DENVER-
Lawmakers tried to rein in a multimillion-dollar program that grants tax breaks for land conservation Tuesday after state officials ran down a litany of abuses, including people getting tax credits for agreeing to preserve their back yards.
State revenue officials said the program got so far out of control they had to ask the Internal Revenue Service to step in and audit people who claimed tax credits for which they didn’t qualify.
Under the program, property owners get federal and state tax breaks by granting conservation easements that guarantee the land will not be developed. They can write off the easement as a charitable contribution and they also get to keep the land.
John Vecchiarelli, director of the taxation business group at the state Department of Revenue, said the state now gives up $85 million a year in revenue to the program, up sharply from the $2.3 million when the program started in 2000.
Vecchiarelli, director of the taxation business group at the state Department of Revenue, told lawmakers that people have gotten conservation tax credits for agreeing not to develop their back yards.
Other state officials said developers were getting paid not to develop land they have already agreed to preserve, and farmers and ranchers were chopping their land into smaller parcels to double or quadruple their tax credits.
“Right now this is a huge unappropriated expenditure, one that you can’t control,” Vecchiarelli told the House Finance Committee.
Supporters of the conservation program said most of the money has been used wisely and has helped farmers and ranchers keep land that otherwise would have gone to developers.
The committee approved a measure (House Bill 1361) that will set standards for appraisers and require applicants to state specifically what conservation benefit taxpayers are getting for their money. It now goes to the full House for debate.
The sponsor, House Majority Leader Alice Madden, D-Boulder, said the IRS audited 250 organizations that applied for the tax credit and found problems with 70. She said the state has no strategy for deciding which parcels it needs.
“No one even knows where these are,” she told the committee.
Bill Fales, who owns a ranch outside Carbondale in the Roaring Fork Valley near Aspen, said 5,000 acres has been set aside near his ranch to protect wildlife and a way of life in an area where land is being gobbled up for multimillion-dollar homes.
He said the program lets him preserve his land for tourists who stop their cars and snap pictures instead of having to sell it to pay debts. In return, he gives up the right to develop his land or use it for other purposes.
“I see it as a way to play Solomon and cut the baby in half,” he said.
