Anthony Venette, Manager, Valuation Services
April 30, 2025
5 Min Read
Zach Gibson/Getty Images News/Getty Images
If you have clients who need (or plan to need) a business valuation for estate-planning purposes, don’t wait until the last minute. The already lengthy backlog could be getting even longer.
In December 2024, the Internal Revenue Service proposed revisions to Circular 230. This regulation governs who may represent taxpayers before the IRS and how all the related material is formatted, presented and delivered to the IRS when representing those clients.
One provision would require appraisals submitted in IRS proceedings to comply with the Uniform Standards of Professional Appraisal Practice (USPAP) or the International Valuation Standards (IVS). Although the rule directly affects appraisers, it also has important implications for attorneys and CPAs who rely on valuations when preparing gift and estate tax returns. To ensure that these appraisals align with the new, more stringent standards, attorneys and CPAs may need to become more familiar with the underlying valuation frameworks and take additional steps to review appraisal reports before filing.
I like to tell my clients: “I can do a valuation for you in 40 minutes or 40 hours. The concluded value will be the same either way. The only difference is price and the length of the report.” It’s hard to write a USPAP report in under 100 pages. My typical reports are shorter and comply with SSVS (Statements on Standards for Valuation Services from the AICPA). This principle-based approach allows the appraiser to apply generally accepted appraisal standards while distilling the reporting to the most relevant information, thus making it easier to understand. The extra pages are arguably unnecessary and distract the reader from the most important factors of the valuation.
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Impact on Estate Planners
Though presented as technical refinement, this proposed revision to Circular 230 would also create practical problems for estate-planning professionals. Although the rule change wouldn’t alter the principles of valuation, it would impose new requirements about report formatting and documentation. That would result in slower delivery timelines, higher costs and reduced access to experienced appraisers who are already up to their eyeballs in work.
The IRS already recognizes several valuation credential holders as qualified appraisers, including the Accredited in Business Valuation (ABV), the Accredited Senior Appraiser (ASA) and the Certified Valuation Analyst (CVA), as noted in Notice 2006-96. Each credential follows a distinct professional standard. ASA holders typically follow USPAP. ABVs, credentialed by the AICPA, follow the SSVS. CVAs follow NACVA’s professional standards. All three frameworks are aligned with longstanding IRS guidance, including Revenue Ruling 59-60, which outlines the key factors that must be considered in a business valuation.
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USPAP, unlike the other standards, was designed for real estate valuation. It emerged to bring uniformity to engagements in which pricing is driven by location, square footage, rental income and cap rates. Real estate valuation is often formulaic and comparable. Business valuation isn’t.
Business valuation involves pass-through entity treatment, application of discounts for lack of marketability and control and subjective assumptions about cost of capital that may not be directly observable. It requires a thorough understanding of tax elections, equity structure and operating agreements. Business appraisers don’t benefit from more formatting rules. They need flexibility to focus on the substance of the engagement.
Professionals operating under SSVS and NACVA standards already produce reports that address all relevant factors identified by the IRS. The proposed rule wouldn’t improve valuation conclusions. It would simply force those valuation professionals to meet redundant documentation and reporting requirements initially developed for a different asset class. It would replace judgment with formatting and increase costs without increasing quality.
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Estate planners would feel the impact directly. Most firms already quote 10 to 14 weeks for valuation reports used in estate or gift filings. Many of the most experienced professionals don’t currently certify to USPAP or IVS. If those appraisers must adjust their reporting format or pursue dual credentialing, delivery times will extend further. In the current environment, this creates real risk.
Timing Considerations
Estate planning often runs on strict deadlines. Late valuations delay filings, which increase audit exposure and reduce strategic flexibility. Valuation isn’t a box to check. It’s often central to estate planning itself. When the timeline slips, the plan can break down.
Considering the massive generational wealth transfer underway, the IRS proposal also comes at the wrong time. Clients are planning gifts and filing estate tax returns in record volume. The valuation profession is already stretched thin. Any regulation that restricts access to qualified appraisers or adds procedural burdens will compound delays and raise costs for clients.
There’s no evidence that valuations performed under SSVS or NACVA standards fail to meet the IRS’s expectations. These reports are regularly accepted in audit, litigation and charitable contribution contexts. The problem the rule attempts to solve is unclear, but the problems it would create are apparent.
Public Comment
The public comment period closed in February 2025—a hearing followed in March. The IRS hasn’t released a final version of the rule. A common suggestion during the comment process was to revise the language to allow for “generally accepted valuation standards” rather than mandating USPAP or IVS. That change would preserve the goal of consistency while maintaining access to the professionals already trusted to deliver this work. Estate planners should care about the proposed changes to Circular 230 because they affect their ability to serve clients. Planners rely on valuation professionals who can connect the numbers to the legal and tax context of the plan. Appraisers working under SSVS and NACVA understand that their work must stand up in front of the IRS, in court or under examination. They don’t need new formatting rules to deliver that outcome. They need to be allowed to focus on the substance of the valuation. Circular 230 should support that.
