Under current law, a taxpayer is required to obtain a qualified appraisal for donated property for which a charitable deduction of more than $5,000 is claimed and in certain instances, an appraisal summery must be attached to the income tax return on which the deduction is claimed. As briefly discussed in the prior issue of the MSK Charitable Sector Letter, the Pension Protection Act of 2006 provided new statutory definitions of qualified appraisal and qualified appraiser for tax returns filed after August 17, 2006.

Under the new substantially more stringent standards, the term "qualified appraisal" means an appraisal that is (1) treated as a qualified appraisal under regulations and other guidance issued by the IRS, and (2) conducted by a qualified appraiser in accordance with generally accepted appraisal standards and any regulations.

The term "qualified appraiser" is defined to mean an individual who:

(1) has earned an appraisal designation from a recognized professional appraisal organization or has otherwise met minimum education and experience requirements to be determined by the IRS;

(2) regularly performs appraisals for which the individual receives compensation;

(3) demonstrates verifiable education and experience in valuing the type of property for which the appraisal is being performed;

(4) has not been prohibited from practicing before the IRS at any time during the three years preceding the date of the appraisal; and

(5) is not excluded from being a qualified appraiser under applicable Treasury regulations.