{"id":18644,"date":"2025-01-24T18:13:08","date_gmt":"2025-01-24T18:13:08","guid":{"rendered":"https:\/\/www.certitrek.com\/isba\/?p=18644"},"modified":"2025-01-27T23:20:03","modified_gmt":"2025-01-27T23:20:03","slug":"new-irs-rules-for-appraisers-a-wake-up-call-for-the-industry","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/isba\/2025\/01\/24\/new-irs-rules-for-appraisers-a-wake-up-call-for-the-industry\/","title":{"rendered":"New IRS Rules for Appraisers: A Wake-Up Call for the Industry"},"content":{"rendered":"
Why These Rules Matter<\/b><\/h5>\n

On December 26, 2024, the IRS released proposed regulations that could redefine the landscape of professional appraisal practices. Many experts, including ISBA Director Howard Lewis, consider these changes to be \u201cthe most consequential IRS action since 1959.\u201d<\/span><\/p><\/blockquote>\n

The proposed rules aim to address long-standing gaps in accountability and elevate the standards for appraisers across the board. By bringing appraisers under the jurisdiction of Circular 230, the IRS is setting a precedent for ethical and professional responsibility akin to those governing attorneys and accountants. This pivotal moment signals a new era of scrutiny and professionalism within the appraisal industry.<\/span><\/p>\n

Overview of the Proposed IRS Rules for Appraisers<\/h5>\n

At the close of 2024, the IRS proposed regulations to hold appraisers accountable to higher professional standards. These changes mark a monumental update to IRS oversight, comparable to the landmark Revenue Ruling 59-60 from 1959.<\/span><\/p>\n

Key Changes Include:<\/b><\/h5>\n
    \n
  1. Appraisers are now subject to Circular 230\u2019s professional responsibility standards, ensuring accountability for ethical and competent practices.<\/span><\/li>\n
  2. The penalty prerequisite for disqualification has been removed, allowing the IRS to take direct action against misconduct.<\/span><\/li>\n
  3. Adherence to appraisal standards such as Uniform Standards of Professional Appraisal Practice (USPAP) and International Valuation Standards (IVS) is now mandatory.<\/span><\/li>\n
  4. The Office of Professional Responsibility (OPR) will oversee investigations into appraiser misconduct as part of the new IRS Rules for Appraisers. However, as Howard Lewis noted during the webinar, this role is currently fraught with uncertainty. The OPR does not have appraisers on staff, raising questions about their ability to effectively evaluate appraisal-specific issues. Howard speculated that OPR may need to hire appraisers or consult external experts to fulfill this responsibility. He emphasized the “gray” nature of this oversight, cautioning appraisers to stay vigilant as the implementation evolves.<\/li>\n<\/ol>\n
    Participant Insights: Awareness Gaps and the Need for Education<\/b><\/h5>\n

    At ISBA’s January webinar<\/a>, where the proposed regulation was discussed, a significant number of participants revealed that they were previously unaware of these proposed regulations. This highlights a pressing need for education and outreach to appraisers across the industry.<\/span><\/p>\n

    One participant shared, \u201cA number of years ago, an Ohio lawmaker tried to get Business Brokers registered.\u2019 It never happened. Governments and agencies, including the IRS, are often not good at regulating professionals. I appreciate you and ISBA and what you do.\u201d<\/span><\/p>\n

    Webinars like ISBA\u2019s play a crucial role in bridging these knowledge gaps. By staying informed and engaged, appraisers can ensure their practices align with the new standards. Continuous learning and professional development are no longer optional\u2014they are essential for success.<\/span><\/p>\n

    The Importance of Well-Written Appraisal Reports<\/b><\/h5>\n

    Howard Lewis emphasized the critical role of well-written appraisal reports in this new regulatory landscape.<\/span><\/p>\n

    Best Practices for Appraisers:<\/b><\/h5>\n