Henry Lane Hull, owner of Commonwealth Antiques & Appraisals in Heathsville, Va. is not a qualified, certified, licensed appraiser and is operating in violation of three federal laws. As a consequence, his appraisals are unlawful, which make any and all of his appraisals used for insurance, estate, auctions, or other valuation purposes, or filed in court records null and void and can be challenged in court. Reputable alternatives exist; lawful appraisers from Richmond and D.C. will not charge travel costs to appraise your personal property. NEVER, EVER USE HIS SERVICES!
HULL’S IRS VIOLATIONS
1) Hull is in violation of IRS Codes §170(f)(11) and §6695A.
A) He is not a qualified appraiser because he fails to meet Section 170(f)(11)(E)(ii). “A qualified appraiser is an individual who meets the following requirements. 1. The individual either a. Has earned an appraisal designation from a recognized professional appraiser organization. For property other than real property the appraiser must have successfully completed … professional-level coursework relevant to the property being valued ... and must fully describe in the appraisal his or her qualifying education. 3. The individual demonstrates verifiable education and experience in valuing the type of property being appraised. To do this, the appraiser can make a declaration in the appraisal that, because of his or her background, experience, education, and membership in professional associations.” [Emphasis mine.] IRS Pub 561. Hull has not earned a designation from any of the three recognized organizations, and has not completed coursework for the property, lacks qualifying education, and is not a member in a professional association. Hull’s degree in history does not qualify as coursework related to the property. I was unable to find any evidence that he successfully completed and passed the USPAP exam.
B) Continued from above: “5. The individual is not an excluded individual.” “Excluded Individuals. The following persons cannot be qualified appraisers with respect to particular property. 1. The donor of the property. 2. The donee of the property. 3. A party to the transaction in which the donor acquired the property being appraised. This applies to the person who … gave the property to the donor. 6. An appraiser who appraises regularly for a person in (1), (2), or (3).” IRS Pub 561. Because Manson was a party to the transaction and gave me (the donor) the property he qualifies as #3. Because Hull appraises regularly for a person in # 3, namely Manson, Hull is an excluded individual. As an excluded individual, he does not meet the criteria for a qualified appraiser.
C) Hull failed to include with his appraisal completed and signed Form 8283, Section B, Part III, which includes his Federal Taxpayer ID #. “The declaration required under Regulations Section §170A-13(c)(5)(i) and Section §170 (f)(11)(E) must include an additional statement that the appraiser understands that a substantial or gross valuation misstatement resulting from an appraisal.” (See D.)
D) “Revision to appraiser declaration. For returns filed after February 16, 2007, the declaration required under §1.170A-13(c)(5)(i) must include an additional statement that the appraiser 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 under §6695A.” Hull omitted this statement from his appraisal and refused to be forthcoming with it upon request.
E) “Under §170(f)(11)(C), taxpayers are required to obtain a qualified appraisal for donated property for which a deduction of more than $5,000 is claimed.” Hull’s appraisal lacks all the elements of a qualified appraisal and he refused to be forthcoming with them upon request for tax purposes, which constitutes noncompliance of federal law and “willful neglect.”
F) “Information included in qualified appraisal. A qualified appraisal must include the following information: 5. The name, address, and taxpayer identification number of the qualified appraiser and, if the appraiser is … an independent contractor engaged by a person other than the donor, the name, address, and taxpayer identification number of the … person who employs or engages the appraiser.” Hull failed to include with his appraisal Manson’s Federal Taxpayer ID #. “11.The specific basis for the valuation, such as any specific comparable sales transaction.” (See below) IRS Pub 561.
G) “Appraisals. The appraisal will not be given much weight if: All the factors that apply are not considered.” Hull failed to factor into his estimates up-to-date marketplace elements of rarity, scarcity, current desirability, and condition for the items he appraised. “The opinion is not supported with facts, such as … comparable sales.” Hull omitted from his appraisal any data of comparable sales. “The opinion is not consistent with known facts.” Hull’s opinions are inconsistent with all auction houses consulted, whose estimates form a consensus. IRS Pub 561.
