In a letter published in The Wall Street Journal to respond to its report on the Internal Revenue Service’s successful challenge of tax breaks claimed by St. James Plantation, the CEO of the National Golf Course Owners Association contends that many courses properly meet the easement requirements and that the industry shouldn’t be singled out for scrutiny.
In a letter published by The Wall Street Journal on January 12, Jay Karen, Chief Executive Officer of the National Golf Course Owners Association (NGCOA), responded to a front-page article that the Journal had published in the previous week about a successful effort by the Internal Revenue Service (IRS) to deny nearly $8 million in tax breaks for St. James Plantation in Southport, N.C.
As reported by C&RB (http://clubandresortbusiness.com/2016/01/06/irs-battles-conservation-easement-claims/), the Journal had reported, in an article headlined “IRS Tees Off on Golf Courses’ Green Tax Claims,” that St. James Plantation had claimed the deductions for two of its golf courses under a commonly used conservation-easement provision that essentially extends a charitable deduction for “giving away” the right to develop the land. But the deductions were challenged by the IRS and a U.S. Tax Court ruling upheld the challenge, after it was shown that St. James was excessive in measuring the amount of property it was claiming under that provision.
In response to the original Journal article, the NGCOA’s Karen wrote:
“The recent ruling by the U.S. Tax Court to overturn the conservation easement tax deductions of a golf club in North Carolina shouldn’t be a harbinger for reversals in golf.
“Landowners must meet specific qualifications to qualify for conservation-easement tax benefits, including protection of environmental systems and preservation of open space. These are important priorities, especially in densely populated urban areas where green space is shrinking. Many golf course properties meet the easement requirements; those that don’t shouldn’t get the tax benefit.
“Some in Washington have attempted to single out golf courses from qualifying for conservation easements. Unfortunately, it is a treatment that our industry of 15,000 small-business owners and operators has seen time and time again. This is reminiscent of when golf was lumped in with massage parlors and tanning salons as business types specifically excluded from disaster-relief benefits after Hurricane Katrina.
“The broad brush is often used to paint golf as a playground for the elite, and therefore somehow worthy of exclusionary treatment.
“While employing nearly two million Americans, course owners and operators work hard to make a living by providing a great recreational experience and being good stewards of land and water. Tax breaks shouldn’t be easy to achieve, but they shouldn’t be harder simply because we are golf.”
Karen’s letter generated this comment after it was posted online:
“Since the taxpayer pays for the conservation easement (which in many states the tax credits are marketable), the land must be accessible to the public. Can I recreate freely in the pristine conservation areas?
“And the function of a conservation easement is not to enhance the value of subdivision development that abuts it, at taxpayer expense.
“Besides, golf courses routinely become insolvent because over 300 courses a year have been (over)built since 2000, with many vacating their use to avoid high property taxes. Then what happens to the conservation easement areas? Does the taxpayer get its money back?
“Conservation easements are a racket.”
A second comment read:
“Golf, like a massage parlor and a tanning salon, is a luxury. When the country is able to pay down its debts and live within its means, then we can talk about tax breaks for luxuries. Until that time, whine to your buddies at the 19th hole.”
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