Legal 1031 Exchange Services, Inc. is please to celebrate the one year anniversary of the passage of “An Act Providing Consumer Protection to Clients of Exchange Facilitators for Tax Deferred Exchanges”. Todd R. Pajonas, President of Legal 1031 Exchange Services, Inc. spearheaded the two year effort to make this law a reality.
The 1031 Protection Act, which passed in two parts, became law when Connecticut Governor Daniel Malloy signed Public Act 135 on June 19, 2013, as well as Public Act 253 on July 11, 2013, which provided for a small modification to the original bill.
An IRC §1031 tax deferred exchange allows owners of real or personal property to defer the recognition of a capital gains tax they would have recognized when they sold their property. Exchanging allows investors to reinvest money into new business or investment properties which would otherwise have been paid to the government as capital gains tax. In one form or another the ability to defer a capital gains tax through an exchange has been part of the tax code for almost 100 years.
The 1031 Protection Act provides for protection of exchange funds deposited by investors with Qualified Intermediaries operating in the State of Connecticut by establishing investment standards, bonding requirements, and notification requirements to keep clients informed.
Connecticut State Representative John Shaban, who introduced and sponsored the bills during the 2012 and 2013 legislative sessions, clearly explained the bill’s intent by stating, “It is easier to stem a crises than respond to one. This bill offers reasonable and predictable consumer protection at no cost to the taxpayer.”
On March 15, 2012 Todd Pajonas, Suzanne Goldstein Baker, president of the Federation of Exchange Accommodators (FEA), and Anthony Lombardi, president of CATIC Exchange Solutions, testified in Hartford, CT on the need for the protections afforded by H.B. 5415 before the Committee on Banks. In 2013, during the following legislative year, Todd Pajonas once again testified before the Committee on Banks, and extoled the benefits of the 1031 Protection Act. House Bill 6339 and Senate Bill 911 were ultimately passed by the Connecticut Legislature and signed into law by the Governor.
Todd Pajonas, commenting on the one year anniversary, stated, “I want to once again thank Representative John Shaban who took the time to understand how this legislation will protect investors. This Act provided investors in Connecticut, the peace of mind and protections they deserve.”
Matthew K. Scheriff, Executive Vice President of Legal 1031 Exchange Services, Inc., further commented, “1031 exchange transactions help to fuel our economy by allowing investors to grow their investments. It is important for federal and state governments to provide legislative support and security so investors can have the confidence they need.”
Legal 1031 Exchange Services, Inc., with offices in Connecticut, New York, Massachusetts and Florida, provides qualified intermediary services for 1031 exchanges, as well as other real estate tax related services.