Detail

White House Reviewing Final OZ Tax Regulations; Senate Legislation Introduced on Reporting Requirements

  • December 13, 2019

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The White House’s Office of Management and Budget (OMB) is reviewing a set of highly anticipated final rules for the Opportunity Zones program created by the 2017 Tax Cuts and Jobs Act, according to a Dec. 6 OMB notice.  The rules will address requirements of qualified opportunity funds that invest in opportunity zones (OZs).

  • OZ investors are looking for clarifications on a number of open issues that will help qualified opportunity funds drive economic development in economically distressed communities nationwide.

  • Treasury released its first set of proposed OZ rules in Oct. 2018, followed by expanded guidance in April 2019.  The Treasury rulemakings have reduced investor uncertainty and encouraged capital formation, job creation and productive real estate.  However, certain questions remain that warrant additional guidance, such as whether an existing owner can retain a carried interest when selling property to a related Opportunity Fund.

  • The Real Estate Roundtable on July 1, 2019 submitted recommended clarifications for final OZ tax regulations, which may be issued by the Treasury Department before the end of this year (Roundtable Comment letter, July 1).  The Roundtable also submitted prior letters on OZ tax incentives in June 2018 and December 2018.)

  • In Congress, GOP senators on Dec. 6 introduced a bill that would expand information reporting requirements for OZ investments, including requiring investors to report the number of full-time workers employed by opportunity zone projects. (BGov, Dec. 8 and Sen. Marco Rubio news release, Dec. 9)

  • The Senate’s “Improving and Reinstating the Monitoring, Prevention, Accountability, Certification, and Transparency Provisions of Opportunity Zones (IMPACT) Act” would “… help show communities and investors that the initiative is working, as well as help root out any fraud or abuse,” according to Sen. Tim Scott (R-SC), the lead sponsor of the bill.  (The Hill, Dec. 6)

  • Democratic lawmakers in the Senate and House have also recently proposed measures that would require more reporting requirements about Opportunity Zone investments – as well as reform the tax incentive, and formally investigate recent allegations of wrongdoing related to the program. (Roundtable Weekly, Nov. 8)

  • The Roundtable has strongly supported the Opportunity Zone tax incentives since their enactment as a potential powerful catalyst for transformative real estate investment in economically struggling parts of the country.  (GlobeSt.com interview with Roundtable President and CEO Jeffrey DeBoer and Roundtable SVP and Counsel Ryan McCormick –July 16, 2018).

Through its Tax Policy Advisory Committee and Opportunity Zone Working Group, The Roundtable will continue to contribute to the implementation and oversight of the Opportunity Zone incentives, offering constructive comments and recommendations to Members of Congress and Treasury officials. 

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