The importance of working with a qualified art appraiser
A recent ruling by the 9th Circuit Court affirmed a U.S. Tax Court opinion that found an appraisal from an esteemed auction house is not adequate assurance of appraisal expertise or competency. On Friday, July 26, The Appraisal Foundation (TAF) released a press release on the ruling.
Commenting on the ruling and the TAF release, ISA President Perri Guthrie, ISA CAPP, states:
"As an Appraisal Foundation Sponsor promoting public trust through appraisal standards, qualifications and practices, the International Society of Appraisers welcomes the Foundation’s announcement regarding the recent findings of the 9th Circuit Court in the Estate of Kollsman vs Commissioner case. This pivotal ruling, upholding earlier U.S. Tax Court opinion supports ISA’s ongoing mission of advancing excellence in the personal property appraisal profession."
Read below for the full Appraisal Foundation press release, which can also be found on the Appraisal Foundation website.
PRESS RELEASE: The Appraisal Foundation Applauds Circuit Court Ruling Affirming Primacy of Personal Property Appraisal Profession
To protect asset value, consumers must select a qualified and independent appraiser
(Washington, DC) – The Appraisal Foundation, the nation’s foremost authority on valuation services, applauds the recent 9th Circuit Court ruling that agreed with a U.S. Tax Court opinion that found an appraisal from an esteemed auction house is not adequate assurance of appraisal expertise or competency.
With this ruling, the professionalism of personal property appraisers has been confirmed for the second time by the judicial system in the United States. This is a game-changer for the primacy of the personal property appraisal profession, and for protecting consumers from biased and uninformed appraisals that can result in significant financial repercussions.
“The 9th Circuit Court ruling is the culmination of dedicated personal property appraisers who committed to establishing qualifications and standards to raise the professionalism of the personal property appraisal discipline,” said David Bunton, president of The Appraisal Foundation. “The Appraiser Qualifications Board (AQB) published the first qualification criteria for personal property appraisers in 1998, and updated it most recently as of January 1, 2018. It is also worth noting that standards for personal property appraising have been part of the Appraisal Standards Board’s Uniform Standards of Professional Appraisal Practice (USPAP) since its inception in 1987.”
“Consumers are the biggest beneficiaries of this ruling. Personal property assets will be better protected when a qualified and independent appraiser is retained to value one’s personal property assets,” said John Brenan, vice president of appraisal issues at The Appraisal Foundation. “This also means wealth managers and estate attorneys now have a greater fiduciary duty to their clients to fully understand appraiser qualification criteria and appraisal standards when vetting personal property appraisal experts.”
The ruling arises from the case of Estate of Kollsman vs. Commissioner. The Estate hired a premiere auction house to conduct an appraisal of the estate’s art collection. The U.S. Tax Court rejected the valuation of the auction house expert because of bias and a lack of objective evidence. The IRS retained the services of a personal property appraiser, who met the qualifications established by the AQB and completed an appraisal that was compliant with USPAP.
The IRS appraisal expert found two of the paintings were significantly undervalued. The court also found that the auction house expert had a conflict of interest as the appraiser in question also sought to represent the paintings at auction. The 9th Circuit Court took the case up on appeal and agreed with U.S. Tax Court opinion.
The Appraisal Foundation is the nation’s foremost authority on the valuation profession. The organization sets the Congressionally-authorized standards and qualifications for real estate appraisers, and provides voluntary guidance on recognized valuation methods and techniques for all valuation professionals. This work advances the profession by ensuring appraisals are independent, consistent, and objective. More information on The Appraisal Foundation is available at www.appraisalfoundation.org.