CERI Act of 2026

(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.