North Carolina land appraiser Walter “Terry” Douglas Roberts II pleaded guilty on May 12 to conspiring to defraud the U.S. as part of a syndicated conservation easement tax shelter scheme.
“According to court documents and statements made in court, from 2008 to 2019, Walter “Terry” Douglas Roberts II of Shelby, North Carolina, conspired with others to defraud the United States by fraudulently inflating the value of the conservation easements upon which the tax deductions were based,” the Department of Justice stated in a press release on May 12.
After acquiring a license as an appraiser in 2007, Roberts commenced furnishing appraisals of conservation easements in the same year. During 2008 to 2019, he participated in a plot whereby he illicitly increased the appraised values of no less than 18 conservation easements through irregular appraisal techniques, fabricating falsehoods, and either personally manipulating or relying on data that he knew had been manipulated. This was done to attain an appraisal value that met a predetermined target, conveyed to him by his co-conspirators, resulting in the desired tax deduction amount.
Some of Roberts’ appraisals were inflated by at least 70%. The 18 conservation easements that he appraised fraudulently accounted for roughly $466,961,000 in tax deductions, causing a tax deficit exceeding $129,000,000 to the IRS.
The court has set a sentencing date of Nov. 14 for Roberts, who may face a prison term of up to five years, as well as supervised release, fines and restitution. The federal district court judge will take into account the U.S. Sentencing Guidelines and other legal factors to decide on an appropriate sentence.
Syndicated conservation easements made the Internal Revenue Service’s 2023 Dirty Dozen list, which include a variety of common scams that taxpayers may encounter. According to a press release, promoters of conservation easement transactions engage in abusive arrangements wherein they seek to provide investors with an opportunity to claim charitable contribution deductions and tax savings that far exceed the amount of their actual investment. Such schemes, which are designed to generate exorbitant fees for promoters, aim to manipulate the tax system by overinflating tax deductions.
"These tax avoidance strategies often target high-income individuals seeking to reduce or eliminate their tax obligation," said IRS Commissioner Danny Werfel in a press release on April 3. "Sometimes taxpayers are conned into believing they can participate in these schemes. People should always look for advice from an independent, trusted tax professional, not a promoter focused on aggressively marketing and pushing questionable transactions."
The Consolidated Appropriations Act of 2023 included an amendment to section 170 that aims to restrict specific abusive conservation easement transactions. The IRS says it is dedicated to enforcing compliance with the modified conservation easement deduction law outlined in the 2023 legislation and will persist in examining transactions that appear "too good to be true."
