Promoter Will Exit Green Tax Breaks Derided by IRS as Fraudulent
(Bloomberg) -- A Georgia woman who helped promote dozens of land conservation deals that authorities say were fraudulent tax shelters has agreed to leave the business permanently as part of a settlement of a U.S. lawsuit.
The proposed accord with Nancy Zak is a victory for the U.S., which sued to bar her and five others from organizing investors in syndicates that conserved land after offering tax deductions that the Internal Revenue Service says were grossly overvalued. Zak didn’t admit wrongdoing and isn’t required to pay any money, according to a filing Thursday in federal court in Atlanta. Her lawyer declined to comment.
Promoters, lawyers and accountants have promised lower tax bills to tens of thousands of wealthy Americans if they join other investors in buying land and pledging to leave it undeveloped. The practice, known as syndicated conservation easements, has provoked a crackdown by IRS Commissioner Charles Rettig, who called the worst ones a “cancer in our system” during congressional testimony last week.
In a separate criminal case, two accountants from Atlanta pleaded guilty in December and are cooperating in an investigation of a promoter who once worked at their firm. Bloomberg News reported last week that prosecutors in Atlanta, St. Louis and Charlotte, North Carolina, are investigating promoters.
Congress has sanctioned tax breaks for people who donate parcels to land trusts or government agencies, which have preserved tens of millions of acres through the practice. But the IRS claims promoters organized hundreds of syndicates that arranged for inflated land appraisals. They underpinned excessive charitable deductions that cheated the government, the IRS said.
The U.S. lawsuit, filed in 2018, claimed Zak and the other defendants promised an average of $4 in deductions for every $1 invested. They promoted 138 syndicates that reported more than $3 billion in tax deductions. Their easements spanned 11 states and included 39 in Georgia, which became the center of an industry that began to flourish a decade ago.
Zak and the others profited handsomely, the U.S. said. Since 2009, she was involved in 86 syndicates, earning about $100,000 to $200,000 for each, according to the lawsuit. She and the others have denied wrongdoing.
After more than two years of litigation that came to involve millions of pages of documents, Zak agreed to end the fight, according to the filing. The case continues against the other defendants.
The settlement, if approved by U.S. District Judge Amy Totenberg, will resolve all claims against Zak “in a case she no longer wishes to litigate, and will substantially narrow the issues remaining in the case,” according to the filing.
The case is U.S v. Zak, 18-cv-5774, U.S. District Court, Northern District of Georgia (Atlanta).
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