There has been a great deal of ‘chatter’ lately about unqualified appraisals of autograph material. Improper and unprofessional appraisals are being provided to many unsuspecting collectors and donors. The potential financial damage to you and your collection can be devastating. Proper appraisal procedures are not being followed. Important valuation techniques are being overlooked. Untrained, incompetent appraisers are ignoring IRS regulations and appraisal standards.
There is certainly not enough room here to expound on the specifics. It is a very complex and complicated process. But here are some basic points on the subject.
Qualified autograph appraisals are formal documents that may be used by the IRS, or in court. Charitable Contributions, Donations, Estate Valuation, Gifts, Loss and Casualty Claims are some of the uses that require the appraiser to be trained and tested in the Uniform Standards of Professional Appraisal Practice. An improperly prepared appraisal could result in stiff fines as well as the required payment of back taxes, plus interest.
There have been thousands of Federal cases where an appraisal has been questioned in IRS tax court. The IRS has taken a very strong stand in this area. The time to make sure your appraisal is prepared properly and is considered a “Qualified Appraisal” is BEFORE the IRS asks you to defend it in court.
Insurance companies will rarely pay a claim on the loss of an autographed item or a damaged collection unless it has been properly appraised by a qualified, competent appraiser. The appraiser’s expertise and qualifications must be described in the appraisal. A specific intended use and purpose of the appraisal must be defined. If these basic items are not included in the appraisal, an insurance claim may be waived.
There are no current licensing requirements for personal property appraisers. Anyone can call himself or herself an appraiser. Remember, you will be the one who may suffer the consequences of a sub-standard appraisal. Those consequences could be tax penalties, or an unpaid insurance claim.
Until state and federal legislation has been passed, autograph collectors and investors must use great care in selecting a trained and knowledgeable appraiser. Just because he or she is familiar with the autograph market, does not mean they know how to prepare an accurate and qualified appraisal.
Membership in an autograph club or in even in some appraisal organizations does not make them qualified in any specific topic or subject. Some unscrupulous dealers imply that being a member of an organization makes them an expert. This truly is “fake news.” Membership, in most organizations, is open to anybody. In addition, anyone can publish a catalog or advertise in a magazine and know nothing about autographs or appraising.
Here are some tips to consider when selecting an appraiser:
DO NOT Accept An Appraisal if:
- The fee charged is based on a percentage of the total value or if the fee is based on a sliding scale related to the total value. This type of fee structure is unethical.
- It is just a listing of the items being appraised. Each item must be described in detail, including size, condition and identifying marks.
- The appraiser cannot provide you with his or her FORMAL appraisal training and qualifications, with specific expertise in autograph material.
- It is handwritten, or it is unsigned.
- The appraiser is not willing to defend it in court. You could end up there all by yourself.
When you get right to the Bottom Line, YOU are the one who is responsible for the claimed value of your collection. An improperly prepared appraisal may void an insurance claim. Your Federal Tax return may depend on an appraisal for Charitable Contributions, Estate Resolution, Gifts, Casualty Loss and other functions. The IRS may challenge what you claim as a deduction, and the burden of proof is on you.
The Qualified Appraisal, prepared by a Formally Trained Certified Appraiser is your best ‘insurance’ against serious tax liability or insurance problems relating to the value of autographed material.