H.R. 10813: Historic Preservation and Land Conservation Certainty Act

This bill would create a one-time way for certain partnerships involved in conservation easement tax deductions to settle open tax disputes with the IRS.

What the main tax settlement rule would do

The bill applies to eligible contributions, which are partnership donations of conservation easements claimed as charitable deductions for tax years ending on or before December 31, 2025, while the IRS still has time to assess tax or already has an open examination, appeal, or court case.

For those open cases, a partnership could choose to use this new settlement process during a 360-day period after enactment. If it does, the partnership would file a statement, pay an amount calculated under the bill, and accept limits on future disputes about that contribution.

The settlement would generally do three things:

• Allow a deduction only up to a capped amount called the settlement limitation amount.
• Require the partnership to pay a settlement amount made up of tax plus penalties on the excess deduction.
• Resolve Federal income tax liability, including penalties and interest, related to the amount of the deduction above the cap.

How the settlement amount would be calculated

The bill sets the settlement cap at:

• 2.5 times the total capital contributed by the ultimate taxpayer partners, in most cases.
• 3.2 times the capital contributed, for certain specified conservation contributions, with some financed amounts excluded.

The settlement amount would include:

• a tax component, based on the excess deduction multiplied by the highest individual income tax rate for the years covered;
• a penalty component, based on accuracy-related penalty rules, with higher penalties applying to larger excess amounts.

If the required payment is made on time, some interest that would otherwise apply would be waived.

Effect on taxpayers and partnerships

If the election takes effect, it would be binding and generally irrevocable on the partnership, its partners, and related pass-through entities. They would give up the ability to contest the deduction amount, settlement cap, and related figures, except for limited computational corrections allowed under the bill.

The IRS would still be allowed to check whether the numbers were calculated correctly, but not to revisit the underlying issues of valuation or whether the conservation contribution qualified substantively.

Special rules for partnerships with non-contributing partners

If some partners do not contribute their share of the settlement payment, the bill allows the partnership to file a schedule identifying who paid and who did not. The unpaid shares would then be assessed directly against the non-paying partners, plus an additional amount equal to 25% of part of the tax component.

Those non-paying partners could challenge the assessment only by paying first and then seeking a refund, subject to normal refund procedures.

Rules for groups of related partnerships

The bill also addresses common marketing groups, meaning partnerships tied to the same organizer, manager, promoter, or related persons. Related partnerships could elect together as a group, with their deductions and settlement amounts combined for purposes of the election.

Limits on who can use the process

The settlement option would not be available in every case. It would not apply if:

• the matter is already finally decided by the Tax Court or another court;
• the partnership has already resolved the issue through certain final settlements, except as allowed by the bill;
• the partnership has a related special partnership-level tax election in place unless that election is revoked for the relevant contribution.

Historic preservation and tax credit changes

The bill also changes tax-law references related to historic preservation. It would replace certain older certification language with a definition of “contributing building” for:

• the charitable deduction rules for conservation contributions, and
• the rehabilitation tax credit rules for certified historic structures.

Under the bill, a building would count if it is identified as contributing in the National Register nomination or related official district records, or if the Secretary of the Interior certifies it as contributing to the district’s historic significance.

These historic-preservation changes would generally apply starting on the date of enactment, with some retroactive application for still-open tax years and proceedings.

Relevant Companies

None found