IRS Declines to Grant Further Pandemic Extensions to §1031 Taxpayers
As you may know, the IRS extended certain 1031 deadlines to July 15, 2020 in consideration of the difficulties that taxpayers were experiencing due to the pandemic. Though the extensions expired on July 15, some had hoped that the IRS would grant additional extensions using the rational that usually the IRS grants 120 day extensions for typical disaster relief.
On August 11, the IRS finally published clarification that the 120 day extensions available for typical disaster relief DO NOT APPLY to the COVID-19 disaster relief granted in Notice 2020-23. The IRS confirmed that the sole relief granted for like-kind exchanges was the stated limitation in Notice 2020-23, that only the §1031 deadline that fell between April 1, 2020 and July 14, 2020 could be extended to July 15, 2020.
IPX1031 has been very active with the Federation of Exchange Accommodators, our industry association, and a coalition of real estate associations, including The Real Estate Roundtable, in requesting clarification and broader relief. Our General Counsel, Suzanne Goldstein Baker, was one of the principal authors of an April 20, 2020 letter to Treasury Secretary Mnuchin, signed by 19 real estate associations, requesting clarification and the additional relief provided in Rev. Proc. 2018-58 Sec. 17, which would have provided 120 day extensions to both 45 day and 180 day deadlines. Four months later, the answer came with a simple, “No.”
The FAQ is printed below and the full list of FAQs can be found here:
Q. Did Notice 2020-23, 2020-18 I.R.B. 742, extend the relief provided in section 17 of Rev. Proc. 2018-58, 2018-50 I.R.B. 990, to taxpayers engaging in section 1031 like-kind exchanges? (added August 11, 2020)
A. Notice 2020-23 did not extend the relief provided in section 17 of Rev. Proc. 2018-58 to taxpayers engaging in section 1031 like-kind exchanges. Therefore, the section 1031 deadlines addressed in items 26 and 27 of section 6 of Rev. Proc. 2018-58 that fall on or after April 1, 2020, and before July 15, 2020, are not extended beyond July 15, 2020.
Should you have any questions, please do not hesitate to contact your trusted like-kind exchange experts at IPX1031.
Covid-19 1031 Exchange FAQs
1031 Coronavirus Resources
1031 Extensions Granted! Information regarding COVID-19 Disaster Relief
COVID-19 Disaster Relief (April 9, 2020)
IPX1031 Disaster Relief Deadline Extensions information
IRS Disaster Relief Notices
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 bank 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
How Important is Your Qualified Intermediary?
Safety and Security for Investors
Disaster Relief Extensions
1031 Exchange and Defer? Or Sell and Pay Taxes?
Capital Gains Estimator
IPX1031 Knowledge Center