IRS agents evaluating conservation easements have severely undervalued properties – sometimes by tens of millions of dollars – without ever visiting those properties for a proper evaluation, a new report has found.Landowners can enter into a conservation easement agreement with a land trust or government agency that protects the property’s natural, agricultural, or scenic resources while limiting future development. Landowners still own the land, but the property can never be altered according to the agreement.
An independent review of more than 130 IRS property valuations has found that the federal agency drastically reduces the value of reviewed properties by approximately 97%, using methods not authorized by Congress.
Conservation easements and IRS targeting
Congress codified conservation easements in 1980, believing them a way to incentivize people to preserve their property for conservation. Prior to then, the Internal Revenue Service (IRS) first officially sanctioned a charitable income tax deduction for the donation of a conservation easement in 1964.
But in the past decade or so, such easements have been targeted by the IRS in a way they hadn’t before, leading researchers at Infinity Advisory Services – a business valuation, litigation support and financial advisory firm – to hypothesize that the IRS predetermines the outcome of its valuations. That is, the agency starts with the assumption that property owners entering conservation are trying to fleece the government.
“We believe that the record perhaps details that an analytic position was developed within the government before the examination program was built; enforcement action timed to external advocacy rather than to the development of case evidence; categorical public characterization of the outcome before adjudication; constraints on the government’s own valuation professionals that foreclose the approaches capable of supporting a higher value; and a settlement schedule priced from a sample the government itself assembled,” the report says.
You can read the report here:
The IRS may be rejecting the “highest and best use” standard relied upon for years
Some cases may bear that out, but in recent practice, the IRS valuations ignore the hundreds of thousands of dollars that property owners spend on field experts and tax lawyers to arrive at their property values. Property owners have been using the “highest and best use” standard, a valuation created by Congress to assess the property’s most profitable, legally permissible, physically possible, and financially feasible use of the property.
As Just the News previously reported, one farmer in Colorado said he spent nearly $1 million on a dozen experts, including mineral geologists, drilling firms, solar engineers, tax attorneys and title and zoning experts, as well as soil tests and taking core samples.
But for most property owners who devote that kind of time and money to hiring experts, the IRS comes in with an audit that wipes out 97% of the expert evaluation. And the IRS does it without experts having equal experience and skill sets.
The Uniform Standards of Professional Appraisal Practice (USPAP) is the professional standard for appraisal work, setting rules for competency, scope, investigation, and results. But it doesn’t appear as though the IRS followed those guidelines, as 62.4% of the reviewed valuations were desk reviews, only half identify a site review by an IRS appraiser, and six didn’t say either, the report found. In 102 of the cases which involved geology appraisals, only 11 reviewed cases identify a technical specialist holding a recognized professional qualification, such as a licensed engineer or registered geologist.
IRS relying on hog hunters, pit bull breeders, and a limousine company owner to give valuation figures
Bernie Donachie, who conducted the latest report and the one previously reported on by Just the News, said that some of the appraisers used by the IRS to value properties had no expertise in the field, including one who was a hog hunter, another who bred pit bulls, and another who owned a limousine company. In other cases, the IRS cited a 1989 tourism pamphlet written for school children and a 1977 publication on manufacturing granite memorials and headstones, according to documents reviewed by Just the News.
The IRS did not respond to a Just the News inquiry.
Part of the problem appears to be related to a company that IRS contracted with through the Small Business Administration’s 8(a) program, which provides resources to disadvantaged businesses. The Small Business Administration (SBA) finalized a major rule on August 11, 2026, replacing previous definitions of disadvantaged to a “race-neutral” standard.
Slashing landowner’s asset values
In numerous reviewed cases, the property valued by experts at taxpayer expense was overturned by IRS desk reviews, where in one case, the taxpayer’s team of experts evaluated the property to be worth $27,880,000: The IRS process reduced the amount the property was worth to $400,000.
Taxpayers evaluate their property based on its potential future use, such as mining for minerals or setting up a solar farm. That had been the standard until about a decade ago, when the IRS began evaluating properties based on their current values if put up for sale.
The reason the original strategy was used was to make it attractive for taxpayers to enter conservation easements and preserve natural resources. The new method makes it more attractive to actually develop the land and destroy those resources.
