Navigating IRS Regulatory Changes: Insights from the NEBB Webinar

The appraisal industry is on the cusp of significant change following the IRS’s proposed regulations issued in December 2024. These IRS regulatory changes introduce new standards and oversight mechanisms that will significantly impact the work of professional appraisers across various sectors. To address these developments, the NEBB Institute hosted a webinar featuring insights from Howard A. Lewis, a seasoned expert with over 32 years at the IRS as National Program Manager for Engineering and Valuation Programs. Lewis also served as Executive Director of the Institute of Business Appraisers and ISBA, and he currently consults with alliantgroup, a Houston firm specializing in federal and state R&D tax credits.

The International Society of Business Appraisers (ISBA), where Lewis serves as a Director, is a premier business valuation membership association. It provides education leading to the Business Certified Appraiser (BCA) designation and offers the only Business Certified Appraiser in Review (BCA-R). Additionally, ISBA delivers advanced courses covering Financial Analysis, Going Concern – Real Property, and Building Essential BV Templates in Excel.

Understanding the New IRS Regulations

The proposed regulations, introduced under Circular 230, now formally encompass appraisers. This inclusion signifies a shift toward heightened accountability, aligning appraisers with standards traditionally applied to tax attorneys, CPAs, and enrolled agents. These IRS regulatory changes represent a significant step in ensuring consistency and reliability in appraisal practices.

Historical Context

Howard Lewis provided a historical overview of IRS oversight milestones and the evolution of IRS regulatory changes:

• 1920: ARM 34: Introduced valuation methodologies for losses due to Prohibition.
• 1968: Revenue Ruling 68-609: Established the excess earnings method for intangible assets.
• 2006: IRS Announcement 2006-96: First formal reference to the Uniform Standards of Professional Appraisal Practice (USPAP), established by The Appraisal Foundation in 1987 as the recognized ethical and performance standards for the appraisal profession.
• 2000: Kumho Tire Co. v. Carmichael: Set judicial standards for appraiser qualifications and competency.

Key Changes Introduced by the New Regulations

The IRS regulatory changes introduce several key adjustments for appraisers:

• Inclusion Under Circular 230: Appraisers are now subject to professional responsibility standards.
• Eliminating the “Penalty Prerequisite”: The IRS can directly disqualify appraisers without a prior penalty.
• Mandatory Compliance with USPAP or IVS: Strict adherence to recognized appraisal standards is now required.
• Expanded Enforcement Powers for the OPR: The Office of Professional Responsibility will oversee compliance.

Implications for Appraisers

Howard Lewis stressed the importance of:

• Clear Documentation: Showing compliance with USPAP or IVS.
• Public Participation: Submitting comments before the February 24, 2025 deadline, which marks the end of the public comment period on the proposed IRS regulations. Feedback submitted by this date will be reviewed and may influence adjustments before the final rules are enacted.
• IRS Hearing Engagement: Attending the public hearing on March 6, 2025, where stakeholders can testify or observe discussions on the proposed regulations.

Expert Insights from the Q&A Session

• Enforcement Concerns:  There is uncertainty around the IRS’s capacity to evaluate appraisal standards, particularly in light of these new regulatory changes.
• State Licensing: There is no current trend toward state-level licensing beyond existing frameworks.

Final Thoughts from Howard Lewis

Lewis reassured attendees that compliant appraisers have little to fear, as these regulations target misconduct and aim to uphold industry integrity.

Call to Action for Appraisers

• Review the proposed regulations thoroughly.
• Submit comments by February 24, 2025.
• Participate in the IRS public hearing on March 6, 2025.

Stay connected with NEBB and ISBA for updates.

Stay Ahead of Regulatory Shifts with Confidence

With IRS standards evolving and scrutiny intensifying, it’s never been more critical to stay informed — and prepared. For professionals like you, precision isn’t optional; it’s expected. That’s why NEBB Institute’s webinars are designed to give you real-time insights, actionable strategies, and expert interpretation of regulatory changes. Join the conversation, deepen your compliance knowledge, and ensure your appraisals meet — and exceed — the expectations of tomorrow’s audits.