DENVER—Attorneys for landowners appealing $150 million in denied conservation-easement tax credits are asking state lawmakers to offer settlements or let them go to district court.
J.D. Wright, president of Land Owners United, which represents 80 landowners fighting the state, made the request after federal and state authorities challenged their tax returns because of faulty appraisals.
Attorney Mark Boscoe said most cases can be settled out of court, and he predicted a smaller percentage would go to trial.
At issue are tax credits that were granted to property owners in exchange for not developing their land. Some of those credits were later denied.
Those who were denied are now required to appeal to the state Department of Revenue. Also affected are people who bought the tax credits as investments.
Rep. Marsha Looper, R-Calhan, said the cases have dragged on since 2003. She wants lawmakers to offer to settle the cases for 10 cents to 50 cents on the dollar, depending on their easements, or let them go to court.
She said it could take years at the current rate to resolve disputes from 550 landowners.
“This way, they would be able to bypass some of the delays and get their cases settled in two or three years, instead of 10 years it will take to get these cases resolved,” Looper said.
Mark Couch, a spokesman for the state Department of Revenue that is handling the appeals, said taxpayers asked for their hearings to be delayed over the past year while lawmakers considered legislation to settle their claims outright. But those bills were killed because state lawmakers and former Gov. Bill Ritter said the state needed the money to cope with a $1.1 billion revenue shortfall.
Couch said more than 3,000 property owners have received $600 million in tax credits over the past decade.
“I understand these folks’ frustration, but we’ve had a great number of these go through smoothly,” he said.
The Ritter administration wanted to settle each case individually, which property owners said would require an admission of guilt.
Gov. John Hickenlooper has not said what he plans to do about the issue. He paid $52,486 to the Internal Revenue Service in 2008 after it denied some claims for tax credits on easements he held in Park County after he received $1.1 million in federal tax write-offs.
Hickenlooper said it would have been too expensive to otherwise contest IRS claims that the land was overvalued.
The Colorado Department of Revenue has notified the landowners and easement credit buyers that their credits were disallowed because the easements were overvalued by state-licensed appraisers. It ordered them to pay the credits along with penalties and interest.
Deputy Attorney General Geoffrey Blue said no criminal charges have been filed, even though there were some “bad actors” involved, because taxpayers have the burden to prove their tax credits were valid.
