Appraising, an Individual or Team Effort
The Pension Protection Act of 2006 (PPA), signed by President Bush last August, includes several sections relevant to the art world, specifically to appraisers. Follow-up guidance was later issued in IRS Notice 2006-96. Almost all the new regulations concerning appraisal practice have attracted sharp criticism from some practitioners, and sound praise from others. One point of contention is who can be considered a "qualified appraiser", an individual or a collective appraisal group or corporation. According to the new law, a qualified appraiser is an "individual".
The Art Dealers Association of America (ADAA), the Private Art Dealers Association (PADA) as well as many auction houses commonly provide appraisals that are inherently group efforts. Several appraisers work together to arrive at the stated opinions of value, officially stated by the company or organization. Worried that the PPA instantly disqualified this approach, some auction houses have sent the IRS recommendations to amend the legislation.
On the other hand, citing the federal government-sponsored Appraisal Foundation's own regulations, known as The Uniform Standard for Professional Appraisal Practice, USPAP, the Appraisers Association of America (AAA) supports the new legislation and the language. By USPAP definition, an "organization" simply cannot give an opinion of value.
Along with this thorny issue, other contentious points for appraisal professionals characterize the PPA legislation, such as new educational standards for appraisers, greater appraiser liability, and the increasing dependence upon USPAP. Nevertheless, in a heretofore unregulated profession, most appraisers would agree on the need for written standards to maintain high ethical and professional standards.