax attorney review your case file for exactly these issues — before you accept anything — is precisely why the 90-day window exists.

Why Georgia and North Carolina Investors Are Disproportionately Affected

This is not an issue distributed evenly across the country. Georgia is where the syndicated conservation easement industry originated. ProPublica documented that the scheme “initially took root in Georgia,” and the paper trail confirms it.

EcoVest Capital, one of the largest syndicated easement promoters ever pursued by the Department of Justice, was headquartered in Atlanta. The DOJ linked EcoVest to more than 50 syndicated deals generating over $1.7 billion in questionable federal tax deductions. Investors were marketed returns of 4 to 5 times their investment. In one case cited by the DOJ, a $1.1 million land purchase generated a $39.7 million charitable deduction.

Tax academics describe the primary geography of these deals as a “Southeast Triangle” covering Georgia, South Carolina, and Eastern Tennessee. The reason: large tracts of inexpensive, undeveloped land with the profile promoters needed to run inflated valuations. High-income professionals in Atlanta and across North Carolina’s major metros were a primary target demographic for these offerings.

Georgia cases that reached Tax Court include:

• Savannah Shoals LLC (Lake Hartwell, GA): claimed a $23 million deduction; the court reduced it to $480,000 and applied a 40% penalty
• Buckelew Farm LLC (1,545 acres, GA): claimed $47.57 million; the court reduced the allowed deduction to $4.6 million with a 40% penalty
• Potts Pond LLC (Lamar County, GA): claimed $66.9 million for 225 acres; the IRS assessed an underpayment penalty of approximately $24.7 million
• Jackson Stone South, LLC (Oconee River Land Trust, GA): claimed dual deductions of $19 million each; the court disallowed one entirely and sharply reduced the other

North Carolina has its own concentration of cases, particularly in the historic preservation easement category. Silver Foxx Investments LLC is currently in Tax Court contesting the IRS’s rejection of a $20.5 million deduction tied to a historic preservation easement in Buncombe County, NC. Jack Fisher, whose 2024 sentencing to 25 years in prison marked one of the largest conservation easement fraud convictions in history, specifically acquired coastal North Carolina land for syndication. His scheme sold investors nearly $1.4 billion in fraudulent charitable deductions overall.

In June 2025 alone, four major lawsuits involving Georgia and North Carolina properties were filed in U.S. Tax Court, contesting over $215 million in conservation easement deductions combined.

If you’re a high-income professional or business owner in Atlanta, Charlotte, Raleigh, or Durham, and a financial advisor pitched you a conservation easement investment between 2015 and 2022, your case is almost certainly within the population the IRS is now targeting with this settlement initiative.

Georgia or North Carolina investor with an open case? Call (800) 960-5359 for a free consultation with Cumberland Law Group. Available Mon–Sun, 9am–9:30pm.

Who Qualifies for This Settlement

Not every open conservation easement case is eligible. The IRS will determine eligibility on a case-by-case basis, but the program does not apply to cases that:

• Have already gone to trial and are awaiting a Tax Court opinion
• Are currently on appeal at a Circuit Court
• Have already been settled under prior initiatives
• Are designated as test cases (unless all bound cases settle simultaneously)
• Have a trial scheduled to begin within 30 days of the May 13 announcement

If your case falls into one of those categories, the settlement window is closed. The legal options available to you are different, and in some situations may still be worth pursuing depending on how your case was handled procedurally. Learn more about IRS appeals options here.

If your case is still in IRS Exam or docketed in Tax Court without a trial date, you are likely eligible. Your partnership should receive an individualized letter from the IRS. If it hasn’t arrived yet, that doesn’t mean the window is closed — letters are being issued on a rolling basis. Unsure what your IRS notice means? Start here.

The Math That Most Investors Haven’t Seen

Here’s what a realistic conservation easement scenario looks like across all three options. Say your partnership claimed a $2 million conservation easement deduction and you hold a 10% interest — your share of the claimed deduction is $200,000.

Scenario A — Settle in Window 1 (Days 1–90)
Charitable contribution deduction: $0
Out-of-pocket cost deduction: allowed (typically your cash investment)
Penalty: 10% on underpayment
Upfront cash due now: $0 — collection post-settlement

Scenario B — Settle in Window 2 (Days 91–135)
Same deduction result
Penalty: 20% — double Window 1
Upfront cash due now: $0 — collection post-settlement

Scenario C — Litigation (After Day 135)
IRS historically allows ~6% of original deduction: approximately $12,000 on a $200,000 share
Penalty: 40% gross valuation misstatement
Plus: interest accruing from the original filing year, attorney fees for trial preparation, and years of unresolved exposure on your balance sheet

The 40% penalty rate under IRC Section 6662(h) applies specifically to gross valuation misstatements — a claimed value 200% or more above the correctly determined value. In syndicated conservation easement cases, courts have repeatedly found the valuations to be multiples of that threshold, which is why the 40% rate appears as consistently as it does. For a deeper look at how penalties compound over time, see our guide: A Guide to IRS Tax Penalties & Interest.

