H.R. 10510: Conservation Easement Resolution and Integrity Act of 2026

This bill would create a special IRS settlement program for certain older conservation easement tax disputes, and it would also change how the tax law treats conservation easement deductions going forward in some respects.

Settlement program for certain disputes

The bill would require the Treasury Secretary to create a Conservation Easement Resolution Program within 180 days. The program would cover disputes involving “syndicated conservation easements” tied to deductions claimed for contributions made before December 30, 2022.

For these covered disputes, the bill would:

• Pause new IRS dispute actions until the program is established.
• Pause the running of the statute of limitations during that waiting period.
• Allow taxpayers to resolve disputes through the new program instead of ordinary audit or litigation paths.

Limits on IRS penalties and adjustments

The bill would restrict when the IRS could assess additional tax, penalties, or interest in these cases:

• For a qualified easement—generally one that is still in effect, still serves a conservation purpose, and is held by a qualified organization—the IRS could not assess a deficiency or penalty unless certain conditions are met, such as the donee not being qualified, the easement not being perpetual or materially impaired, the taxpayer failing to attach a qualified appraisal, the taxpayer knowingly participating in fraud, or the claimed value being a gross valuation misstatement.
• For easements that are not fully qualified but still substantially preserve conservation purposes, any deficiency, penalty, or interest would be reduced by at least 80%.
• No penalties could be imposed under certain accuracy-related or fraud penalty provisions for these covered transactions.

Fraud standard

The bill would make it harder for the government to treat a taxpayer as having knowingly participated in fraud unless there is direct, documented evidence of the taxpayer’s own intentional and willful conduct. It says this finding could not be based only on negligence, recklessness, constructive knowledge, or the actions of a promoter or adviser unless the taxpayer actually knew of, and willfully joined in, the conduct. It also says technical filing or reporting mistakes alone would not be enough.

Cases already in court or already resolved

The bill would allow court cases involving covered transactions that were already pending when the law takes effect to be put on hold while the settlement program works. It would also require the government to pay some taxpayers back if they already reached a final resolution before enactment and paid more than they would owe under the new rules.

Valuation rules

The bill would create a rebuttable presumption that a taxpayer’s qualified appraisal is correct for these covered transactions. In practice, that means the taxpayer’s appraisal would be treated as accurate unless the government can rebut it with clear and convincing evidence.

To challenge the appraisal, the IRS would have to produce its own qualified appraisal with:

• a detailed explanation of the methodology,
• comparable sales data,
• a full description of assumptions, and
• an explanation of any different “highest and best use” conclusion.

The bill also says valuation of conservation easements should account for the property’s highest and best use, including possible mineral extraction or development uses when those are physically possible, legally allowed, financially feasible, and maximally productive.

Form 8886 disclosures

If a taxpayer filed Form 8886 for one of these covered transactions, the bill would treat that filing as evidence that the taxpayer acted in good faith and did not actually know the transaction was fraudulent. The IRS could not use that filing alone to prove fraud or abusive conduct, and it could not start or sustain an action solely because the taxpayer complied with the disclosure rules tied to certain prior IRS guidance.

Changes to conservation easement tax rules more broadly

The bill would also amend section 170 of the tax code in two key ways:

• It would say that a conservation easement does not fail the “perpetuity” requirement just because an agreement addresses how post-donation improvements affect extinguishment proceeds.
• It would codify the valuation rules described above for conservation easements, including use of qualified appraisals and consideration of highest and best use.

These changes would apply retroactively to transactions entered into after December 31, 2009.

Reporting requirements

The bill would require annual reports to Congress for five years on how the program is working, including how many taxpayers apply, how many settlements are reached, how much tax, penalty, and interest is avoided or refunded, and why any settlements are رفضed. The National Taxpayer Advocate would also review these reports and provide comments and recommendations.

Relevant Companies

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