Navigating the Insurance Recovery Minefield for Syndicated Conservation Easement Transactions

Partners Austin Bersinger, Jeffrey S. Luechtefeld and John Nail recently published "Navigating the Insurance Recovery Minefield for Syndicated Conservation Easement Transactions" in Tax Notes. They examine the IRS's newest settlement initiative for syndicated conservation easement transactions (SCETs) and the coverage fight now facing entities that purchased section 170(h) liability insurance for their charitable contribution deductions.

They break down the initiative's tiered, time-sensitive terms and compare them to the agency's 2020 and 2024 settlement programs. The article also covers a growing body of coverage litigation in Georgia state and federal courts showing how insurers are responding to claims. Bersinger, Luechtefeld, and Nail also identify a recurring pattern of carrier tactics, including prolonged information demands before evaluating a settlement, arguments that IRS settlements don't trigger a covered loss, and efforts to push disputes into costly arbitration.

"With policy limits estimated at well over $1 billion, insurers would rather that policyholders just give up on each potential settlement initiative, regardless of whether settlement might be the best option for the policyholder's investors," they write.