Why “Wait and See” Costs More Than It Saves

The most common response from investors in this position is to wait — to see how similar cases resolve, to see if enforcement posture softens, to see what happens to the promoter’s case first.

That calculus has a specific price tag. Interest on any underpayment continues to accrue from the original filing year. Every year of delay on a six-figure underpayment adds several percentage points in interest. Combined with moving from a 10% penalty window to a 20% or 40% window, the decision to delay carries a compounding dollar cost.

There’s also a 2022 legislative change that affects newer transactions. Section 605 of the SECURE 2.0 Act, effective for contributions made after December 29, 2022, disallows the deduction for a qualified conservation contribution entirely if the contribution amount exceeds 2.5 times the sum of each partner’s relevant basis. For investors in post-2022 transactions, the deduction may already be statutorily dead regardless of litigation outcome. Understanding your specific settlement options — rather than defaulting to a wait-and-see approach — is critical.

Many investors in these transactions were not promoters — they were professionals who trusted their advisors. But the IRS’s enforcement has targeted syndicated transactions broadly, regardless of individual investor intent. If you have concerns about potential tax fraud or tax evasion implications in your case, those are separate, time-sensitive conversations that require immediate legal counsel.

What Cumberland Law Group Does in These Cases

A conservation easement defense involves a sequence of decisions, each with different costs and outcomes. Before you respond to any IRS settlement letter, you need a tax attorney to:

• Review the settlement terms against your specific case facts. The IRS’s offer is based on its records — those records aren’t always complete or accurate.
• Check for procedural defects. As the TIGTA report confirmed, the IRS has made procedural errors in conservation easement cases. Penalty approval backdating and other issues have been grounds for concession in prior cases.
• Assess your partnership’s specific penalty exposure. The headline 10% rate applies to the underpayment, not your full investment. The actual dollar figure depends on partnership-level accounting that requires professional review.
• Evaluate BBA vs. TEFRA procedural posture. Settlement terms differ depending on whether your partnership is governed under the Bipartisan Budget Act or the older Tax Equity and Fiscal Responsibility Act — this affects how the settlement flows through to individual partners.
• Confirm your case eligibility. The IRS’s exclusion list is specific. Cases with trials set to begin within 30 days, or cases already bound to a test case awaiting decision, are excluded entirely.
• Determine whether an IRS audit defense strategy or an appeal is more appropriate if your case does not qualify for the current initiative.

Cumberland Law Group represents high-net-worth investors, business owners, and partnership investors across Georgia and the Carolinas in exactly these situations. Tax controversy at this level — six-figure deductions, six-figure penalty exposure, cases already docketed in Tax Court — requires attorneys who work in this space consistently, not generalists who encounter it occasionally.

The Decision in Front of You

You did not necessarily do anything wrong. Many investors were approached by financial advisors with what appeared to be legitimate, professionally structured tax planning vehicles. The IRS’s enforcement has targeted syndicated transactions broadly, regardless of individual investor intent. Georgia investors in EcoVest deals, for example, are facing IRS scrutiny they had no role in engineering.

What matters now is the decision in front of you — not the decision made years ago.

The IRS has given eligible partnerships a structured off-ramp with defined costs. Window 1 offers the lowest penalty rate and no immediate cash outlay. Window 2 doubles the penalty. After 135 days, you’re in litigation territory where the average outcome is a 40% penalty on a 94% disallowed deduction, with years of accrued interest. That’s not speculation. That’s the published Tax Court track record.

Schedule Your Free Consultation with Cumberland Law Group

If you received an IRS settlement letter for a conservation easement case, or if you’re an investor waiting for one, the time to get professional review is before the 90-day window runs — not after.

Cumberland Law Group offers free consultations for high-net-worth individuals and business owners facing conservation easement disputes, IRS notices, and tax controversy matters.

Our offices:

• Atlanta, GA — 400 Galleria Pkwy #1500
• Raleigh, NC — 421 Fayetteville St Suite 1100
• Charlotte, NC — 6201 Fairview Rd Suite 200
• Durham, NC — 555 S. Mangum Street, Suite 100

Contact us now. The 135-day window is already running for some of your co-investors. Once it closes, the terms available today are gone.

Call (800) 960-5359 for a free consultation, or submit your information online and we’ll call you back.

This article is for informational purposes only and does not constitute legal advice. The facts of each conservation easement case differ. Contact Cumberland Law Group directly for guidance specific to your situation.