December 31, 2019 is the final date to receive the full tax benefit of Opportunity Zone (“OZ”) investing. Nonetheless, the program continues to evolve.
Opportunity Zone IMPACT Act
Senator Tim Scott (R-SC) recently introduced the Improving and Reinstating the Monitoring, Prevention, Accountability, Certification, and Transparency Provisions of Opportunity Zones (IMPACT) Act. The bill seeks to reinstate and enhance the reporting requirements surrounding OZ investments.
As described by Sen. Scott, the IMPACT Act:
- Codifies requirements for Qualified Opportunity Funds to report the following information regarding the Qualified Opportunity Fund: (i) value of total assets held; (ii) location and value of OZ properties held; (iii) whether such properties are owned or leased; (iv) information surrounding disposed investments during the tax year; and (v) details regarding the location and industry classification codes of businesses receiving equity investments as well as the value of those investments. The IMPACT Act further requires reporting on number of persons employed through OZ investments, thereby providing data on job creation and firm growth without burdening small businesses and funds alike.
- Codifies requirements for investors to report critical information on OZ investments including funds receiving investments, relevant dates on which investments and dispositions are made, descriptions of OZ investments, and measures that will continue to allow the IRS to track both the deferral and recognition of gains, the trajectory of OZ investments over time, and compliance more broadly.
- Adds penalties for both individuals and funds that fail to accurately and appropriately file the required returns or statements and also significantly enhances penalties for any individual who attempts to take advantage of the OZ incentive for fraudulent purposes.
- Requires that the Treasury make public as soon as practicable and annually thereafter timely, comprehensive information tracking Qualified Opportunity Funds and their corresponding investments into QOZs. Specifically, the Treasury shall make public in the aggregate the total number of funds, the total assets of all funds, the distribution of OZ investments across different industry classification codes, the percentage of all OZs that have received investment through the incentive, the total amount of Opportunity Fund investments made in each census tract, the distribution of investments in real property and active businesses, data deciphering the sizes of businesses receiving OZ investment, and numbers of jobs created or sustained by those businesses in light of OZ investments.
The full bill text of the IMPACT Act can be found here.
Given the continually evolving regulatory landscape, participation in the OZ Program takes an experienced legal and accounting team who is up to date on the growing field of regulations and can help you navigate them successfully.
With a multi-disciplinary team of affordable housing, real estate, tax and corporate attorneys, Scarinci Hollenbeck is uniquely qualified to help New Jersey investors navigate the new program and realize its benefits. To discuss potential opportunities for your business, .
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact Stephanie Edelstein, Jeffrey Cassin, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.