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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10510 Introduced in House (IH)]
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119th CONGRESS
2d Session
H. R. 10510
To establish a settlement program for disputes relating to syndicated
conservation easements and to amend the Internal Revenue Code of 1986
to clarify Congressional intent with respect to such easements.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 21, 2026
Mr. Bergman introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To establish a settlement program for disputes relating to syndicated
conservation easements and to amend the Internal Revenue Code of 1986
to clarify Congressional intent with respect to such easements.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Conservation Easement Resolution and
Integrity Act of 2026'' or the ``CERI Act of 2026''.
SEC. 2. SETTLEMENT PROGRAM FOR CONSERVATION EASEMENT DEDUCTIONS.
(a) In General.--Not later than 180 days after the date of the
enactment of this section, the Secretary shall, in consultation with
the National Taxpayer Advocate, establish the Conservation Easement
Resolution Program to provide for the resolution of any dispute
relating to a covered transaction.
(b) Treatment of Pending Disputes.--During the period beginning on
the date on the enactment of this section and ending on the date on
which the Secretary establishes the program under subsection (a)--
(1) the Secretary may not initiate a dispute with respect
to any covered transaction, and
(2) the statute of limitations with respect to any dispute
relating to a covered transaction shall be tolled.
(c) Terms of Settlement.--
(1) In general.--In the case of any dispute relating to a
covered transaction--
(A) in the case of a covered transaction relating
to a qualified easement, the Secretary may not assess
any deficiency or penalty unless--
(i) the donee organization was not a
qualified organization under section 170(h)(3)
of the Internal Revenue Code of 1986 at the
time of the contribution,
(ii) the conservation easement was not
granted in perpetuity or the conservation
purpose has been materially impaired,
(iii) the taxpayer failed to obtain and
attach a qualified appraisal as required by
section 170(f)(11) of such Code,
(iv) the taxpayer knowingly participated in
a fraudulent transaction, or
(v) the claimed value of such transaction
constitutes a gross valuation misstatement (as
defined in section 6662(h)(2) of such Code),
(B) in the case of a covered transaction relating
to an easement which is not a qualified easement but
with respect to which the conservation purposes are
substantially preserved, the amount of any deficiency,
penalty, or interest determined with respect to such
transaction shall be reduced by not less than 80
percent, and
(C) no penalties may be imposed under sections
6662, 6662A, or 6663 of such Code.
(2) Requirements to demonstrate knowing participation in
fraud.--For purposes of paragraph (1)(A)(i), a determination of
knowing participation in a fraudulent transaction--
(A) may only be established by direct, documented
evidence of the taxpayer's own intentional and willful
conduct,
(B) may not be based on constructive knowledge,
negligence, recklessness, or the conduct of any
promoter, advisor, or other third party unless the
taxpayer had actual knowledge of, and willfully
participated in, such conduct, and
(C) may not be based solely or primarily on
technical or mechanical non-compliance, including any
failure to satisfy disclosure or reporting
requirements, differences in valuation methodology,
reliance on a qualified appraisal, or any deviation
from administrative guidance later invalidated under
the Administrative Procedure Act.
(d) Proceedings in Court of the United States.--Any proceeding in a
Court of the United States which began before the date of the enactment
of this section relating to a covered transaction shall be stayed upon
motion of any party until a final disposition relating to such
proceeding occurs under subsection (a).
(e) Payment in Case of Final Disposition.--In the case of a covered
transaction with respect to which a final disposition was reached
before the date of the enactment of this Act, the Secretary shall
provide to the taxpayer (in such manner as the Secretary determines
appropriate under subsection (a)) an amount equal to the excess (if
any) of--
(1) the amount of any penalty, deficiency, or interest paid
by the taxpayer under such final disposition, over
(2) the amount of any penalty, deficiency, or interest
which would be imposed with respect to such taxpayer under
subsection (c) if such case had not reached a final disposition
before such date.
(f) Valuation.--In the case of any covered transaction, for
purposes of this section and such Code--
(1) there shall be a rebuttable presumption that the value
of any conservation easement (and the fair market value of the
property) as determined by a qualified appraisal conducted on
behalf of the taxpayer is accurate,
(2) the burden of proof in rebutting such presumption shall
be clear and convincing evidence, and
(3) the Secretary may not contest such presumption unless
the Secretary produces a qualified appraisal which includes--
(A) a detailed explanation of the methodology of
such appraisal,
(B) comparable sales data,
(C) a full description of each assumption upon
which such appraisal is based, and
(D) an analysis of the highest and best use
identified in the qualified appraisal described in
paragraph (1), including, if the appraisal produced by
the Secretary applies a different highest and best use,
a detailed explanation of the basis for such
difference.
(g) Costs and Certain Fees Awarded Without Regard to Net Worth.--
Any determination of whether any party is a prevailing party for
purposes of section 7530(c)(4) of such Code relating to a covered
transaction shall be made without regard to subparagraph (A)(ii)
thereof.
