[Federal Register Volume 80, Number 142 (Friday, July 24, 2015)]
[Notices]
[Pages 44196-44198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18115]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service


Art Advisory Panel--Notice of Availability of Report of 2014 
Closed Meetings

AGENCY: Internal Revenue Service, Treasury.

ACTION: Notice.

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SUMMARY: Pursuant to 5 U.S.C. App. 2, section 10(d), of the Federal 
Advisory Committee Act, and 5 U.S.C. 552b, of the Government in the 
Sunshine Act, a report summarizing the closed meeting activities of the 
Art Advisory Panel during Fiscal Year 2014 has been prepared. A copy of 
this report has been filed with the Assistant Secretary for Management 
of the Department of the Treasury.

DATES: Effective Date: This notice is effective July 24, 2015.

ADDRESSES: The report is available for public inspection and requests 
for copies should be addressed to: Internal Revenue Service, Freedom of 
Information Reading Room, Room 1621, 1111 Constitution Avenue NW., 
Washington, DC 20224, Telephone number (202) 622-5164 (not a toll free 
number). The report is also available at www.irs.gov.

FOR FURTHER INFORMATION CONTACT: Maricarmen R. Cuello, AP:SO:AAS, 
Internal Revenue Service/Appeals, 51 SW. 1st Avenue, Room 1014, Miami, 
FL 33130, telephone (305) 982-5364 (not a toll free telephone number).

SUPPLEMENTARY INFORMATION: It has been determined that this document is 
not a major rule as defined in E.O. 12291 and that a regulatory impact 
analysis therefore, is not required. Neither does this document 
constitute a rule subject to the Regulatory Flexibility Act (5 U.S.C. 
chapter 6).

Kirsten B. Wielobob,
Chief, Appeals.

The Art Advisory Panel of the Commissioner of Internal Revenue

Annual Summary Report for Fiscal Year 2014 (Closed meeting activity)

Overview

    Created in 1968, the Art Advisory Panel of the Commissioner of 
Internal Revenue (the Panel) provides advice and makes 
recommendations to the Art Appraisal Services (AAS) unit in the 
Office of Appeals for the Internal Revenue Service (IRS). Chartered 
under the Federal Advisory Committee Act (FACA), the Panel helps the 
IRS review and evaluate the acceptability of tangible personal 
property appraisals taxpayers submit to support the fair market 
value claimed on the wide range of works of art involved in income, 
estate, and gift tax returns.
    When a tax return selected for audit includes an appraisal of a 
single work of art or cultural property valued at $50,000 or more, 
the IRS examining agent or appeals officer must refer the case to 
AAS for possible referral to the Panel, unless a specific exception 
exists. The AAS staff supports and coordinates the Panel meetings, 
while the AAS appraisers independently review taxpayers' appraisals 
for art works not referred to the Panel.
    The Panel provides essential information to help foster 
voluntary compliance. The information and recommendations play an 
important role in the IRS's efforts to cost-effectively address the 
potentially high abuse area of art valuation. The panelists provide 
information, advice, and insight into the world of art which cannot 
be obtained effectively from within the IRS. The Panel does not 
duplicate work performed in the IRS. The AAS appraisers review 
appraisals by researching publicly available information; the Panel 
provides additional knowledge of private sales based on their 
personal experience as dealers, scholars, and museum curators, and 
from information obtained from other members of their relatively 
small industry. The panelists' knowledge is particularly beneficial 
when questions exist about the authenticity or condition of works of 
art.
    Art Appraisal Services takes steps to ensure objectivity and 
taxpayer privacy. Information provided to the panelists does not 
include the taxpayer's name, the type of tax, the tax consequences 
of any adjustments to the value, or who did the appraisal. To 
minimize the possibility that panelists recognize a taxpayer's 
entire collection, the art works are usually discussed in 
alphabetical order by artist or, in the case of decorative art, by 
object type. If there is a conflict of interest with a panelist and 
a work of art under review, the panelist does not participate in the 
discussion and is excused from that portion of the meeting.
    Before Panel meetings, AAS appraisers send photographs and 
written materials to the panelists about the works of art under

[[Page 44197]]

review. The materials include information from the taxpayer's 
appraisal, such as size, medium, physical condition, provenance, any 
comparable sales, and appraised value, and the AAS appraiser's own 
research, including available information on public and private 
sales of relevant art work.
    During their meetings, the panelists review the information 
provided, along with the research and findings of both the panelists 
and AAS appraisers. After discussing each item individually, the 
panel reaches consensus on its value. Panel discussions are lively 
and serious. Despite the different perspectives of dealers, museum 
curators, and scholars, substantial disagreements are rare. When 
disagreements happen, they generally result from insufficient 
information. In these cases, the panelists may recommend additional 
research, such as inspecting the property or consulting with 
additional experts, before making a recommendation as to value. Once 
the AAS appraiser completes the additional work, the item may be 
brought up for review at a subsequent Panel meeting.
    The Panel's recommendations are advisory. The AAS staff reviews 
all of the Panel's recommendations, which become the position of the 
IRS only with AAS concurrence. In Fiscal Year 2014, AAS adopted in 
full 90% of the Panel's recommendations and adopted the rest in 
part.
    The AAS staff provides written reports or memos to the 
requesting IRS office, with a copy for the taxpayer, outlining the 
Panel's recommendations for any adjustments to fair market value 
with all supporting evidence.
    Taxpayers may request reconsideration of an adjusted claimed 
value only if they provide new information or probative evidence. 
The AAS staff may submit such information to the Panel for 
reconsideration at a subsequent meeting.

