During the past two weeks, leaders from ADISA and other trade groups and coalitions have met with several government and regulatory officials to make the case for delaying the DOL fiduciary rule, as well as pressing for preservation of the 1031 like-kind exchange in any possible tax reform strategy.
“There are several legislative angles to pursue, and we are trying to have our members’ voices heard on the Hill,” said ADISA’s president, John Grady, a partner with DLA Piper. “However, the key to ensuring a full and fair reconsideration of the DOL’s fiduciary rule and accompanying ‘best interest contract’ exemption lies with the White House.”
He continued, “The administration can rightly postpone the rule’s current implementation date and ensure that a comprehensive and thorough approach to evaluating the rule’s impact on retirement savers and their advisors takes place. And perhaps ensure that the SEC has an opportunity to weigh in on these important issues.”
The fiduciary rule is currently scheduled to go into effect on June 9, 2017.
ADISA’s executive director/CEO, John Harrison, met at length with Senator Tim Scott (R-SC) and others to reiterate what he views as the strong benefits of like-kind exchanges to the economy as a whole.
The South Carolina delegation are known for their support of like-kind exchanges, particularly Congressman Tom Rice (R-SC), who as a tax attorney has knowledge and experience with like-kind exchanges, according to his staff member in charge of tax issues, Robert Cusmano.
“It’s unfair to even link [like-kind exchanges] with any kind of specific tax maneuver or so-called ‘loophole,’ for it is an economic stimulus pure and simple,” said Harrison. “ADISA is proud to have co-sponsored two studies showing the great benefit to the bottom line GDP of our country by [like-kind exchanges]; everyone in Congress we have dealt with, who sees these numbers, is in awe of the magnitude of [like-kind exchanges] importance to the GDP across several industries.”
“If we look at the Ernst & Young study, we see over a $13 billion per year value of [like-kind exchanges] to the economy as a whole,” noted Harrison, “and our academic study by professors from Syracuse and University of Florida showed that about 6 percent of all commercial real estate transactions involve [like-kind exchanges] in some way. That involvement lowers holding time and gives incentive to ‘buy up’ to improved properties. This means [like-kind exchanges] accelerate demand, thus helping to raise the value to property owners.”
According to ADISA’s Legislative & Regulatory Committee Chair Catherine Bowman, ADISA’s largest efforts in regards to like-kind exchanges is in educating members of congress and their staffs.
“Even though those in financial services know how the [like-kind exchange] stimulus aids with commercial real estate, many on the congressional staff level still need to know more,” said Bowman.
ADISA is currently preparing a “sequel” to its Guide to Alternatives which will be solely dedicated to like-kind exchanges, designed for congressional staff involved with tax and budget issues.
“The toughest thing right now in Washington is navigating the post-election chaos to find the right person in the administration and then the related champion on the Hill to move something forward,” said Harrison. “We’re all hoping things will settle in more quickly, and we can make serious progress on, at least for starters, on important issues like the DOL fiduciary rule and like-kind exchanges.”