- Rep. Joel Judd applauded for defending the interests of consumers and businesses performing Section 1031 exchanges
- ..."no client should have reason to fear doing a Like Kind-Exchange."
March 26, 2009
(Denver) Colorado House Bill 09-1254, sponsored by State Representative Joel Judd and State Senator Ted Harvey, has been unanimously passed by the 67th General Assembly of the State of Colorado. This legislation is designed to create consumer protections relating to Section 1031 Like-Kind Exchanges facilitated by Qualified Intermediaries (QI) and Also referred to as an "EAT", is typically a special purpose, limited-liability company that is used to own the legal title to property that is being parked as part of a reverse exchange. An exchange accommodation titleholder may not be a disqualified person. Exchange Accommodation Titleholder s, otherwise known as Exchange Facilitators.
For the past two years a group of QIs committed to responsible business practice has served as a resource team for legislators promoting this bill. The team, comprised of members of the Federation of Exchange Accommodators (FEA), included committee leader Brent Abrahm of Accruit, Mary Lou Schwab of Bankers An escrow agreement provides for the placement of money or other assets in the control of an independent third party in order to protect the parties involved in a transaction. The funds or assets are held by the escrow agent until it receives the appropriate instructions or until predetermined contractual obligations contained in the escrow agreement have been fulfilled. Escrow ; Paul Holloway of Land Title Exchange Corporation; David Wright of 1031 Corporation Exchange Professionals; Scott Saunders of Asset Preservation; Suzanne Goldstein Baker of Investment Property Exchange Services, Inc. (IPX1031); and Max Hansen of American Equity Exchange, Inc. Abrahm, Baker, and Hansen also serve on the FEA's Board of Directors.
Abrahm, CEO of Denver-based Accruit, LLC, explains that "the like-kind exchange (LKE) was added to the Internal Revenue Code (IRC). The comprehensive set of tax laws created by the Internal Revenue Service (IRS). This code was enacted as Title 26 of the United States Code by Congress, and is sometimes also referred to as the Internal Revenue Title. The code is organized according to topic, and covers all relevant rules pertaining to income, gift, estate, sales, payroll and excise taxes. Internal Revenue Code Internal Revenue Code in 1921 to promote business reinvestment in our economy. It is important, especially during difficult economic times like the present, that this ultimate stimulus tool be governed in the best interests of the consumers and businesses that utilize it. We applaud Representative Judd and Senator Harvey for supporting legislation that protects the integrity of the services provided by QIs doing business in Colorado. It's been an honor to be a resource for this landmark legislation, which will ensure appropriate business standards for all QIs in the state."
Jason Hopfer of JLH Public Affairs said, "It's a pleasure to assist these industry leaders, through the FEA, in their quest to protect and preserve this tax planning tool and the businesses in Colorado that it serves."
The FEA, which represents Qualified Intermediaries nationwide, requires that its members follow a strict code of ethics consistent with the legislation presented by Representative Judd. Billions of dollars in like-kind exchanges for real estate and other business assets are transacted each year, and House Bill 09-1254 will ensure that all Colorado Exchange Facilitators follow secure banking procedures that provide sufficient liquidity of funds to meet their obligations to their clients.
"The FEA Code of Ethics very specifically provides every member organization a set of standards and business processes to safely handle assets and business funds," says Hugh Pollard, President of the FEA. "With proper due diligence, no client should have reason to fear doing an LKE. Each client should ask detailed and specific questions about how their money will be invested and they should make sure that their QI provides proper financial assurances."
About the Federation of Exchange Accommodators
The Federation of Exchange Accommodators (FEA) is the only national trade organization formed to represent qualified intermediaries (QIs), their primary legal/tax advisors and affiliates who are directly involved in Section Internal Revenue Code Section 1031 states that "no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held for productive use in a trade or business or for investment." 1031 Exchange s. Formed in 1989, the FEA was organized to promote the discussion of ideas and innovations in the industry, to establish and promote ethical standards of conduct for QIs, to offer education to both the exchange industry and the general public, and to work toward the development of uniformity of practice and terminology within the exchange profession. The FEA also provides timely input and updates on pending State and Federal legislation, Internal Revenue Service and Treasury Rulings, and Court Decisions. Parties with questions about Section 1031 and its operating principles are encouraged to contact the FEA at 215.564.3484 or visit the Web site at www.1031.org.