H) “Household Goods. The FMV is used household goods, such as furniture, appliances, and linens, is usually much lower than the price paid when new. Such used property may have little or not market value because of its worn condition. You cannot take a deduction for household goods donated after August 17, 2006, unless they are in good used condition or better. Used Clothing. You cannot take a deduction for clothing donated after August 17, 2006, unless it is in good used condition or better.” IRS Pub 561. Hull engaged in gross valuation and misstatement of Miscellaneous furnishings, silver, glassware, and other decorative items under $50 ea. items, and Miscellaneous household goods: ordinary linens, pots, pans, utensils, clothing.
HULL’S PPA VIOLATIONS
1) Hull is in violation of Section §1219 of the Pension Protection Act of 2006 (PPA), P.L. No. 109-280, 120 Stat.780 (2006).
A) Hull inflated the values for 47 out of 67, or ¾, of the items distributed to me, a violation of Section 6695A. “Substantial and Gross Valuation Misstatements Attributable to Incorrect Appraisals. (a) Imposition of Penalty. If (1) a person prepares an appraisal knows or reasonably should have known, that the appraisal would be used in connection with a return or a claim for a refund, and (2) the claimed value of the property on a return or claim for refund which is based on such appraisal results in a substantial valuation misstatement under chapter 1 (within the meaning of section 6662(e)), or a gross valuation misstatement (within the meaning of section 6662(h)), with respect to such property, then such person shall pay a penalty in the amount determined under subsection (b).” Therefore, Hull is in violation of Public Law No. 109-280.
B) Hull is not a qualified appraiser according to Section 6695A (c) Qualified Appraisers and Appraisals. “(ii) Qualified Appraiser. Except as provided in clause (iii), the term ‘qualified appraiser’ means as individual who (I) has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and [emphasis mine] experience requirements set forth in regulations prescribed by the Secretary, (iii) Specific Appraisals. An individual shall not be treated as a qualified appraiser with respect to any specific appraisal unless (I) the individual demonstrates verifiable education and [emphasis mine] experience in valuing the type of property subject to the appraisal.” Hull has not met minimum education requirements or demonstrated verifiable education. Education refers to the following: college or advanced degree or specialized training in the subject matter, and successfully completing the 15-hour USPAP course and passing its exam, and successfully completing the 7-hour refresher course every two years. Hull’s degree is in Russian history and I have found no evidence of his USPAP credentials.
C) “Section 1219 of the PPA amends §170(f)(11)(e) and provides statutory definitions of a qualified appraisal and qualified appraiser.”
D) Hull remains unaccredited despite the PPA stipulation that appraisers must be certified members of accredited organizations. The American Society of Appraisers (ASA), Appraisers Association of America (AAA), and International Society of Appraisers (ISA) are the only three organizations that qualify as accredited because only they regulate appraisers through membership standards and imposing disciplinary action. Hull is a member of the Certified Appraisers Guild of America (CAGA), a social club that has no membership standards, imposes no sanctions, and therefore possess no criteria for certifying members. It is not recognized by the IRS, PPA, The Appraisal Foundation, nor is it taken seriously by professionals, e.g., trust officers, reputable attorneys, banks, etc. Therefore, for the last two years, Hull has worked illegally, that is, in violation of federal law. Manson is culpable because he knowingly contracted and paid for illegal services out of estate assets.
HULL’S USPAP VIOLATIONS
1) Hull is in violation of the following Uniform Standards of Professional Appraisal Practice (USPAP) Rules:
A) Hull is not a qualified appraiser according to The Appraisal Foundation because he is not a member of an organization affiliated with the Foundation. “Certification of qualified appraisers of personal property may be made by any impartial entity, for example, an organization of appraisal users or a society of appraisers affiliated with The Appraisal Foundation.”