(h) Treatment of Form 8886 Filings.--In the case of any covered
transaction with respect to which a taxpayer filed (or caused to be
filed on the taxpayer's behalf) a Form 8886--
(1) such taxpayer shall be conclusively presumed to have
acted in good faith and without actual knowledge that the
transaction was fraudulent,
(2) the Secretary shall not use such filing as evidence of
fraud, knowledge of fraud, participation in an abusive
transaction, or as grounds to deny, reduce, or delay any
relief, settlement, or refund available under this section with
respect to such transaction,
(3) no audit, examination, enforcement action, or penalty
may be initiated or sustained relating to such transaction
solely or primarily on the basis of a taxpayer's compliance
with Form 8886 disclosure requirements related to Notice 2017-
10 (or any substantially similar guidance later invalidated
under the Administrative Procedure Act), and
(4) in any administrative or judicial proceeding, the
timely filing of such Form 8886 shall constitute mitigating
evidence with respect to any determination of fraud, penalties,
interest, or valuation disputes relating to such transaction.
(i) Definitions.--For purposes of this section--
(1) Covered transaction.--The term ``covered transaction''
means any syndicated conservation easement transaction, as
described in Internal Revenue Service Notice 2017-10, with
respect to which a deduction was claimed for a contribution
made before December 30, 2022.
(2) Qualified easement.--The term ``qualified easement''
means a conservation easement arising from a covered
transaction that meets the following requirements:
(A) The easement remains in effect.
(B) The conservation purpose of the easement has
not been materially impaired.
(C) The land subject to the easement continues to
serve a conservation purpose.
(D) The donee organization holding the easement is
a qualified organization (as defined in section
170(h)(3) of such Code) and is actively monitoring
compliance with the easement terms.
(3) Conservation purpose.--The term ``conservation
purpose'' shall have the meaning given such term in section
170(h)(4) of such Code.
(4) Dispute.--The term ``dispute'' means an audit,
examination, enforcement action, or litigation.
(5) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury or the designee of such Secretary.
(6) Qualified appraisal.--The term ``qualified appraisal''
has the meaning given such term in section 170(f)(11)(E)(i) of
such Code.
SEC. 3. ALLOCATION OF EXTINGUISHMENT PROCEEDS IN CASES OF POST-DONATION
IMPROVEMENT NOT TREATED AS DISQUALIFIED.
(a) In General.--Section 170(h)(5)(A) of the Internal Revenue Code
of 1986 is amended to read as follows:
``(A) Conservation purpose must be protected.--
``(i) In general.--A contribution shall not
be treated as exclusively for conservation
purposes unless the conservation purpose is
protected in perpetuity.
``(ii) Treatment of extinguishment
proceeds.--A conservation purpose shall not
fail to be treated as being protected in
perpetuity for purposes of clause (i) merely
because of any provision of an agreement
relating to the treatment of post-donation
improvements for purposes of the calculation of
extinguishment proceeds with respect to such
easement.''.
(b) Effective Date.--The amendment made by this section shall apply
to transactions entered into after December 31, 2009.
SEC. 4. CLARIFICATION OF VALUATION OF CONSERVATION EASEMENTS.
(a) In General.--Section 170(h) of the Internal Revenue Code of
1986 is amended by adding at the end the following new paragraphs:
``(8) Valuation.--For purposes of this subsection--
``(A) there shall be a rebuttable presumption that
the value of any conservation easement (and the fair
market value of the property) as determined by a
qualified appraisal (within the meaning of subsection
(f)(11)(E)) conducted on behalf of the taxpayer is
accurate,
``(B) the burden of proof in rebutting such
presumption shall be clear and convincing evidence, and
``(C) the Secretary may not contest such
presumption unless the Secretary produces a qualified
appraisal (within such meaning) which includes--
``(i) a detailed explanation of the
methodology of such appraisal,
``(ii) comparable sales data, and
``(iii) a full description of each
assumption upon which such appraisal is based.
``(9) Highest and best use.--For purposes of determining
the fair market value of any property subject to a qualified
conservation contribution (including for purposes of any
covered transaction under the Conservation Easement Resolution
and Integrity Act of 2026), the highest and best use of such
property shall be taken into account in accordance with
generally accepted appraisal standards (including the Uniform
Standards of Professional Appraisal Practice), include
potential uses for mineral extraction, mining, quarrying, oil
and gas development, or other development of mineral rights
where such use is physically possible, legally permissible,
financially feasible, and maximally productive.''.
SEC. 5. REPORT.
(a) Annual Report.--Not later than 1 year after the date of
enactment of this Act, and annually thereafter for 5 years, the
Secretary shall submit to the Committee on Ways and Means of the House
of Representatives, the Committee on Finance of the Senate, the
Committee on Agriculture of the House of Representatives, and the
Committee on Agriculture, Nutrition, and Forestry of the Senate a
report on the implementation of this Act, including--
(1) the number of taxpayers who have applied for relief
under the program established under section 2(a), disaggregated
by covered transactions described by paragraph (1) or (2) of
subsection (c) of such section,
(2) the number of settlements reached, the aggregate
amounts of deficiencies, penalties, and interest which were not
imposed by reason of section 2,
(3) the number of cases in which the Secretary refused to
offer settlement terms consistent with section 2(c), and the
basis for each such refusal,
(4) the number of cases with respect to which a payment was
made under section 2(e) and the aggregate amount of such
payments, and
(5) any recommendations for legislative or administrative
changes to improve the effectiveness of this Act.
(b) National Taxpayer Advocate Review.--The National Taxpayer
Advocate shall review each report submitted under subsection (a) and
shall submit to the committees described in such subsection comments,
findings, and recommendations with respect to the implementation of
this Act, including any instances in which the rights of taxpayers
under the Taxpayer Bill of Rights have not been adequately protected
with respect to a qualified easement (as defined in section 2(h)(2)).
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