The International Fund for Animal Welfare (IFAW) recently released a 40-page report titled “Bidding Against Survival: The Elephant Poaching Crisis and the Role of Auctions in the U.S. Ivory Market.” The report is worrisome, because it appears that most U.S. auctioneers haven’t gotten the message that selling undocumented ivory is illegal, and auction buyers don’t seem to have gotten the message, either. These facts, whether they know them or not, could be extremely hazardous to their financial health, as buyers of the ivory offered at auction risk the loss of their purchases and additional fines.
The report is the result of months of undercover investigations by the IFAW, and their methodology appears to be sound.
Auctioneers wouldn’t be offering ivory if buyers weren’t bidding on it. I just did a quick search on Auctionzip.com for the keyword “ivory” and found 485 live auctions in the month of October 2014 that were offering ivory for sale in the U.S.
Most auction houses “pass the documentation buck” to the purchasers of ivory. The IFAW report states: “When asked about what kinds of documentation the auction house provided when selling ivory items, several galleries said “none” or that it was up to the buyer to secure such information. One staff member said, “The person needs to take care of themselves, if they buy the ivory.” This was a common attitude among staff at many of the auction houses visited, placing the legal responsibility for following endangered species laws on the customer. In essence, the auction houses are saying “we want to sell you the ivory and get top dollar for it, but we are not willing to provide you with provenance.”
Make no mistake: the burden of proof as to the provenance of the ivory rests with the person who is in possession of the ivory. Documentation/provenance should follow an item being sold. Auctioneers should get documentation from the sellers they represent, and bidders need to make sure that documentation is provided by the auction house. Otherwise, the purchase is at risk. How is it possible for auction bidders to know with any certainty what the provenance is of the ivory they are bidding on, if the auctioneer doesn’t provide it? It’s not possible without scientific analysis, and such analysis isn’t possible before ownership of the ivory is transferred.
Any ivory that is undocumented may be confiscated by Fish and Wildlife Officers, and fines may be levied (state as well as federal). F&W officers have confiscated ivory from auction houses, antique dealers and buyers. Proper documentation of ivory may include CITES documents for import-export ESA (Endangered Species Act) permits, or proof that the ivory meets the criteria for being an “authentic antique.”
The regulations surrounding interstate and intrastate sale and international import/export of ivory are complex and are currently in a state of flux as the government fine-tunes the requirements.
Before bidding on ivory at auction, here are two things you should know:
• Without documentation, ivory is a worthless investment. An art law report by Amy Faltman on Law.com states: “A representative of a major auction house… told me that, if asked to appraise an item which cannot be legally imported, exported or sold via interstate commerce then her position will be… that the object has no fair market value.” Market value is typically defined as the price at which a willing seller sells to a willing buyer, neither being under duress to complete the transaction. If ivory cannot be legally bought and sold, it has no value under this definition. Items in question can be expanded to include any items made using ivory parts that are not specifically exempted from the regulations.
• The purchase of ivory may have estate tax implications. According to the above art law report, the IRS Art Advisory Board has, in the past, ruled that artworks with no market value have an intrinsic artistic value that is taxable. If an estate appraiser lists the value of an ivory collection at zero, and the IRS disagrees, the estate will be responsible for paying the taxes and underpayment penalties.
The rules regarding buying, selling, importing and owning ivory and objects made using ivory are in review. If you want to know what the current rules are, check the government websites and don’t take anyone else’s word for the current status of ivory (including my advice in this article). Web content stays on the Internet for months (years, sometimes) and the regulations regarding ivory are changing too quickly for anyone’s opinion to remain correct for very long. When it comes to buying ivory at auction, the rule is: Caveat Emptor, or buyer beware.
Previously published on WorthPoint.com
Originally posted 2014-11-20 16:48:00.