One of our clients recently asked the following question: "Can the Minnesota Department of Revenue force your Qualified Intermediary provide them with your private information relating to your 1031 exchange?" This is a common question among taxpayers who are considering a 1031 exchange. Read on to find out whether big brother is watching your 1031 exchange.
Minnesota Statute 289A
In the last few years, Minn. Stat. 289A.12 was amended to include a new subsection #16, which states:
Minn. Stat. 289A.12 Subd. 16. Qualified intermediaries. The commissioner may by notice and demand require a qualified intermediary to file a return relating to transactions for which the intermediary acted to facilitate exchanges under section 1031 of the Internal Revenue Code. The return must include the name, address, and state or federal tax identification number or Social Security number of each of the parties to the exchange, information relating to the property subject to the exchange, and any other information required by the commissioner.
This means that the Minnesota Department of Revenue can require your Qualified Intermediary to provide them with all of the key details of your 1031 exchange and any other information that they want. In other words, big brother is watching your 1031 exchange.
Start Your 1031 Exchange: If you have questions about your private information involved in a 1031 exchange, feel free to call me at 612-643-1031.
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