May 21, 2019

HB 16-1174: Limiting the Ability of the Director of the Department of Revenue to Contest Claimed Conservation Easements

On February 1, 2016, Rep. Becker introduced HB 16-1174Concerning a Perpetual Conservation Easement in Gross Granted for Property in Colorado for Which a Tax Credit Claim has been Rejected. The bill was introduced in the House and assigned to the State, Veterans, & Military Affairs Committee, and was referred by that committee, unamended, to the Finance Committee. The Finance Committee amended the bill and referred it to Appropriations.

Under current Colorado law, a state income tax credit is allowed for a portion of the value of a perpetual conservation easement that is granted by a taxpayer on real property located in Colorado. This bill, if enacted, would restrict the ability of the executive director of the department of revenue to contest an appraisal and credit claimed for an easement donated prior to January 1, 2008, in which a final settlement has not been reached by July 1, 2016.

C.R.S. § 39-22-522 proposes that this restriction would apply unless the executive director can show two things. First, the restriction would not apply if the executive director is able to produce clear and convincing evidence of an overvaluation of the easement, confirmed in writing by the State Attorney General prior to a specified date. Second, if the valuation is supported solely by an appraisal from an appraiser convicted of fraud or misrepresentation in connection with preparing the appraisal.

Currently, Colorado law allows for a conservation easement to be terminated in the same manner as any other easement. The proposed bill specifies, however, under C.R.S. § 38-30.5-107(2) that a court may exercise its equitable jurisdiction to terminate a conservation easement where a tax credit has been claimed in certain circumstances if the claim has been rejected.

Mark Proust is a 2016 J.D. Candidate at the University of Denver Sturm College of Law.