Historic Preservation and Land Conservation Certainty Act
- Sponsor
- Rep. Carey, Mike [R-OH-15]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jun 23, 2026
Bottom line
The bill offers a settlement pathway for ongoing tax disputes over conservation easements and clarifies eligibility for historic preservation tax benefits, aiming to reduce litigation and provide certainty.
What it actually does
This bill establishes a voluntary election process for partnerships to resolve open tax controversies related to conservation easement donations made on or before December 31, 2024. It allows partnerships to settle their tax liability by paying a 'settlement amount' based on a reduced deduction and applicable penalties. Additionally, the bill amends the Internal Revenue Code to clarify the definition of a 'contributing building' for purposes of qualified conservation contributions and certified historic structures.
Proponents argue
Proponents argue that this bill provides much-needed certainty for taxpayers and the Internal Revenue Service by offering a streamlined mechanism to resolve a large backlog of complex and costly conservation easement tax disputes. They contend it reduces administrative burdens, frees up judicial resources, and ensures that legitimate conservation efforts are not unduly penalized while addressing concerns about abusive transactions.
Opponents contend
Opponents might contend that the settlement terms are too lenient on partnerships involved in what the IRS has identified as abusive tax schemes, potentially encouraging future aggressive tax planning. Conversely, some might argue that the terms are too punitive for taxpayers who believed they were engaging in legitimate conservation, or that the direct assessment mechanism for non-contributing partners bypasses due process.
The bill is moderately complex due to its technical tax language, requiring careful reading. An informed reader will need sufficient time to understand its implications.
Section 2
Election to Resolve Conservation Easement Controversies
This section allows partnerships with open tax matters related to qualified conservation contributions made by December 31, 2024, to elect a voluntary settlement. The election requires the partnership to pay a 'settlement amount' consisting of a tax component (based on the difference between the claimed deduction and a 'settlement limitation amount' of 2.5x or 3.2x basis/capital) and a penalty component (25% or 40%). Upon election and payment, the matter is resolved, and parties waive rights to contest the amounts.
Supporters argue
Supporters argue this provision offers a pragmatic solution to a complex and highly litigious area of tax law, providing certainty for both taxpayers and the government. It allows the IRS to clear a backlog of cases efficiently while giving taxpayers a defined path to resolve their liabilities without further legal battles.
Critics contend
Critics might argue that the settlement terms, particularly the multipliers for the settlement limitation amount, are too generous for transactions the IRS has deemed abusive, potentially signaling leniency and encouraging future aggressive tax planning. Conversely, some might find the penalties and direct assessment mechanisms too harsh, especially for partners who were less involved in the initial transaction.
Tradeoffs
The provision navigates the tension between the government's interest in collecting taxes and penalties from what it considers abusive schemes, and the desire to provide a fair, efficient, and final resolution for taxpayers caught in prolonged disputes. It balances strict enforcement with administrative practicality.
Section 3
Contributing-Building Standard for Historic Preservation
This section amends the Internal Revenue Code (Sections 170(h)(4)(C) and 47(c)(3)(A)) to clarify the definition of a 'contributing building' for qualified conservation contributions and certified historic structures. A building is now explicitly defined as 'contributing' if it is identified as such in the National Register nomination for the district, any amendment thereto, or official district documentation, or if it is certified by the Secretary of the Interior as contributing to the historic significance of the district.
This subsection broadly defines a 'common marketing group' to include all partnerships with eligible contributions where the same principal organizer or manager (or related person) was principally responsible for organizing, structuring, or facilitating the arrangement. It also specifies that if a partnership could be part of more than one group, all such groups are treated as a single common marketing group.
Section 2(a)(5)
Why it matters:While standard for defining terms in legislation, the breadth and aggregation rules of this definition are critical for determining the scope of group elections and the potential joint and several liability of partnerships, making it a powerful, yet easily missed, detail.
Case for: Proponents argue that this broad definition is essential to prevent fragmentation of related transactions and ensure that all entities involved in a potentially abusive scheme are addressed comprehensively. It prevents organizers from structuring multiple, slightly varied deals to avoid a group settlement.
Case against: Critics might argue that such a broad definition could inadvertently sweep in partnerships that had only tangential connections or whose contributions were genuinely distinct, forcing them into a collective settlement that may not accurately reflect their individual circumstances.
Estimated impact: Significantly impacts the number of partnerships that must participate in a single, aggregated election and determines the scope of joint and several liability for the settlement amount.
This subsection outlines a mechanism for the Secretary to directly assess non-contributing ultimate taxpayer partners. If an electing partnership fails to remit the full settlement amount because some partners don't contribute their share, the Secretary can assess those non-contributing partners their allocable amount plus an additional 25% penalty on the tax component. These assessments are immediately assessable, bypassing typical restrictions on assessment and collection, though partners can contest the computation via a refund claim.
Section 2(f)
Why it matters:This is a powerful enforcement tool designed to ensure compliance and collection, but its direct nature and circumvention of typical pre-payment judicial review make it a critical detail that could be missed by those not scrutinizing the procedural fine print.
Case for: Proponents argue this mechanism is crucial for the effectiveness of the settlement program, ensuring that individual partners cannot evade their share of the settlement and compelling full participation. It prevents a situation where the partnership elects but cannot collect from its members.
Case against: Critics might argue that allowing immediate assessment without prior Tax Court review for individual partners, even with a subsequent refund claim option, could be seen as an erosion of taxpayer due process rights, particularly for those who dispute their allocable share.
Estimated impact: Shifts the burden of collecting unpaid settlement amounts from the electing partnership to the IRS, and provides an expedited collection method directly from individual partners, potentially affecting a significant number of individuals.
This clause states that an effective election is irrevocable and binding on the electing partnership, all partners, and all associated pass-through entities and ultimate taxpayer partners. It further specifies that such an election shall be treated as a closing agreement under Section 7121 of the Internal Revenue Code and is deemed approved by the Secretary as of the effective date.
Section 2(b)(9)
Why it matters:This is standard legal language for ensuring finality in tax settlements, but its power means taxpayers must be absolutely certain before making an election, as there is no recourse once it's effective. Its placement ensures it applies broadly.
Case for: Proponents argue that this irrevocability and finality are crucial for providing absolute certainty to both the IRS and taxpayers. It prevents future disputes over the same matters, ensuring that once a settlement is reached, it remains settled, which is a key goal of the program.
Case against: Critics might argue that the absolute irrevocability and binding nature, especially when combined with the complexity of the calculations and potential for computational adjustments, places a high burden on taxpayers to ensure accuracy upfront, with little room for error or reconsideration.
Estimated impact: Ensures complete legal finality for all parties involved in the settlement, preventing any subsequent administrative or judicial challenges to the resolved tax matters.