IRS issues guidance on appraisal requirements for non-cash charitable contributions of property.

In Notice 2006-96, the Internal Revenue Service issued transitional guidance on the new definitions of "qualified appraisal" and "qualified appraiser" in [section] 170(f)(11) of the Internal Revenue Code, and new [section] 6695A of the Code regarding substantial or gross valuation misstatements, as added by [section] 1219 of the Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780 (2006) (the "PPA").

The Service and the Treasury Department expect to issue regulations under [section] 170(f)(11). Until those regulations are effective, taxpayers may rely on Notice 2006-96 to comply with the new provisions added by [section] 1219 of the PPA.

Some key provisions for members in this transitional guidance are:

* The guidance specifically mentions the Uniform Standards of Professional Appraisal Practice, which are promulgated by the Appraisal Foundation, in its discussion of generally accepted appraisal standards.

* The guidance defines an appraisal designation and the appropriate education/experience of the qualified appraiser in valuing the type of property.

* The appraiser will be required to file a statement that he or she understands that a substantial or gross valuation misstatement resulting from an appraisal of the value of property that the appraiser knows, or reasonably should have known, would be used in connection with a return or claim for refund, may subject the appraiser to a civil penalty.

The new IRS guidance is available at www.irs.gov/pub/irs-drop/n-06-96.pdf.

In another action, the Service and the Treasury Department have asked for comments containing suggestions for future guidance under [section] 170(f)(11), including regulations. In particular, comments are requested concerning the definition of the following terms: (1) "generally accepted appraisal standards" in [section] 170(f)(11)(E)(i)(II); (2) "appraisal designation from a recognized professional appraisal organization" in [section] 170(f)(11)(E)(ii)(I); (3) "minimum education and experience requirements" in [section] 170(f)(11)(E)(ii)(I); and (4) "verifiable education and experience in valuing the type of property subject to the appraisal" in [section]170(f)(11)(E)(iii)(I). Comments also are requested on the potential impact any guidance under [section] 170(f)(11) may have on small businesses. Comments should refer to Notice 2006-96 and be submitted by Jan. 17, 2007, to: Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044, Attn: CC:PA:LPD:PR, Room 5203. Alternatively, comments may be submitted electronically via e-mail to: [e-mail].