Tax Legal Services · Primary-source case analysis

Tarpey v. United States: Timeshare Appraisal Activity Supported an $8 Million Promoter Penalty

By Aneeta Mishra and Timothy Chan

Published April 21, 2026

Tarpey examines promoter liability where a nonprofit donation program, affiliated closing service, and appraisal process operated as one timeshare tax-benefit enterprise.

The program marketed deductions for unwanted timeshares

James Tarpey organized a nonprofit that accepted timeshares, charged donors fees, and used an affiliated company for closings. Tarpey and associates produced valuations used to support charitable deductions.

Disqualified appraisers and inflated values supported liability

Section 6700 reaches organizing or selling a plan while making or furnishing false statements or gross valuation overstatements. The court held Tarpey knew or had reason to know that associated appraisers were disqualified and upheld imputation of their work.

The penalized activity was the integrated business

The statutory gross-income measure was not limited to appraisal fees or isolated false statements. The district court could treat the interdependent donation, closing, and valuation operation as the relevant activity.

Disposition

The Ninth Circuit affirmed more than $8 million in penalties and the district court’s income calculation. Fact-intensive control over receipts also supported inclusion of funds held through the affiliated closing account.

Key takeaways

• Verify appraiser independence and qualification before marketing deductions.
• Treat connected entities according to their actual integrated activity.
• Section 6700 exposure can extend beyond the fee tied to one statement.
• Preserve valuation support and control-of-funds evidence.