IRS increases scrutiny of tax deductions.

The Internal Revenue Service issued a notice on June 30 that it will increase scrutiny of tax deductions taken by individuals who give real estate to charities.

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IRS Commissioner Mark W. Everson said that the agency has uncovered "numerous instances" where taxpayers have claimed improper charitable contribution deductions for easement transfers that do not qualify as conservation contributions or have claimed deductions for amounts that far exceed the fair market value of the donated property. In appropriate cases, the IRS will challenge the tax-exempt status of charities involved in these transactions and may impose penalties on promoters, appraisers, and other people involved in these types of land transfers.

The notice is consistent with the IRS's servicewide enforcement priority to discourage noncompliance within the tax-exempt sector as well as misuse of charities and other tax-exempt organizations by third parties for tax avoidance and other unintended purposes.