The Internal Revenue Service (IRS) has been accused of issuing an excessive number of summonses during the auditing process for a property holding company’s conservation easement. The claim was made by Norcave Properties LLC, which has said they find the summonses should be dismissed due to the lack of discernible purpose, according to the details of the case lodged with a Federal court (Bloomberg).
As part of the IRS’ examination of Norcave Properties’ conservation easement donation and related charitable contribution deduction from their 2018 tax year, Agent Lijia Wu allegedly issued a total of 37 summonses. The company asserts that most of the 36 parties additionally investigated as part of this inquiry had minimal or no involvement in the donation at all.
In a statement Norcave said, “The only explanation for the additional summonses can be harassment of Petitioner, by issuing unnecessary and burdensome document requests to third parties Petitioner has worked with or continues to work with”. Among the summoned parties are the company’s manager Webb Creek Management Group, which was one of the entities named in a 2020 Senate Finance Committee report that flagged syndicated conservation-easement transactions as highly abusive tax shelters.
Norcave shared that it had already produced over 9,000 pages of documents for the IRS and alleged that Wu abused the summons process in separate audits related to the same tract of land from where Norcave’s parcel was cut. Furthermore, it was highlighted that Wu issued over 20 summonses for each of these audits.
“The fact that Agent Wu has issued at least 86 summonses in three audits involving property from the same Parent Tract… evidences a pattern of lack of a legitimate purpose”, Norcave added. The company also contended that the IRS doesn’t need to request additional documents from third parties as it has already decided to disallow the deduction and impose penalties related to their donation of a conservation easement.
Fox Rothschild LLP represents Norcave in this current lawsuit against the IRS.