Marc Arnusch wanted to conserve his farm for his family and community after several solar companies asked to lease it for solar farms.

Arnusch, a third-generation Colorado farmer whose crops support the craft beer industry, knew he’d never have to work another day if he accepted a solar company’s offer to lease 2,700 acres of farm land – but it wasn’t about that, to him.

“We can’t do this to our farm, we can’t do this to our family, we can’t do this to our community,” he told Just the News.

So Arnusch reached out to his financial adviser, who sought advice from an outside financial strategic consulting firm, which suggested Arnusch enter a conservation easement to protect his land. 

Such an easement is a way for landowners to protect their property’s natural or historic values, and the process has been around since Congress created it in the late 1950s, believing it a way to incentivize people to preserve their property for conservation. 

In 1979, the IRS made such easements tax deductible, further incentivizing them.

Arnusch and his family decided this was the best route for their farm, and spent close to $1 million hiring a dozen experts including mineral geologists, drilling firms, solar engineers, tax attorneys and title and zoning experts. In addition, soil tests were conducted, core samples were taken, zoning and boundary surveys were produced – all to come up with the “highest and best use” value of the land, a valuation created by Congress to assess the property’s most profitable, legally permissible, physically possible, and financially feasible use of the property. 

In Arnusch’s case, it involved the offers from the solar companies suggesting how valuable the land was, along with the reports from the experts. All that information was given to an appraiser, who appraised the land based on all the knowledge he or she had acquired from the expert reports.

Based on that report, submitted to the IRS, Arnusch was able to claim a tax deduction based on the easement. But due to IRS rules, he has not earned enough income to be able to write off the value of the property and therefore receive the tax benefit.

But three years after Arnusch claimed the tax deduction, the IRS told him he would be audited. An IRS employee came out to appraise the land, but Arnusch didn’t believe the man was qualified.

“We trusted a litany of experts. From land planners, engineers, solar experts, CPA’s, attorneys, and accredited appraisers, we hired the best people to dot every “I” and cross every “T,” to build a sound plan,” Arnusch told Just the News. “The IRS sent a non-expert doing his first ever audit to our farm, and then he even questioned the validity of a multi-generational farming family as even being farmers.”

“That’s a bitter pill to swallow when you spend decades trying to protect the community and be good stewards of the environment.”

Arnusch said that while the IRS agent was at his farm, he was basically accused of trying to fleece the federal government.

“Without any evidence, they went straight to ‘you’re guilty, but we’ll let you off the hook if you sign this,” Arnusch said. “Not one conversation about the merits, not one real question about our valuation – just an unfounded accusation. It felt like they’d made up their minds about us before they ever set foot on the property.”

The IRS did not respond to a request for comment.

Arnusch hasn’t heard anything since the IRS agent came to his property earlier this summer, but many others have been told by the IRS that the agency overvalued their property and would be assessed a penalty. 

The issue appears so common that Bernie Donachie, an expert in value analytics who has a stake in some conservation easement properties, took a random sampling of 10 publicly available cases – including some of his own – and evaluated them for consistency. 

He found that the taxpayers – using dozens of experts – valued their properties at a total of $358.2 million, while the IRS came in – without experts – and valued the same 10 properties at a combined $1.57 million, wiping out 99% of appraised value.

Donachie said he also discovered that no government expert ever set foot on the properties he evaluated. Instead, the “geological reviews” were performed from a desk or by non-experts visiting the properties, including a painting contractor who was described by the IRS as a “geological consulting company” even though the company itself does not identify itself as such, he said.

President Donald Trump has been the victim of property undervaluing, though at the state level. 

During the New York civil fraud trial perpetrated by Democrats, a Palm Beach County property appraiser’s valuation of Mar-a-Lago at $18 million to $27 million was used to show Trump vastly inflated the value of his property when obtaining a loan. Trump’s experts had valued the property between $426 million and $612 million. The low valuation for Mar-a-Lago came despite a nearby property – which did not have the same scenic views of the ocean and Intercoastal Waterway as Mar-a-Lago and was a single home instead of a resort – selling for $57 million at about the time of Trump’s trial.

An appraiser who’s testified in tax court multiple times and spoke to Just the News on the condition of anonymity said that when he gets information from experts hired by a property owner he prepares a report, but an IRS appraiser will get very little information and conduct a desk review. 

“We’re not appraising the same piece of property,” he said.

When the IRS takes property owners to tax court, the appraiser said, the IRS appraiser will get on the stand and falsely claim they never received any due diligence from the property owner. The attorney representing the IRS will then ask the government appraiser if the expert information would change his or her opinion, and the appraiser will always say “no.”

“I think it’s completely unethical,” the appraiser said, adding that IRS appraisal reports will contain just nine pages of actual analysis and another hundred or more pages of basic property information, whereas his reports will be hundreds, sometimes thousands of pages long for individual analysis.

The good news for the hundreds of thousands of taxpayers affected by the IRS’s targeting is that the Trump administration on Aug. 19 established the Office of Conservation Easements, which may help some, including Arnusch, avoid losing their farms because they did their due diligence and hired the experts while the IRS did not. 

It remains to be seen whether the office will provide relief for the taxpayers who were forced to pay the IRS money it wasn’t owed to avoid losing their farm over the vastly deflated valuations by the federal government.

The law in this area needs to change, one source expert familiar with the situation told Just the News, because the IRS has made the process of auditing law-abiding taxpayers its own punishment.

“When the IRS unilaterally tries to change a law Congress made 60 years ago, calls a legal taxpayer transaction fraudulent before it even reviews the evidence, sends armed agents to intimidate law-abiding taxpayers, and illegally backdates documents to erase the statute of limitations, they’re intentionally making the process the punishment,” the expert said.

The expert was referring to an IRS Inspector General report that found IRS employees backdated penalty approval documents in some cases, forcing taxpayers to wrongly pay the government more than $68 million in penalties.