In what is easily one of the most unexpected and unfair developments derived from 1031 Tax Group plundering, victims are being informed by their legal representatives and the IRS that they will be liable to pay capital gains taxes on monies they may never see again! Why are investors liable to pay the government taxes on monies they never received, in deals that investors lost their monies, with the “Qualified Intermediaries” baring no tax burden from their own questionable actions?
The following is a comment by a 2nd investor who decided to speak out in order to help others in similar situations:
“Q.I.’s charge a fee for their services. Further, the money doesn’t belong to the QI, the interest therefore belongs to the Exchanger. Same as escrow or trust accounts.
Re the Edward Okun, et al fiasco, my attorney, yes I’m one of his victims, told me the national organization of Q.I.’s are lobbying to extend the identification period because of what’s happened. I had two properties slated to close May 1st, my identification period ended April 27th, and I now have no idea where my money is.
As the law stands now, everyone will still be responsible for the captial gains taxes even if our money is never recovered, and if it is for those of us whose identification period is closed I’ll have to pay capital gains on the full amount. How messed up is that? No money received in my pocket, but by golly I’ll have to pay the taxes.”
As I reported back in May, California Democratic Senator Mike Machado had done little except to “look into” the problem of regulation in the 1031 Exchange industry. The real killer is that Machado “Chairs” the Senate’s “Banking, Finance, and Insurance” committee yet he did not understand the lack of regulation in the industry. Likewise equally uninformed United States Representative Zoe Lofgren D-San Jose has done nothing to move the situation forward.
Maybe it is time for all of us to check in on our paid representatives in state and federal governments.