ASA asks IRS to eliminate Letter 4477 and establish due process for appraiser penalties

Last fall, we reported on the “dangerous” implications of Letter 4477, the IRS internal memorandum that would permit IRS agents and examiners—even those lacking BV accreditation or appraisal experience—to issue a penalty citation without consulting the appraiser or a Field Specialist Engineer (see BVWire™# 85-3). The American Society of Appraisers requested a formal meeting with the IRS, and presented its Statement…Regarding the Process for Assessing Civil Money Penalties Against Appraisers for Valuation Misstatements during a panel discussion in Washington, D.C. on February 18.

“Letter 4477 should be eliminated or its contents changed,” says Jay Fishman, who testified on the ASA’s behalf. Under current procedures, the mere receipt of a 4477 Letter “could be injurious to [an appraiser’s] professional standing and reputation.”

The ASA also generally objects to IRC Sec. 6695A procedures for assessing appraiser penalties, for their failure to define a “key” term in the safe harbor provision; i.e., that the appraised value was “more likely than not the proper value,” as established “to the satisfaction of the Secretary.” “What are the criteria appraisers must meet to pass [this] test?” Fishman asks, in the ASA statement. “What are the criteria and protocols appraiser must understand…to demonstrate that the appraised value is ‘more likely than not the proper value’?” Without answers or published guidance, “appraisers are being denied [due process] protections that Congress intended.”

The ASA also “respectfully” recommends that IRS reinstate its Field Specialist program, so that its valuation specialists can obtain appropriate professional credentials, and to reactivate its Valuation Policy Council “immediately.” We’ve posted the ASA’s complete, strongly worded 9-page statement to BVR’s free downloads.