House and Senate Finance Land Conservation Tax Credit Subcommittee
held its second meeting on August 29 in Richmond at which time the members
heard from three scheduled presenters; a public hearing followed where
scheduled speakers addressed the joint subcommittee.
ROBERT H. LAMB, ESQ.
Robert Lamb of Wright
and Talisman in Washington, DC, has experience working with conservation
easements, having written several such easements currently held by conservation
agencies. Mr. Lamb presented proposed changes to the Virginia Land Conservation
Incentives Act of 1999 (the Act), which provides a tax credit for certain
donations of conservation easements in the Commonwealth.
Mr. Lamb's first
suggestion was to amend the Act to allow any tax credit to be inheritable.
Making the tax credit inheritable would provide an additional incentive
for potential donors of conservation easements. He next suggested that
the Act be amended to require the Department of Taxation to allow tax
credits for donations of conservation easements that were made using text
or language provided by a state agency, notwithstanding any ruling by
the Internal Revenue Service regarding the qualification of the easement
for charitable deduction purposes. Mr. Lamb's final suggestion was that
appraisers should be sanctioned if they substantially or fraudulently
overstate the value of a conservation easement. The Act currently provides
for sanctions if the value of a conservation easement is falsely or fraudulently
Joan E. Putney, a
senior attorney with the Division of Legislative Services, compared and
contrasted features of conservation tax credits currently available in
different states. Ms. Putney stated that California, Colorado, Connecticut,
Delaware, Maryland, Mississippi, New Mexico, North Carolina, South Carolina,
and Virginia allow state tax credits for donations of conservation easements.
The tax credits are authorized for easements restricting land to open
space, agricultural, natural resource, and water-related conservation
uses. In addition, Delaware, Maryland, New Mexico, and Virginia authorize
tax credits for conservation easements restricting land to historic preservation
uses. Only California and Connecticut do not have a cap on their conservation
tax credits. Only Colorado allows for a refundable tax credit, up to $50,000.
Colorado, Virginia, and South Carolina allow conservation tax credits
to be sold or transferred. Transferability is unlimited in Virginia and
South Carolina while Colorado permits a one-time transfer of the credit.
With the exception of Mississippi, all states require that a government
or a charitable/nonprofit entity hold the conservation easement.
Becky Covey, Legislative
Fiscal Analyst for the Senate Finance Committee, spoke in regard to the
use of conservation tax credits by charitable nonprofit organizations.
Although charitable nonprofit organizations generally are not subject
to Virginia income tax, these organizations can still benefit under the
Act as they can sell or transfer earned credits to third parties. At this
point it does not
appear that charitable nonprofit organizations have participated in widespread
transfers or sales of conservation tax credits. However, the Department
of Taxation has received several inquiries about the potential for charitable
nonprofit organizations to participate in the tax credit.
Ms. Covey stated
that 90 percent of the conservation easements in Virginia are held by
the Virginia Outdoors Foundation. The Foundation has accepted 36 easements
from charitable nonprofit organizations.
The following people
spoke at the public hearing:
1. Rich Johnson,
representing Ducks Unlimited
2. The Honorable W. Tayloe Murphy, Jr., Secretary of Natural Resources
3. The Honorable William P. Dickinson, Jr., Deputy Secretary of Agriculture
4. Tom Foster of McCandlish Holton, PC
5. Peter Henderson of Virginia Eastern Shore Land Trust
6. Howard Dickerson
7. Jim Hefner
8. Brock Herzberg of the Virginia Farm Bureau
9. Christopher Miller of Piedmont Environmental Council
10. Mike Lane of the Izaak Walton League
11. Catherine Slusser, Deputy Director of the Department of Historic Resources
12. Philip Hocker
13. Nikki Rovner of The Nature Conservancy
14. Debi Osborne of Trust for Public Land
15. John McVicker
The next meeting
of the subcommittee will be on November 10, 2005, in Richmond.
The Hon. Lee Ware
Joan Putney &