To amend the Internal Revenue Code of 1986 to reform the charitable contribution deduction rules on contributions of certain easements on buildings in registered historic districts, and for other purposes.

SECTION 1. REFORM OF CHARITABLE CONTRIBUTIONS OF CERTAIN EASEMENTS ON 
              BUILDINGS IN REGISTERED HISTORIC DISTRICTS.

    (a) Special Rules With Respect to Buildings in Registered Historic 
Districts.--Paragraph (4) of section 170(h) of the Internal Revenue 
Code of 1986 (relating to definition of conservation purpose) is 
amended by redesignating subparagraph (B) as subparagraph (C) and by 
inserting after subparagraph (A) the following new subparagraph:
                    ``(B) Special rules with respect to buildings in 
                registered historic districts.--In the case of any 
                contribution of a qualified real property interest 
                which is a restriction with respect to the exterior of 
                a building described in subparagraph (C)(ii), such 
                contribution shall not be considered to be exclusively 
                for conservation purposes unless--
                            ``(i) such interest--
                                    ``(I) includes a restriction which 
                                preserves the entire exterior of the 
                                building (including the front, sides, 
                                rear, and height of the building), and
                                    ``(II) prohibits any change in the 
                                exterior of the building which is 
                                inconsistent with the historical 
                                character of such exterior,
                            ``(ii) the donor and donee enter into a 
                        written agreement certifying, under penalty of 
                        perjury, that the donee--
                                    ``(I) is a qualified organization 
                                (as defined in paragraph (3)) with a 
                                purpose of environmental protection, 
                                land conservation, open space 
                                preservation, or historic preservation, 
                                and
                                    ``(II) has the resources to manage 
                                and enforce the restriction and a 
                                commitment to do so, and
                            ``(iii) in the case of any contribution 
                        made in a taxable year beginning after the date 
                        of the enactment of this subparagraph, the 
                        taxpayer includes with the taxpayer's return 
                        for the taxable year of the contribution--
                                    ``(I) a qualified appraisal (within 
                                the meaning of subsection (f)(11)(E)) 
                                of the qualified property interest,
                                    ``(II) photographs of the entire 
                                exterior of the building, and
                                    ``(III) a description of all 
                                restrictions on the development of the 
                                building.''.
    (b) Filing Fee for Certain Contributions.--Subsection (f) of 
section 170 of such Code (relating to disallowance of deduction in 
certain cases and special rules) is amended by inserting at the end the 
following new paragraph:
            ``(13) Contributions of certain interests in buildings 
        located in registered historic districts.--
                    ``(A) In general.--No deduction shall be allowed 
                with respect to any contribution described in 
                subparagraph (B) unless the taxpayer includes with the 
                return for the taxable year of the contribution a $500 
                filing fee.
                    ``(B) Contribution described.--A contribution is 
                described in this subparagraph if such contribution is 
                a qualified conservation contribution (as defined in 
                subsection (h)) which is a restriction with respect to 
                the exterior of a building described in subsection 
                (h)(4)(C)(ii) and for which a deduction is claimed in 
                excess of the greater of--
                            ``(i) 3 percent of the fair market value of 
                        the building (determined immediately before 
                        such contribution), or
                            ``(ii) $10,000.
                    ``(C) Dedication of fee.--Any fee collected under 
                this paragraph shall be used for the enforcement of the 
                provisions of subsection (h).''.
    (c) Effective Date.--
            (1) Special rules for buildings in registered historic 
        districts.--The amendments made by subsection (a) shall apply 
        to contributions made after the date of the enactment of this 
        Act.
            (2) Filing fee.--The amendment made by subsection (b) shall 
        apply to contributions made 180 days after the date of the 
        enactment of this Act.

SEC. 2. PROVISIONS RELATING TO SUBSTANTIAL AND GROSS OVERSTATEMENTS OF 
              VALUATIONS OF CHARITABLE DEDUCTION PROPERTY.

