Appraisers (and Charities) Beware

Appraisers (and Charities) Beware

News story posted in Information Release on 9 April 2014| 1 comments
audience: National Publication | last updated: 10 April 2014

In a recent release, IR-2014-31, Karen L. Hawkins, Director of the Office of Professional Responsibility, entered into a settlement agreement with five appraisers from the same firm for violations of Circular 230. The settlement included five year suspensions for the appraisers. At issue was the perceived lack of due diligence in submitting appraisals on facade easements that were donated to charities over multiple years. The appraisers apparently used the same valuation adjustment of 15% for each of the donations, essentially "rubber stamping" the appraisals instead of exercising proper diligence. All of the Part III, of Form 8283, Non-Cash Charitable Contribution Forms were completed in a like manner.

While the penalty may seem severe, it appears that the appraisers admitted their lack of compliance and that their appraisals were unsupported by acceptable documentation. This notice does not suggest any action was taken against the charities that relied on the appraisers to supply accurate documentation. Charities, however, should take note of this action and use their own due diligence if an appraiser is to be engaged for complex valuations.

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Re: Appraisers (and Charities) Beware

The facade easement area has been the subject of appraisal abuse. That said, the IRS has also acted in an arbitrary and high-handed manner in many of these cases. The IRS is supposed to act fairly and in accordance with the law. Very often, in this area the IRS has done neither.

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