Real Estate Coalition Requests Clarification of Disaster Relief for §1031 Exchanges
On April 9th the IRS extended deadlines for the identification and purchase of properties in like-kind exchanges in response to the novel coronavirus pandemic, it is unclear whether the deadlines for the 45 day identification and 180 day acquisition periods are extended until July 15th or for an extra 120 days (which is the historically issued extension period of time). A conservative interpretation is that both dates are extended only until July 15th. Additionally, the extensions only apply to deadlines originally falling between April 1 and July 15, 2020. In the past the IRS has used the date of emergency declarations, which, in this case, is March 13th.
A coalition of 19 real estate organizations, including the Federation of Exchange Accommodators (FEA), submitted a letter today to Treasury Secretary Mnuchin and other members of Treasury and IRS. The letter thanked the Administration for the disaster relief granted April 9 in Notice 2020-23, but requested further clarification.
Specifically, the coalition requested the following clarifications:
- That the 120 day deadline postponements provided in Rev. Proc. 2018-58 Section 17 would be included in the relief granted in Notice 2020-23;
- That March 13, 2020, the date the President issued the Stafford Act emergency declaration related to the COVID-19 pandemic, be deemed to be the beginning date of the disaster period;
- That each day between March 13 and July 15, 2020 be deemed to be a separate date of the federally declared disaster for purposes of relief for like-kind exchanges under Rev. Proc. 2018-58;
- That a taxpayer that qualifies for postponement of either the 45-day or 180-day deadlines within the disaster period would receive postponements for both deadlines;
- That the relief is automatic, but not mandatory. Qualifying taxpayers won’t have to do anything to receive the postponements, but they could elect out of the disaster relief and rely upon their original exchange deadlines.
These clarifications would provide much needed relief to our clients and other taxpayers engaged in like-kind exchanges, many of whom are middle-class individuals and small businesses. During this time of unprecedented uncertainty, taxpayers need the confidence of knowing that they will have enough time to successfully complete their real estate exchanges.
We are proud that our IPX1031® General Counsel, Suzanne Goldstein Baker, is one of the principal authors of this letter. Suzanne is also one of the co-chairs of the FEA Government Affairs Committee.
IRS Disaster Relief Updates
1031 Fund Security
A major role of a Qualified Intermediary is to safeguard taxpayer funds during a 1031 Exchange. Since Qualified Intermediaries are not regulated by the federal government or by most states, financial assurances, expertise, company strength and reputation are critical factors. As the nation’s largest and most secure 1031 Qualified Intermediary, you can count on IPX1031®. Our security features include:
- $100 million Fidelity Bond
- $50 million third party corporate performance guarantee
- $30 million in Errors & Omissions insurance
- Exchange funds are held in segregated accounts for the benefit of the named Exchanger, using the Exchanger’s taxpayer identification number
- Disbursement of exchange funds requires written authorization from the Exchanger
- Disbursements require dual authorization and are controlled by our separate Banking Division; sales and administrative staff have no authority or ability to transfer funds
- Regular reconciliation of exchange fund balances by our Banking staff and our parent company
- As part of a large publicly-traded corporation, we are subject to audits, controls and a level of financial transparency about the entire organization that is not required of privately held businesses
- To increase security as well as provide increased convenience to our exchange customers, we have chosen the use of an electronic platform (utilizing two factor authentication) as the preferred delivery method for exchange documents
IPX1031: Prepared & Ready to Help
As the Coronavirus related issues continue to evolve, we remain committed to supporting you and keeping you informed. We are available and ready to listen to your unique needs and provide 1031 assistance on the phone and online.
Since our operations have been “paperless” for many years, our employees are able to work remotely. As a result, we do not anticipate any adverse impact to normal customer service operations or the security we provide.
We are committed to being responsive and flexible to your needs during this time. We are here to help, and we encourage you to contact us if we can be of assistance.
We will keep you informed as this situation continues to evolve. In the meantime, stay well and thank you for being an IPX1031 customer.
IPX1031 – Choose the Experts
IPX1031 focuses solely on 1031 Tax Deferred Like Kind Exchanges. As the national leader in 1031 Exchange services, IPX1031 has the financial assurances, security and expertise essentials to protect your funds and provide answers and guidance throughout the exchange process. For more information or to discuss your specific 1031 tax deferred exchange situation, please contact us.
IPX1031 PDF Summary on Extensions
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Disaster Relief Extensions
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IPX1031 Knowledge Center