The IRS has recently released Notice 2023-30, which introduces safe harbor deed language for extinguishment and boundary line adjustment clauses within conservation deeds of easement. This important update is in response to the SECURE 2.0 Act of 2022 and provides significant implications for donors seeking to amend their conservation easement deeds. In this article, we will explore how Notice 2023-30 affects taxpayers, what actions they should consider, and highlight some key considerations to keep in mind.
The Impact on Taxpayers
Section 605(d)(2) of the SECURE 2.0 Act offers donors an opportunity to amend specific conservation easement deeds by substituting the safe harbor language for the corresponding language in the original deed. Taxpayers will have until July 24, 2023, to record their safe harbor deed amendments. Importantly, this provision applies only if the amendment is effective as of the date of the recording of the original easement deed.
Notice 2023-30 Clarifications
To provide clarity and guidance, Notice 2023-30 states that if a donor substitutes the safe harbor deed language for the corresponding language in the original eligible easement deed, and the amended deed is signed by both the donor and donee and recorded on or before July 24, 2023, the amended eligible easement deed will be treated as effective for purposes of § 170, § 605(d)(2) of the SECURE 2.0 Act, and Notice 2023-30. This treatment applies retroactively to the date the eligible easement deed was originally recorded, regardless of whether the amended eligible easement deed is effective retroactively under relevant state law.
While it is not mandatory for donors to amend their conservation easement deeds with the safe harbor language, we highly recommend reaching out to the drafting attorney for careful consideration so any amendments to the deed can be recorded before the July 24th, 2023 deadline. Collaborating with your attorney to evaluate whether your deed should be amended can prove invaluable, as the substitution of safe harbor language could potentially strengthen your position in defending the deduction if it is ever challenged under IRS Examination.
It’s important to note that the safe harbor language introduced in Notice 2023-30 specifically addresses extinguishment and boundary line adjustment clauses within conservation deeds of easement. It does not cover any other types of deed amendments or address additional aspects related to conservation easements.
Sources: Internal Revenue Service; Diana Norris, Land Trust Alliance
The issuance of IRS Notice 2023-30 has brought about significant changes in the realm of conservation easement deeds. Taxpayers now have the opportunity to amend their deeds by substituting the safe harbor language, providing them with potential advantages when it comes to defending their deduction against IRS Examination. We recommend engaging with your attorney to determine whether amending your deed is advisable and taking appropriate action before the July 24th, 2023 deadline. For further questions or assistance, please feel free to contact us.