The National Historic Preservation Act of 1966 (Public Law 89-665) established legal guidelines for identifying and protecting important cultural resources. Under the law, the Secretary of the Interior, through the National Park Service, was authorized to create a list of those historic places and properties worthy of preservation. This list, "The National Register of Historic Places," identifies "sites, buildings, objects, districts and structures significant in American history, architecture, archaeology and culture."
The 1966 Act was a major advance in the Federal government's role in historic preservation. However, after ten years of experience with the legislation, Congress' main concern was that this legislation was not being effective in protecting the nation's cultural resources. Congress had relied primarily on local and state governments, citizens groups and local zoning ordinances to protect the nation's cultural heritage. The creation of the National Register of Historic Places through the Department of the Interior did not give the federal government control over historic structures. The control remained exclusively with the state and municipal governments. Thus, if allowed by the state or the municipal government, any building in any historic district could be legally destroyed.
In 1976, Congress passed the Tax Reform Act of 1976 (Public Law 94-455). This legislation attempted to strengthen the country's historic preservation efforts by providing federal tax incentives for the preservation and rehabilitation of properties certified as historically significant. These tax incentives are the legislative basis for the Historic Preservation Tax Incentive Program.
Congress created the Historic Preservation Tax Incentive Program to encourage property owners living in federal historic districts to participate directly in the historic preservation process. It hoped that this program might act as a form of insurance, protecting these historic cultural resources when economic and political pressures on local governments became too great. To accomplish this goal, Congress offered owners of historic properties located in federal historic districts a significant reduction in their federal income tax (and in many cases, a reduction in their state and local taxes as well) if the property owner would agree to preserve the historic nature of the property's exterior.
In 1986, the Department of the Treasury issued final regulations governing the circumstances under which easement donations would be allowable as charitable deductions (Treasury Regulations Section 1.170A-14). Tax court rulings were rendered from 1985 through 1990. All these actions have further solidified the program in the mind of the public.