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11th Circ. Ruling Moves Circuits Closer to Tax Procedure Split

Law360 Tax Authority

In this article, Maria O'Toole Jones and Samuel Lapin write that big news came out of the U.S. Court of Appeals for the Eleventh Circuit at the end of 2021, involving a closely watched conservation easement case. In Hewitt v. Commissioner of Internal Revenue, the Eleventh Circuit overturned the U.S. Tax Court when it held that a provision in the conservation easement regulations, promulgated in the 1980s, is procedurally flawed under the Administrative Procedure Act (APA). O'Toole and Lapin note that this case should be of interest to those following the developing body of cases involving the application of the APA's rules to U.S. Department of the Treasury (Treasury) and Internal Revenue Service (IRS) determinations. On a more granular level, the holding of this case has important implications for the dozens — if not hundreds — of taxpayers that have had conservation easement deductions challenged based on these regulations. The authors review this case and the Eleventh Circuit's ruling, and their implications on easement cases. While Treasury and IRS were long considered immune from the APA's requirements, the trend has shifted in recent years. The authors conclude that this trend could continue, which could mean more challenges to Treasury and IRS agency determinations in appropriate cases. 
This article was originally published as a tax alert on January 19, 2022.