This 2011 IRS private letter ruling illustrates a rare instance of a land trust losing its tax-exempt status. It exhibits the consequences of flagrant disregard for legal and ethical standards and the process of fact-finding that may result in an adverse IRS action. The factors supporting the IRS determination that the land trust was operating for private (as opposed to public) benefit included:
• an abject failure to maintain corporate records;
• failure to report compensation paid to its founder/president;
• dubious business relationships between the founder/president's for-profit company and the land trust;
• receipt of payment from a landowner, and payment by the land trust of "consulting fees" to the founder/president, in connection with an easement amendment that doubled the building right with no reciprocal conservation benefits to the land trust;
• the making of direct political campaign contributions;
• a lack of resources or staff to monitor or enforce its easements; and
• the founder/president entering private consulting contracts with prospective land donors.
