IRS establishes Office of Conservation Easements and concludes 2026 settlement initiative

Recognizing the importance of conservation and preservation, as well as the specialized tax, valuation, contractual, and procedural issues CEs and historic easements present, the IRS announced the establishment of the new CE Office. According to the IRS, experience administering the May 13 Settlement Initiative, together with engagement with taxpayers, has shown that standardized, unsolicited settlement letters on a rolling basis, each with a fixed response deadline, are not well suited to the full range of CE cases. Partnership agreements, insurance arrangements, procedural posture, and other circumstances may differ materially and affect when and how taxpayers evaluate settlement.

The IRS says the new CE Office will centralize technical expertise and coordinate policy, enforcement, and case-resolution strategy across the IRS and with the Office of Chief Counsel. It will support engagement with taxpayers, practitioners, conservation and historic preservation organizations, and other stakeholders. The new CE Office will also work with Treasury to evaluate administrative and legislative options that advance Congress’s conservation and historic preservation objectives, promote consistent tax administration, and strengthen valuation integrity. Taxpayers should continue working directly with their assigned representatives on case-specific matters and settlement requests. Once operational, the IRS says the new CE Office will provide central coordination and a channel for general inquiries. Additional contact information will be announced separately according to IR 2026-95. 

Other main points from the IRS news release include the following: As part of this transition, the IRS will conclude the May 13 Settlement Initiative “effective immediately” (i.e., August 19, 2026), the IRS will not issue any additional uniform settlement offers under the May 13 Settlement Initiative (for additional information on the May 13 Settlement Initiative, see our prior coverage here); and, any deadlines for accepting previously issued offers are withdrawn. It is unclear exactly what the IRS means when it says that all previously issued offers are withdrawn, but this could imply that all previously issued settlement offers under the May 13 Settlement Initiative that were not accepted before the issuance of IR 2026-95 are no longer on the table for those taxpayers to whom they were issued.

Prior elections to participate in the May 13 Settlement Initiative will apparently remain in effect and will be processed in accordance with their terms. Additionally, the IRS says that taxpayers with pending cases may continue to request settlement terms under the May 13 Settlement Initiative through their assigned IRS examination or Chief Counsel representative. If the case remains eligible, the IRS may issue a new offer on the same standardized terms. Interestingly, the IRS says that individual cases may continue to be resolved on different terms where warranted by the “hazards of litigation.”

In summary, as of the time of the announcement:

• The IRS will not issue any additional uniform settlement offers under the May 13 Settlement Initiative.
• All deadlines for accepting previously issued offers have been “withdrawn.”
• Prior elections to participate in the May 13 Settlement Initiative will remain in effect and will be processed in accordance with their terms.
• Taxpayers who have already accepted the May 13 Settlement Initiative should continue to work with their assigned IRS examination or Chief Counsel representative.
• Taxpayers with pending cases may still request settlement terms under the May 13 Settlement Initiative by contacting their assigned IRS examination or Chief Counsel representative. If the case remains eligible, the IRS may issue a new offer on the same standardized terms. Cases may also be resolved on different terms based on hazards of litigation.

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