The Tax Court’s decision setting aside IRS Notice 2017-10 for ignoring the APA’s notice and comment requirements has serious implications for other notices identifying listed transactions.

Key Points:

..Notice 2017-10 identified syndicated conservation easements as potentially abusive “listed transactions,” with associated reporting responsibilities and an enhanced penalty structure under Section 6662A of the Internal Revenue Code.

..In Green Valley Investors, LLC v. Commissioner, the Tax Court held that the IRS’s listed transaction regime may not bypass the notice and comment requirements of the APA. Because the IRS failed to follow these requirements with respect to Notice 2017-10, the Tax Court set the listing notice aside.

..In response to this decision, Treasury quickly issued proposed regulations — subject to notice and comment procedures — to again identify syndicated conservation easements as listed transactions.

..The Green Valley Investors decision charts the course for courts to potentially set aside dozens of IRS notices identifying listed transactions over the last two decades.