B) Management (Ethics Rule). “It is unethical for an appraiser to accept an assignment, or to have a compensation arrangement for an assignment, that is contingent on any of the following: 2. a direction in assignment results that favors the cause of the client.” Per Manson’s instructions, Hull lowered by 40% all estimates in his Nov 2005 appraisal for his Mar 2006 appraisal, a violation of Rule 2. And “5. the occurrence of a subsequent event directly related to the appraiser’s opinions and specific to the assignment’s purpose.” Manson routinely hires Hull to do both an appraisal and estate sale for estates he is administering. Therefore, Hull’s re-appraisal was done with the expectation of holding an estate sale, a violation of this Rule.
C) Competency Rule. “Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment correctly; or alternatively, must: 2. take all steps necessary or appropriate to complete the assignment competently; and 3. describe the lack of knowledge and/or experience and the steps taken to complete the assignment competently in the report.” His lack of knowledge and experience re: appraising historical documents and authenticating signatures caused him to omit from the appraisal 26 potentially very valuable documents, Civil War-era daguerreotypes, and ceremonial weapons that Manson distributed to sister. His failure to take steps to complete the assignment completely violates this Rule.
D) Problem Identification (Scope of Work Rule), and Standards Rule 7-2(a)(b). “An appraiser must gather and analyze information about those assignment elements that are necessary to properly identify the appraisal, appraisal review or appraisal consulting problem to be solved. In an appraisal assignment, for example, identification of the problem to be solved requires the appraiser to identify the following assignment elements: client and any other intended users, intended use of the appraiser’s opinions and conclusions.” Manson provided a copy of Hull’s appraisal and distributed personal property to the beneficiaries, who constitute “other intended users”; therefore, Hull’s failure to prepare for all contingencies of “intended use” i.e., taxes, by including Form 8283 with his appraisal constitutes a violation of this Rule.
E) His Statement of Qualifications states that “He is comfortable familiar with IRS reporting requirements for estate settlement.” This indicates he is aware that his appraisal may be used by beneficiaries in ways that will involve the IRS. Therefore, he must comply with the IRS requirement to include in his appraisal a completed and signed Form 8283, Section B, Part III, which includes his Federal Taxpayer ID #.
F) Scope of Work Acceptability (Scope of Work Rule). “An appraiser must not allow assignment conditions to limit the scope of work to such a degree that the assignment results are not credible in the context of the intended use.” Hull’s failure to allow for tax consequences by omitting Form 8283 limited the scope of work so the appraisal may not be credible for tax purposes. In so doing, he violated this Rule.
G) Scope of Work Acceptability (Scope of Work Rule). “An appraiser must not allow the intended use of an appraisal or a client’s objectives to cause the assignment results to be biased.” By (1) deleting all items under $50.00 in the Nov 2005 appraisal from the Mar 2006 appraisal, then Manson distributing 100% of them to sister, Hull biased the assignment and First Accounting; (2) including in the Mar 2006 appraisal items he had excluded from the Nov 2005 appraisal as not being valuable enough o be worthy of inclusion in order to sell them at the estate sale, Hull allowed his intended use of the assignment to bias the results.
H) Standard 7. Personal Property Appraisal Development. Standards Rule 7-1(b). “In developing a personal property appraisal, an appraiser must: not commit a substantial error of omission or commission that significantly affects an appraisal.” By omitting 26 historical documents, Hull committed and error of omission that affects the appraisal and First Accounting. “(c) not render appraisal services in a careless or negligent manner, such as by making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affect the credibility of those results.” By inflating values for 47 out of 67 items distributed to me and lowering or deleting values for 160 of the items distributed to sister, Hull made a series of errors that affect the credibility of his appraisal and the First Accounting.
