The services of a qualified valuation specialist are frequently required in connection with the examination of federal tax returns involving valuation issues. If a qualified valuation specialist is not available within a local office conveniently located near the property or the point of the conference or examination, necessary valuation assistance may be requested from Appeals Appraisal Services. In those instances, an Appeals Appraisal Services valuation specialist will be assigned to the requesting office to furnish expert assistance.

Although there are no minimum criteria to enable a requester to determine whether to seek valuation assistance, the following list contains some examples of areas where assistance is available.

Valuation specialists in this office provide valuation assistance upon receipt of formal as well as informal inquiries. They can recommend expert witnesses and furnish technical expertise in the negotiation of trial and pre-trial settlements. They are available to assist at settlement conferences on the issues of valuation.

In instances where a taxpayer has secured opinions or appraisals from outside experts, a valuation specialist can assist by preparing a critique of the documents.

Valuation specialists will recommend acceptance or adjustments to the value claimed by the taxpayer on the return.

The valuation specialists will also work closely with other Operating Divisions (LMSB, SBSE, TE/GE and W&I) to develop, review, present and furnish professional and technical valuation training and material.

The valuation specialists can be made available to participate in field conferences. These conferences serve to acquaint field engineers and specialists with recent developments in these areas and serve to alert the Appeals' representatives of potential problems and/or the need for further action or published positions in troublesome areas.

Appeals Appraisal Services furnishes expert assistance in litigation matters in response to requests from the Office of Chief Counsel when cases are being considered by Government attorneys for trial, during preparations for trial, at court proceedings, in studies of transcripts for briefing, and in connection with subsequent procedures related to final disposition of litigation including contemplations for appeal or judicial decisions.

Requests for assistance in litigation are received from the Tax Litigation Division of the Office of Chief Counsel, District Counsel and Regional Counsel and the Tax Division of the DOJ. Requests are also received from General Litigation Division and Disclosure Division.

Assistance requested in litigating activities applies to data and information required to properly present and interpret factual matters at issue in litigation in the U.S. Tax Court, U.S. Claims Court, U.S. Bankruptcy Court, the various U.S. District Courts and U.S. Courts of Appeals. The assistance relates, but is not confined to matters at issue involving valuation, and related accounting features. Government attorneys generally seek help that can be given by specialists who are professionally qualified as economists, valuation specialists, real estate appraisers, art appraisers, financial analysts, accountants, and in various specialized areas.

When expertise on factual matters is not available within Appeals Appraisal Services, specialists may be asked to assist Government attorneys in obtaining help from other Service personnel or from experts outside the Service.

Generally, the requested assistance requires review, analysis, and, when necessary, enlargement of the factual background found in the files reflecting Service action prior to litigation. Independent investigation and research often are necessary for preparing an unbiased analytical report containing appropriate findings and recommendations. The report may be used by Government counsel in an overall evaluation of the settlement potential of a case in relation to the litigation hazards of the valuation issues involved. The initiator of the report is available to Government counsel for participation in settlement conferences that may or may not be attended by experts representing taxpayers.

In the event that settlement is not obtained and trial is necessary, Valuation specialists may be presented to the courts as expert witnesses to explain and clarify the findings in their reports.

After a trial, Government counsel may request further assistance in studying transcripts of the court records and in preparing factual information and analyses for use in briefs. This work is not limited to initial trial courts but extends to subsequent courts of appeal.

There are no restrictions on disclosing to the taxpayer that assistance has been requested.

In cases involving valuation problems, it will be necessary to inform the taxpayer that assistance has been requested because the Office specialist may have to contact the taxpayer.

Valuation issues in estate and gift tax cases with tax of $ 10 million, or more, are required to be submitted to the Appeals Appraisal Services in for consultation. It is important that these issues be identified and submitted at the earliest possible time during the Appeals process.

The Appeals Appraisal Services will recommend values, identify strengths and weaknesses in both the government's and taxpayer's expert report or position, and provide any other assistance that will bring about final resolution of the valuation issues.

If the requested assistance involves the valuation of closely held securities, the requester should discuss with the specialist what data should accompany the formal written request for assistance.

The following is a recommended list of information that should be sent with the request for valuation assistance on a closely held security issue:

If the requested assistance involves the valuation of intangibles or the allocation of a purchase price of a business interest among the assets acquired, the requestor should discuss with the specialist what data should accompany the formal written request for assistance.

The following is a recommended list of information that should be sent with the request for valuation assistance of tangible or intangible assets:

If the requested assistance involves the valuation of real property, the requester should discuss with the specialist what data should accompany the formal written request for assistance.