Panel Leadership

    The Director, Art Appraisal Services serves as the Panel Chair 
and Designated Federal Officer (DFO) for FACA purposes.

Panel Sub-Committees

    The DFO has the authority to create subcommittees or workgroups. 
Subcommittees may be established for any purpose consistent with the 
Panel's charter, and are comprised of Panel members. There are 
currently two subcommittees: the Fine Arts Panel, which reviews 
items such as paintings, sculpture, watercolors, prints, and 
drawings; and the Decorative Arts Panel, which reviews items such as 
antique furniture, decorative art, ceramics, textiles, carpets, and 
silver.

Meetings

    The Panel generally meets once or twice a year in each 
subcommittee area. Panel meetings are closed to the public since all 
portions of the meetings concern matters that are exempted from 
disclosure under the provisions of section 552b(c)(3), (4), (6) and 
(7) of Title 5 of the U.S. Code. This determination, which is 
consistent with section 10(d) of the Federal Advisory Committee Act, 
as amended (5 U.S.C. App. 2), is necessary to protect the 
confidentiality of tax returns and return information as required by 
Internal Revenue Code Sec.  6103.
    The meetings held during this reporting period included:

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                   Type                                Date                              Location
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Fine Arts................................  April 16, 2014..............  New York, NY.
Fine Arts................................  September 11, 2014..........  Washington, DC.
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    The Decorative Arts Panel did not meet in Fiscal Year 2014.

Summary of Panel Recommendations

    During Fiscal Year 2014, the Panel reviewed 315 items with an 
aggregate taxpayer valuation of $250,800,500 on 54 taxpayer cases 
under examination. The average claimed value of a charitable 
contribution item was $634,000; the average claimed value for an 
estate and gift item was $799,341.
    The Panel recommended accepting 38 percent and adjusting 62 
percent of the appraisals it reviewed. On the adjusted items, the 
Panel recommended total net adjustments of $55,706,000 in estate and 
gift tax appraisals, a 23 percent increase. Net adjustments for 
charitable contributions totaled $2,077,000, a 55 percent reduction.
    The Panel reconsidered seven items in three taxpayer cases 
originally valued at $13,235,000 by the taxpayers and $18,300,000 by 
the Panel. After reviewing the additional information, the Panel 
revised their recommendations to $17,300,000. The items from these 
three taxpayer cases are not included in the information above or 
that follows.

Comprehensive Recommendations Report

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                                                                                               Net change (panel
         Type of tax             Number of      T/P claimed       Type of           Panel         less claimed
                                   items           value         adjustment    recommendation        value)
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Estate......................              70     $32,275,000  No Change......     $32,275,000                 $0
                                          58      36,257,000  Increase.......      66,839,000         30,582,000
                                          31      18,207,000  Decrease.......      10,308,500        (7,898,500)
Gift........................              50      42,935,000  No Change......      42,935,000                  0
                                          49      66,262,500  Increase.......     113,730,000         47,467,500
                                          51      51,060,000  Decrease.......      36,615,000       (14,445,000)
Charitable Contribution.....               6       3,804,000  ALL............       1,727,000        (2,077,000)
                             -----------------------------------------------------------------------------------
    Totals..................             315     250,800,500  ...............     304,429,500         53,629,000
Items Adjusted..............             194  ..............  ...............  ..............         53,629,000
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Art Advisory Panel of the Commissioner of Internal Revenue 2014

Ms. Stephanie Barron Senior Curator of Modern Art, Los Angeles 
County Museum of Art, Los Angeles, CA
Mr. Douglas Baxter* President, The Pace Gallery, New York, NY
Mr. Leon Dalva Dalva Brothers, Inc., New York, NY
Ms. Alice Duncan Director, Gerald Peters Gallery, New York, NY
Mr. Michael Findlay Director, Acquavella Galleries, Inc., New York, 
NY
Mr. Brock Jobe Professor of American Decorative Arts, Winterthur 
Museum, Winterthur, DE
Mr. Christian Jussel Independent Scholar/Art Adviser, New York, NY
Ms. Rebecca Lawton Curator of Paintings and Sculpture, Amon Carter 
Museum, Fort Worth, TX
Ms. Barbara Mathes Barbara Mathes Gallery, New York, NY
Ms. Nancy McClelland McClelland + Rachen, New York, NY
Ms. Susan Menconi Partner, Menconi & Schoelkopf Fine Art, New York, 
NY
Mr. Howard Rehs Director, Rehs Galleries, Inc., New York, NY
Mr. James L. Reinish Principal, James Reinish & Associates, Inc., 
New York, NY
Mr. Joseph Rishel The Gisela and Dennis Alter Senior Curator of 
European Painting before 1900, and John G Johnson Collection, 
Philadelphia Museum of Art, Philadelphia, PA

[[Page 44198]]

Dr. Andrew Robison Mellon Senior Curator of Prints and Drawings, 
National Gallery of Art, Washington, DC
Mr. Louis Stern Louis Stern Fine Arts Inc., Los Angeles, CA
Dr. Scott Schaefer** Senior Curator of Paintings, J. Paul Getty 
Museum, Los Angeles, CA
Mr. David Tunick President, David Tunick, Inc., New York, NY

* Resigned in January 2015
** Changed employers and subsequently resigned in January 2015

[FR Doc. 2015-18115 Filed 7-23-15; 8:45 am]
BILLING CODE 4830-01-P