I) Standards Rule 7-2. “In developing a personal property appraisal, an appraiser must: “(e) Identify the characteristics of the property that are relevant to the type and definition of value, including: (ii) sufficient characteristics to establish the relative quality of item within its type.” Hull inflated values for 9 items distributed to me that were of such poor quality or were knock-offs no auction house, consignment shop, or thrift store would accept them.
J) Standards Rule 7-3. “In developing a personal property appraisal, when necessary for credible assignment results, an appraiser must: (a) identify the effect of highest and best use by measuring and analyzing the current use and alternative uses [emphasis mine] to encompass what is profitable, legal, and physically possible, as relevant to the type and definition of value and intended use of the appraisal.” “Alternative uses” includes uses other than estate sales, i.e., auction house sales. Hull’s estimates were, on average, 2.5 times higher than the estimates provided by reputable, international auction houses. By inflating estimates, he failed to “identify the highest and best use,” (i.e., auction houses) “and alternative uses,” (i.e., consignment shops) “to encompass what is profitable” to the detriment of the beneficiaries who based their distribution choices on his erroneous estimates; and (c) “analyze the relevant economic conditions at the time of valuation, including market acceptability of the property and supply, demand, scarcity, or rarity.” By overestimating items by more than double (2.5 times), Hull clearly demonstrated that he is out of touch with the current marketplace and with what constitutes marketability. This is further proven by the (1) consensus among auction house on estimates, and (2) closer alignment between auction house estimates and actual sales returns.
K) Standards Rule 7-6. “In developing a personal property appraisal, an appraiser must: (b) reconcile the applicability or suitability of the approaches used to arrive at the value conclusions(s).” This goes to intent. All along, Hull expected to sell the items at an estate sale, which is why (1) First, he changed the Most Common Market from the auction market in the United States (Nov 2005) to Tidewater Virginia (Mar 2006). (2) Second, he included in the Mar 2006 items he had excluded from the Nov 2005 appraisal as not being valuable enough to be worthy of inclusion. (3) However, he unnecessarily re-appraised them (at a cost to the estate) not to provide a more accurate estate appraisal (since their value had not increased from Nov to Mar) but in order to set down a base sale price on which to base his 20% commission when he sold them at the estate sale. In other words, he charged the estate twice for the same work, the second time for the illegal purpose of profiting his business.
L) Standards Rule 8-2. “Each written personal property appraisal report must be prepared under one of the following three options and prominently state which option is used: Self-Contained Appraisal Report, Summary Appraisal Report, or Restricted Use Appraisal Report.” Hull’s appraisal does not state any of the above. Because it does not identify it as a Restricted Use Appraisal Report, its use is not restricted only to the client, Manson, or only for the purpose of estate settlement but can be used by other users and for other intended uses. Further, Hull’s omission confirms that he knew or should have known the appraisal would be used for tax purposes. Therefore, he engaged in willful neglect by omitting Form 8283 and in intentional noncompliance with federal law by refusing to be forthcoming with it on request.
M) Standards Rule 8-3. “Each written personal property appraisal report must contain a signed certification that is similar in content to the following form: --my compensation for completing this assignment is not contingent upon the occurrence of a subsequent event directly related to the intended use of this appraisal.” Hull’s appraisal omits the above required statement. Indeed, Hull’s compensation for re-appraising was not only contingent on using his appraisal in a subsequent estate sale, the estate sale was his reason for re-appraising the items (See J above). “Comment: A signed certification is an integral part of the appraisal report. An appraiser who signs any part of the appraisal report, including a letter of transmittal, must also sign this certification.” Hull’s appraisal is unsigned; his accompanying letter of transmittal is signed. Therefore, he violated Rule 8-3.
N) Failed to meet the Personal Property Appraiser Minimum Qualifications Criteria I, II, and IV mandated by the Appraisal Qualifying Board of The Appraisal Foundation, a government regulatory agency authorized by FIREAA, the Congressional Act of 1987, which established and promotes USPAP.