Silver Moss Properties, LLC v. Commissioner: A Tax Court Showdown Over Conservation Easements and the Right to Jury Trial
The world of syndicated conservation easements (SCEs) has been a hotbed of litigation in recent years, with the IRS aggressively challenging transactions it considers abusive tax shelters. One recent case, Silver Moss Properties, LLC v. Commissioner, 165 T.C. No. 3 (2025), illustrates just how far taxpayers are willing to push constitutional arguments in an effort to beat back IRS enforcement.
Silver Moss Properties, LLC, along with related entities, became embroiled in a dispute with the IRS over deductions claimed for a conservation easement donation. At the heart of the matter were two questions:
- Did the easement satisfy the strict requirements of IRC § 170(h), including the “in perpetuity” rule?
- Could the IRS impose a 75% civil fraud penalty under IRC § 6663(a) in a TEFRA partnership-level proceeding?
In response to the proposed fraud penalty, the petitioners raised a novel constitutional claim i.e., that the Seventh Amendment right to a jury trial should apply to the IRS’s imposition of civil fraud penalties. Their argument leaned heavily on the Supreme Court’s 2024 decision in SEC v. Jarkesy, which emphasized jury trial protections in certain administrative enforcement actions.
The Tax Court, however, was unpersuaded. In an opinion authored by Judge Pugh, the court held that (1) the Seventh Amendment does not apply to cases brought against the federal government unless Congress explicitly provides for a jury trial and (2) the assessment of tax liabilities and penalties falls within the “public rights” doctrine, meaning Congress can assign adjudication to the Tax Court without violating constitutional protections. In short, taxpayers don’t get a jury trial in the Tax Court—even for fraud penalties.
The Silver Moss Properties, LLC decision underscores that the IRS will continue to challenge what it believes are questionable SCE structures, pushing courts to scrutinize not only the technical compliance of easements but also the intent behind them. In addition, the Seventh Amendment argument was creative and described by some commentators as a “Hail Mary”. However, it ultimately failed, reinforcing that the Tax Court’s jurisdiction is firmly rooted in the public rights doctrine.
Taxpayers and advisors watching the SCE battles should view Silver Moss Properties, LLC as both a cautionary tale and a reaffirmation of the IRS’s enforcement power. While creative constitutional arguments may grab headlines, the core issues remain the same: Was the easement properly structured, and can the deduction be sustained?
For now, the Tax Court has made clear that when it comes to partnership-level proceedings and fraud penalties, the jury box is off-limits.
For questions regarding this blog post or any other civil or criminal tax related matter, please feel free to contact me at jcrouch@meadowscollier.com.