The American Society of Appraisers in 1992, the Institute of Business Appraisers in 1993 and the National Association of Certified Valuation Analysts in 1993 each established its own set of standards, each claiming to be the “true religion.” The turf war raged on until 2006 when The Pension Protection Act of 2006 settled the issue by establishing requirements for “qualified” appraisers and appraisal reports as far as most federal matters are concerned.
In 2006, the IRS issued notice 2006-96 which provided guidance on the policies in the PP Act. The notice declared USPAP as the “generally accepted appraisal standard,” however it did leave the door open to alternative standards if they surpassed USPAP standards, but the use of them would need to be defended. It did not however establish a requirement for state licensing of business and personal property appraisers.
So what is a poor practitioner to do? The answer is very simple – if you have a client that needs a business or personal property appraisal) say for estate or gift tax purposes, or in an “equitable distribution” case in a divorce or dissenting shareholders suit, require that appraisals be done to USPAP standards. You will thereby comply with the PPA of 2006 requirements for standards End of argument.
To find out more about USPAP standards go http://www.appraisalfoundation.org.
