"Formality" of 1031 Exchange Process

[Mike Nas]

Hello BP family, I had question about 1031 and reverse 1031 exchanges. I know this is  an oversimplification, but coming from a legal background Im trying to understand whats going on in a 1031. My impression of the process is that its kind of "informal" in the sense that it really only involves the exchanger and QI with the idea being  that the transaction is being properly documented (such as identifying a prop w/in 45 days) and structured (i.e. making sure the exchanger doesn't receive or control both properties or proceeds) in accordance with IRS rules. Once the transaction is complete you would file your yearly taxes and indicate the sale but defer payment of cap gains taxes on the basis of the 1031. 

With that said, is it correct to say the IRS (or govt for that matter) doesn't get involved unless you're basically being audited/investigated? The documents used specifically for the 1031 (such as the Exchange agreement or writing identifying props to acquire) are not sent or filed with the IRS/govt; they are more important after the fact to demonstrate and prove to Uncle Same why capital gains were not owed on that transaction, should an audit occur? Is it correct to say that there is basically no affirmative "approval" received when doing a 1031; there is really only a disapproval of one in the form of a failed audit.