The following is a recommended list of information that should be sent with the request for valuation assistance of REITS:

The manager of any Service requester who has received assistance from Appeals Appraisal Services should insure that a feedback report is prepared at the time of case disposition. Since the report does not require a specific form there should be appropriately sufficient information to identify the case. The report should clearly explain whether or not the valuation assistance aided in resolving the issue. The report should be mailed to:
Internal Revenue Service Appeals Appraisal Services
Room 5020, South Bldg.
950 L"'" Enfant Plaza, SW
Washington, DC 20024

To further enhance the valuation assistance provided by Appeals Appraisal Services, requesters are encouraged to include comments and attach any supporting statements that would be beneficial to the viability of this program.

Requests for valuation assistance on works of art should include the following information and items necessary for determining the fair market value of each object.

Any pertinent factors or knowledge gathered as to the accuracy of the claimed value should be set out on a separate page in the request.

While the items listed in a. - h. above represent the ideal informational background required for valuation determinations by Art Appraisal Services, it is understood that each item of information may not be readily available in every case. However, the validity of the value findings and recommendations by the Art Advisory Panel is greatly enhanced and facilitated by complete and accurate information on each object of art to be reviewed.

The Commissioner maintains an Art Advisory Panel of nationally prominent art museum directors, curators and art dealers to aid the Service in the review of Service-selected cases involving valuations by the taxpayer of major art objects -- principally American and European paintings and sculpture, Decorative Arts and Antiques. Art Appraisal Services provides staff support for the Panel and also provides valuation assistance on other art objects.

If the Panel members question the taxpayer's value, they will so indicate and recommend a specific valuation. Such recommendations become the position of the IRS. Later, if agreement with a taxpayer is not secured at the Panel's recommended value, Art Appraisal Services may be contacted to provide additional information and valuation data in support of the Panel's recommended value.

When necessary, Art Appraisal Services will arrange with prominent art authorities to make detailed appraisals for cases which involve significant indications of tax abuse or where a wide divergence of fair market value opinion exists. This appraisal program supplements the Art Advisory Panel review when case facts warrant this action.

Art Appraisal Services is also available to provide telephone assistance to requesters in determining the fair market value of many objects of art that have return values of less than $ 20,000. Requesters are encouraged to take advantage of this expert advice for such items as paintings, watercolors, prints, lithographs, etchings, drawings and sculpture. An Art Appraisal Services appraiser can be reached at 202-435–5609. However, prior to making a telephone call to the Art Office to discuss the value of any item, the requester should ascertain as many as possible of the following essential facts necessary for determining its fair market value:

The complete referral file (request for valuation assistance with the essential information and material identified above) will be reviewed and additional research will be conducted by Art Appraisal Services prior to referral to the Art Advisory Panel or an outside appraiser.

A fixed schedule of meeting dates for the Art Advisory Panel has not been established. However, in recent years it has become the practice of the Panel to meet approximately twice in each specialty area (Paintings and Sculpture; Decorative Arts and Antiques) in each calendar year. Notice of these closed meetings are published in the Federal Register usually six weeks prior to each meeting date. Accordingly, requests for valuation assistance should be initiated as early as possible in the examination of returns involving works of art in order to allow sufficient time for Art Appraisal Services review procedures (by February 15th for Spring meeting and August 15th for Fall meeting).

To assist in case planning and control, Art Appraisal Services will advise the requester of estimated completion dates especially when facts and circumstances in specific cases indicate any abnormal delay in the completion date.

In the final disposition of a case by Art Appraisal Services, recommendations for acceptance or rejection of claimed values will be made to the requester based primarily on the Panel's conclusions.

Due to the unique nature of the subject matter reviewed by the Art Advisory Panel and their extraordinarily high degree of expertise, appeals officers contemplating substantial concessions to values recommended by the Panel should first consult with the Chief of Art Appraisal Services at 202-435–5609.

Requests for information regarding the status of specific cases referred for art valuation assistance may be obtained by contacting Art Appraisal Services.

A closing memorandum report of findings and recommendations is prepared on each case referred to the Office of Art Appraisal Services for valuation assistance.

Form 8256, Art Valuation, will be used on requests from Service personnel on cases referred for assistance by the Art Appraisal Services or the Commissioner's Art Advisory Panel. The appraisal specialist will complete Part I of Form 8256 and attach it to the Office of Art Appraisal Services closing memorandum report which will be forwarded to the manager of the requester employee.

The manager of any Service requester who has received assistance from Art Appraisal Services will ensure that the information found in Part I of Form 8256 is updated by completing the applicable portions of Part II immediately upon closing the case.