IRS elevates appraisers to "nonsigning tax return preparers" status

[The Warrior Monk]

Ah, thats nice. I wonder if I can get paid for this additional liability? Don't answer that. I already know the answer.

You bet you can, and you should.

 

[Deleted member 77547]

I have no idea what this means for us. In what circumstances would I be considered a non-signing tax return preparer? When I do my own taxes? Or when I don't do someone else's?

Probably when one does an appraisal for estate tax purposes and they're relying on the appraisal to determine tax liability.

 

[Mike Phillips]

Ah, thats nice. I wonder if I can get paid for this additional liability? Don't answer that. I already know the answer.

I'm not arguing whether it is right or wrong but some are of the opinion that a licensed professional should be held liable for the statements they make, for the content of the documents they sign and for the accuracy of their conclusions/opinions. I'm not sure if the notion that appraisers can restrict who may rely on their work in an effort to limit their liability will fly in the future. I operate from the position that "if I say it I better be ready to back it up" no matter who reads the report. Granted, I'm not a "production-oriented" appraiser.

The authors of USPAP can dance, appraisers and appraisal organizations can argue this or that - where our liability starts or stops. But when and if entities like the IRS, or the SEC or the federal courts decide "the way it is going to be" then appraisers better listen up.

 

[Elliott]

cwd & Judy,
What I think it means is, if you do 'conservation easements' and you come
up with a high number, you and the taxpayer will be considered joined at the hip.

I was having calls from a HO that wanted to take an uninsured casaulty loss
because they 'lost their privacy' when a lot of trees were blown down. I
said, gee, that isn't easy to prove and I imagine your raising a red flag to
be audited. They wanted to go ahead with it and I think I either convinced
them it was a bad idea or they found someone else.

 

[c w d]

With the points being made here I have to question where exactly does our tax preparation liability begin and end. For instance, are we liable to the IRS when we produce an appraisal for Joe Blow home owner who bought a second home for investment purposes? Are we also liable to the IRS when the lender who loaned money on that transaction basing their fees and interest rates (hence potential earnings) off the value of the home of which was indicated in our appraisal? Are we liable for the taxes on rental income we opined in the original appraisal? For how long into the future? And then maybe 10 - 15 years down the line when Joe Blow decides he doesn't want to rent the home any more and then sells the house since he will presumably sell the property at a profit or loss when compared to its original appraisal value. Do you see where I am going with this? Where does the liability start and stop?

 

[c w d]

You bet you can, and you should.

How would you even quantify that liability Dave?

 

[Kali the Boston Terrier]

cwd & Judy,
What I think it means is, if you do 'conservation easements' and you come
up with a high number, you and the taxpayer will be considered joined at the hip.

You already are joined at the hip in terms of Conservation and Preservation Easements, you can thank the Pension Act of 2006 for that liability. They mean anything prepared for the IRS...estate, gift, conservation and preservation, etc.

This is really the first shot over the bow, if you were already doing easement valuations prior...this is nothing new. But everything else just got real risky...But an an IRS Engineer (that's what they call reviewers, BTW they are not appraisers) once told me " all we want is a USPAP compliant report".

Most of this stuff should not concern you if you do an ethical and unbiased USPAP report, but the threat does make my fee go higher for the hassle. Typically I have found that your reports are more scrutinized by the IRS, if your client has tax skeltons. I usually decline people with "issues", partly because I do not need the guilt by association thing the IRS loves to do.

and for the newbies that are getting into doing IRS reports, they want Fair Market Value not Market Value...make sure you do not make a newbie mistake.

 

[The Warrior Monk]

How would you even quantify that liability Dave?

See your PM.

 

[Stone]

You already are joined at the hip in terms of Conservation and Preservation Easements, you can thank the Pension Act of 2006 for that liability. They mean anything prepared for the IRS...estate, gift, conservation and preservation, etc.

This is really the first shot over the bow, if you were already doing easement valuations prior...this is nothing new. But everything else just got real risky...But an an IRS Engineer (that's what they call reviewers, BTW they are not appraisers) once told me " all we want is a USPAP compliant report".

Most of this stuff should not concern you if you do an ethical and unbiased USPAP report, but the threat does make my fee go higher for the hassle. Typically I have found that your reports are more scrutinized by the IRS, if your client has tax skeltons. I usually decline people with "issues", partly because I do not need the guilt by association thing the IRS loves to do.

and for the newbies that are getting into doing IRS reports, they want Fair Market Value not Market Value...make sure you do not make a newbie mistake.

Good post.