WHO IS A QUALIFIED APPRAISER, and why should we care?
© by Margaret Olsen, ASA
The IRS has changed the rules.
It is imperative that all appraisers, donors, CPA's, accountants, tax attorneys, estate lawyers and anyone involved with charitable contributions and estate tax become aware of the changes and all the implications of the new IRS regulations.
If the donor chooses unwisely, and the appraiser is found to be unqualified, the appraisal that was submitted by the unqualified appraiser also becomes an unqualified appraisal. The donor could lose his or her entire charitable contribution deduction. Any questions regarding the qualifications of the appraiser may be raised on audit (after the tax report due date). Therefore, there is no second chance for the donor. Reg 1.170 A-13(c)(3)(i)(A).
The Pension Protection Act of 2006, signed on August 17, 2006, increased the requirements of a QUALIFIED APPRAISER in charitable contributions. The new requirements are set forth in IRS Publication 561, April 2007. The IRS significantly expanded its definition of a QUALIFIED APPRAISER for returns filed after February 16, 2007. Now, a QUALIFIED APPRAISER is an individual who meets ALL of the following requirements:
1. The appraiser must have:
Earned an appraisal designation from a recognized professional appraiser organization for demonstrated competency in valuing the type of property being appraised, or,
Met certain minimum education and experience requirements.
For personal property, this includes:
a. Successfully completed college or professional-level coursework that is relevant to the property being valued, and
b. Must have at least 2 years of experience in the trade or business of buying, selling, or valuing the type of property being valued, and
c. Must fully describe in the appraisal his or her qualifying education and experience.
2. The appraiser must regularly perform appraisals for which the appraiser receives compensation, and
3. The appraiser must demonstrate verifiable education and experience in valuing the type of property being appraised.
To do this, the appraiser can make a declaration in the appraisal that, because of his or her background, experience, education, and membership in professional associations, he or she is qualified to make appraisals of the type of property being valued.
4. The individual has not been prohibited from practicing before the IRS under section 330(c) of title 31 of the United States Code at any time during the past 3-year period ending on the date of the appraisal.
5. The individual is not an excluded individual.
When the donor has a wide variety of objects, more than one qualified appraiser may be required to submit an appraisal report.
More than one appraiser may appraise the property, provided that each appraiser complies with the requirements, including signing the qualified appraisal report and Form 8283, Section B, Part III.
There is now an additional requirement to the Appraiser Declaration.
Each QUALIFIED APPRAISER is required to provide an appraiser's declaration contained in the appraisal, which must now include a statement that the appraiser understands that a Substantial and Gross Overstatement of Valuation resulting from an appraisal that the appraiser knows is for tax purposes may be subject to a penalty.
Five (5) Tips for hiring a QUALIFIED APPRAISER:
1. Hire an accredited appraiser from a leading appraisal society such as the American Society of Appraisers, (www.appraisers.org).
2. Hire an appraiser who can demonstrate competency and experience in appraising the type of property being valued.
3. Hire an appraiser who is unbiased and does not have a vested interest, (wants to buy or sell), in the object(s) to be appraised.
4. Hire an appraiser who is knowledgeable and up to date on The Pension Protection Act of 2006 and its requirements.
5. Hire an appraiser who adheres to the Uniform Standards of Professional Appraisal Practice.
Learn more about becoming current as a QUALIFIED APPRAISER by updating your education. There are many University course offerings which will help you meet the educational requirements along with your educational due diligence.
Learn more about becoming a qualified appraiser and/or remaining current in your profession by enrolling in Pratt’s course offerings in fine and decorative art appraisal.
President, Westminster Appraisal & Consultation, Ms. Olsen has been an appraiser for more than 35 years. Her American Society of Appraisers designations are Personal Property-Sports Collectibles and Memorabilia and Numismatics (coins and currency). Ms. Olsen is a frequent guest speaker and lecturer. A recognized authority on Personal Property, she is often called upon for expert witness consultation, testimony and appraisal related corporate, estate, charitable contribution and tax consultation She has been seen on PBS, heard on radio stations, quoted in USA Today, The Washington Post, Associated Press, Smart Money, The Chicago Tribune and numerous other publications. She has published articles about the appraisal profession, professional development, sports memorabilia, and co-authored "The Gold Book, A Guide to Commonly Traded Gold Bullion Coins and Bars" and "The Platinum and Palladium Buyer's Guide."
Ms. Olsen has taught Personal Property Principles of Valuation, Connoisseurship and Professional Development Courses at The University of California at Irvine (UCI), Northwestern University (NWU), George Washington University (GWU), The University of Missouri at Kansas City (UMKC), Pratt Institute, The University of Missouri at Columbia (UMC), University of Georgia (UGA), University of Tennessee-Knoxville (UTK), and Rhode Island School of Design (RISD). She is an Education Consultant to Pratt Institute, and a member of the UCI Advisory Committee and is the recipient of the Distinguished Instructor Award from UCI.