There is an Art Advisory Panel for the Internal Revenue Service (IRS) that provides asset appraisal and evaluation services for artwork included in federal income claims, gift tax cases, and estate successions.
Understanding the Art Advisory Panel
Twenty-five “renowned art experts” serve on the Art Advisory Panel without compensation. The Panel typically consists of:
- Art dealers
- Academic scholars
- Museum curators
Under the federal tax code, all works of art with a claimed value of $50,000 or more must be referred to the Panel. While the Panel serves several important purposes, its main task is ensuring that appraisals are accurate and fair—both for the owners and for the IRS. They ensure that assets are accurately valued, so collectors pay the appropriate amount of estate and gift taxes.
How the Art Advisory Panel Protects Taxpayers’ Privacy
To ensure impartiality and protect taxpayers’ privacy, the panelists only receive relevant information about the artwork and its history. They cannot view the owner’s name, the type of tax applicable to the item, or the potential tax consequences of their decision. If a Panel member has a conflict of interest, they are excluded from making an appraisal. In one recent year, the Panel’s members reviewed over 500 individual pieces of art, recommending tax adjustments totaling some $100 million.
The Importance of Getting a Good Appraisal
Estate items are usually only referred to the Art Advisory Panel if the IRS believes an artwork’s claimed appraisal could be inaccurate. While the Panel often finds in favor of taxpayers, an adverse decision could result in a larger tax bill and, in some cases, penalties.
Contact a California Attorney
If your estate includes valuable works of art, you could spare your intended heirs and beneficiaries uncertainty by accounting for your artwork before the IRS decides it needs to call in its experts. The Law Firm of Kavesh, Minor & Otis, Inc. has decades of experience helping high-net-worth Californians plan their estates and protect their precious works of art. Please send us a message online, or call us at 1-800-756-5596 to schedule your free consultation.