WASHINGTON POST MUDDLES FAÇADE EASEMENT STORY
Misses Critical D.C. Easement Ruling

On July 9, 2011, The Washington Post ran a story on façade easements, headlined "U.S. targeting tax break tied to property use," subheaded "Facade Easements Scrutinized."

We found the story to be sorely disappointing and, in fact, misleading. First it only gave half of the news, the story about people and organizations sued by the Justice Department for misusing their non-profit status, promoting false tax deductions and otherwise abusing the facade easement donation process. The Post ignored the contemporaneous story -- good news for L'Enfant Trust donors -- of the Simmons case affirmation.

Some of our easement donors were alarmed by the Post story which painted the facade easement abuse with an overly broad brush, suggesting that all easement donations are suspect and have no real value and that taking a tax deduction for them may be a scam. Our donors and potential donors would have been comforted rather than alarmed if the Post had properly reported the news:  just days after the Department of Justice filed its suit against the easement promoters it deemed abusive, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit unanimously affirmed the Tax Court's finding in Simmons v. Commissioner that the taxpayer's donations to The L'Enfant Trust were valid, valuable and deductible, and that L'Enfant's documents and processes meet the requirements set out in the Internal Revenue Code. That decision from one of the nation’s highest courts will serve as an important precedent in any lower court that considers a donation to The L’Enfant Trust.

Although the government's lawsuit against certain easement promoters is news, the IRS hostility to facade easements is an old story, hardly news at all. The IRS's targeting of the tax break, its massive auditing of donors (although only a handful of donors to The L'Enfant Trust have told us of audits), and its assertion that easements have no value began several years ago, as The L'Enfant Trust has consistently reported and warned on its website and elsewhere.

The important news, certainly for Washington readers -- the story the Post
failed to report -- is that Simmons has been affirmed. The zero-valuation
position espoused by the IRS and apparently by the Post's reporter has
been thoroughly rejected by the courts, at least for facade easement
donations to The L'Enfant Trust.

Perhaps most disappointing to us -- even more than their failing to
distinguish between good nonprofit practices and bad, even more than their
failure to report on the major court ruling that rejects the slant of the IRS
and the Post reporter -- is the failure of our local newspaper to appreciate
what The L'Enfant Trust's 33-year history of honest, dedicated, community based
stewardship has meant to Washington's landscape and historic
neighborhoods. Even if the Post got it wrong, the courts got it right.
Our donors, directors, staff, volunteers, interns, pro bono counsel, and our
neighbors, past and present, can take pride in what we have accomplished
together over the years.