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Insurers fight claims tied to ‘tax scam’ investments - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2026 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2026 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2026 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2026 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Insurers fight claims tied to ‘tax scam’ investments by Richard Sine Claims Disputes , Risk Management Oct 6, 2026 Insurers, including Liberty Mutual, are fighting claims involving an estimated $1 billion in limits after writing policies on what the Internal Revenue Service has called one of the “worst of the worst tax scams.” Investor partnerships allegedly formed to exploit tax rules governing land conservation have filed at least 20 lawsuits against the insurers after the IRS disallowed their deductions and imposed big penalties. The transactions have clogged the federal tax courts and created more than $36 billion in disputed deductions, according to the tax agency. During a Senate Finance Committee hearing on the transactions in 2020, the IRS Commissioner said he was examining the returns of 28,000 investors in the schemes. After years of bipartisan efforts, the maneuver was effectively shut down in 2022. “Land trusts are critical conservation tools, and these abusive transactions were putting them at risk,” said Lori Faeth, director of government relations for the Land Trust Alliance, a nonprofit group. The scheme, centered largely in the Southeast, took advantage of an IRS provision made permanent in 1980 allowing taxpayers to claim a deduction when they donate land to a trust for permanent conservation. A promoter would buy an often-remote land parcel, then hire an appraiser to assert it had potential as a quarry, senior housing or solar farm, valuing it at a large multiple of its purchase price. The promoter would then gather a group of investors to buy the land and share a charitable deduction worth many times their investment. The maneuver is known as a syndicated conservation easement transaction. In some cases, the investors would vote to purchase tax liability insurance prior to the transaction, said Austin Bersinger, an Atlanta-based partner at Barnes & Thornburg who represents investor partnerships in more than a dozen suits against insurers. The indemnity-only tax liability insurance policies cover losses resulting from an adverse tax proceeding, according to policy wordings. Only about a third of investor partnerships voted to buy the tax insurance, said Mr. Bersinger. But he estimates the total value of limits written at over $1 billion. Most of the policies named in lawsuits filed by Mr. Bersinger on behalf of investors were bound after 2016, when the IRS publicly identified the transactions as tax avoidance schemes and required participants to file a special form. In 2019, the IRS added the transaction to its list of “Dirty Dozen” tax scams and sought to audit them all. The tax liability underwriters typically reviewed private placement memoranda, appraisal reports, tax opinions and more as part of their due diligence, Mr. Bersinger said. “I don’t think there’s any question that the carriers knew what the risk was.” In a typical case, Ashwood Gap v. Wesco et. al., a promoter bought 205 acres of land in rural Alabama in 2020. An appraiser said the land could be used as a quarry, giving it a fair market value of $53.6 million, but said it was worth only $280,000 if donated for conservation. The investors bought the land for $10.3 million, then shared a $52.3 million deduction after giving it up for conservation, according to the investors’ complaint. When the investors voted to donate the property, they also voted to purchase the tax insurance policy, the complaint said. The policy had been offered by Volante Specialty Risk, a managing general agent that had been formed in 2019 “for the primary purpose of placing (syndicated conservation easement) policies,” the complaint said. The policy’s primary layer was insured by Liberty Mutual and Fidelis, with excess layers by AmTrust and Allianz. It carried a $10.3 million limit, a $309,000 retention, and a $721,000 premium, plus $43,260 in taxes and fees. Volante Specialty owner, Volante Group, and its lawyers did not respond to requests for comment, nor did Volante’s owner, Acrisure. Liberty Mutual, AmTrust and Fidelis declined to comment, citing pending litigation. Allianz did not respond to a request for comment. After an audit and negotiation, the IRS proposed a settlement allowing a deduction for only the purchased value of the property and imposing a 21% tax on the disallowed contribution and a 5% “misstatement” penalty. The investors sued the insurers after they declined to consent to the settlement. In April, a judge denied the insurers’ motion to compel arbitration and moved the case to a Georgia court, where it is ongoing. Other cases have been ordered into arbitration. In a separate suit, Liberty Mutual sued a Georgia partnership, Fishtail Creek, over coverage for a claimed $20.2 million deduction. Liberty Mutual contended that Fishtail settled with the IRS without the insurer’s consent and that the settlement was restitution to the government, not a “loss” as defined by the policy. The tax insurance may have helped to make investors more comfortable with the deals, said Robert Wayne Pearce, an attorney in Boca Raton, Florida, who said he has represented investors. “They’re told the partnership has insurance. Anytime anyone says ‘guaranteed,’ ‘insured,’ that’s a sales tool. It’s intended to lure them into the investment.” With names like EcoVest and Green Rock, the sponsors of these deals often touted their conservation credentials. One such sponsor, Georgia-based Trimera, headlines its webpage: “Where investor value meets sustainable real estate development.” Its chief executive, Stephen Burroughs, did not respond to requests for comment. In its bipartisan 2020 report on the deals, the Senate Finance Committee said it did not uncover “a single email reflecting a taxpayer’s primary interest” as land conservation or development. A 2022 federal law automatically disqualified most syndicated conservation easement transactions with very high deductions, effectively quashing the tax scheme. What remains are lawsuits and audits. In May, the IRS said it had about 740 cases in Tax Court and 400 in audit. In August, the agency established a new office solely to handle the easements. In 2024, accountant Jack Fisher and attorney James Sinnott were sentenced to 25 and 23 years in prison, respectively, for selling more than $1.3 billion in fraudulent deductions. 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