Practice advice for appraisers facing an IRS appeals process

Diane Ryan is the IRS’ Chief of Appeals.  “I’d like to give you some practice tips you can use,” she said. speaking at BVR's Tax and Valuation conference in DC this morning. “We see every kind of work stream in my office.  It’s a fascinating place to be in tax because you see everything.”  The Office of Appeals is part of the Service but independent, though, up until just a few years ago, “we were dependent on the valuation skills available in other parts of the Service.   This was a potential conflict.   Now we have our own cadre,” she explained.

If you’re taking an issue to Appeals and it’s a new issue to you, you should go to our website to see if it’s a coordinated issue,” Ryan says.  “This means that we have an appeals officer who is coordinating the topic across the appeals process, even if an officer in California feels differently than one in New York.”  The technical coordinating officer will offer ranges of settlement for various issues in an appeals settlement guideline in redacted form from the website.

Other hot issues:

  1. “We have centralized our estate and gift officers in two teams.  This gives us specialization of not only the appeals officers but also the management over them,” Ryan says.  This change occurred at the end of the summer.
  2. “It’s not effective to take a strong point against us,” she suggests.  “We’re more prone to start with an appraisal that appears reasonable on first glance, and tweak it.”  Ryan warns appraisers that the Office of Appeals is not a place where they split the difference between widely divergent conclusions.
  3. What’s the best valuation method?  “There’s a facts and circumstances decision here,” she says.   “It’s not always the income method.”
  4. Here’s what her staff sees on appraisals?  “First, there’s a concern that there’s a deterioration in the quality of appraisals, perhaps because of the economy.”  But, more commonly, not looking at the three approaches, including math errors, including data sets that aren’t related to the narrative—these are the kinds of red flags the Office of Appeals is seeing.

Ryan advises using the “Fast Track” appeals process to save every one’s resources.   She says “it takes 139 days on average for the normal appeals process to prepare files to begin.   Compare this to the average of 80 days to resolve a Fast Track appeal,” she says.  “You have every one with an interest in the room, so it’s effective and creative with a focus on resolution.”  Ryan received a round of laughter when she compared the resolution process to romance; “be sure not to become too attached to your position,” she said.