    (a) Substantial and Gross Overstatements of Valuations of 
Charitable Deduction Property.--
            (1) In general.--Section 6662 of the Internal Revenue Code 
        of 1986 (relating to imposition of accuracy-related penalties) 
        is amended by adding at the end the following new subsection:
    ``(i) Special Rules for Charitable Deduction Property.--In the case 
of charitable deduction property (as defined in section 
6664(c)(3)(A))--
            ``(1) the determination under subsection (e)(1)(A) as to 
        whether there is a substantial valuation misstatement under 
        chapter 1 with respect to the value of the property shall be 
        made by substituting `150 percent' for `200 percent', and
            ``(2) the determination under subsection (h)(2)(A)(i) as to 
        whether there is a gross valuation misstatement with respect to 
        the value of the property shall be made by substituting `200 
        percent' for `400 percent' and by substituting `150 percent' 
        for `200 percent' in applying subsection (e)(1)(A) for purposes 
        of such determination.''.
            (2) Elimination of reasonable cause exception for gross 
        misstatements.--Section 6664(c)(2) of such Code (relating to 
        reasonable cause exception for underpayments) is amended by 
        striking ``paragraph (1) shall not apply unless'' and inserting 
        ``paragraph (1) shall not apply. The preceding sentence shall 
        not apply to a substantial valuation overstatement under 
        chapter 1 if''.
    (b) Qualified Appraisers and Appraisals.--
            (1) In general.--Subparagraph (E) of section 170(f)(11) of 
        such Code is amended to read as follows:
                    ``(E) Qualified appraisal and appraiser.--For 
                purposes of this paragraph--
                            ``(i) Qualified appraisal.--The term 
                        `qualified appraisal' means, with respect to 
                        any property, an appraisal of such property 
                        which--
                                    ``(I) is treated for purposes of 
                                this paragraph as a qualified appraisal 
                                under regulations or other guidance 
                                prescribed by the Secretary, and
                                    ``(II) is conducted by a qualified 
                                appraiser in accordance with generally 
                                accepted appraisal standards and any 
                                regulations or other guidance 
                                prescribed under subclause (I).
                            ``(ii) Qualified appraiser.--Except as 
                        provided in clause (iii), the term `qualified 
                        appraiser' means an individual who--
                                    ``(I) has earned an appraisal 
                                designation from a recognized 
                                professional appraiser organization or 
                                has otherwise met minimum education and 
                                experience requirements set forth in 
                                regulations prescribed by the 
                                Secretary,
                                    ``(II) regularly performs 
                                appraisals for which the individual 
                                receives compensation, and
                                    ``(III) meets such other 
                                requirements as may be prescribed by 
                                the Secretary in regulations or other 
                                guidance.
                            ``(iii) Specific appraisals.--An individual 
                        shall not be treated as a qualified appraiser 
                        with respect to any specific appraisal unless--
                                    ``(I) the individual demonstrates 
                                verifiable education and experience in 
                                valuing the type of property subject to 
                                the appraisal, and
                                    ``(II) the individual has not been 
                                prohibited from practicing before the 
                                Internal Revenue Service by the 
                                Secretary under section 330(c) of title 
                                31, United States Code, at any time 
                                during the 3-year period ending on the 
                                date of the appraisal.''.
            (2) Reasonable cause exception.--Subparagraphs (B) and (C) 
        of section 6664(c)(3) of such Code are amended to read as 
        follows:
                    ``(B) Qualified appraisal.--The term `qualified 
                appraisal' has the meaning given such term by section 
                170(f)(11)(E)(i).
                    ``(C) Qualified appraiser.--The term `qualified 
                appraiser' has the meaning given such term by section 
                170(f)(11)(E)(ii).''.
    (c) Effective Dates.--
            (1) Misstatement penalties.--The amendments made by 
        subsection (a) shall apply to returns filed after the date of 
        the enactment of this Act.
            (2) Appraiser provisions.--The amendments made by 
        subsection (b) shall apply to appraisals prepared with respect 
        to returns or submissions filed after the date of the enactment 
        of this Act.

Summary: Amends the Internal Revenue Code to modify requirements for the tax deduction for charitable contributions of easements on buildings in registered historic districts to require such easements to preserve the entire exterior of the building and to prohibit any change in the exterior of the buildings which is inconsistent with the historic character of such exterior. Imposes additional reporting, appraisal, and filing fee requirements.

Revises criteria for determining substantial and gross overstatements of valuations of charitable deduction property. Eliminates the reasonable cause exception for waiving penalties for such overstatements.