Ask A Question

Could Opportunity Zones get additional reporting requirements in the future?

I’ve heard about efforts to make OZs more accountable. Are there any new reporting requirements brewing? Is there any possibility that new rules will be introduced later that could make investments harder to manage?

  • Valerie Grunduski
    September 23, 2019

    It is expected that there will be additional data point collection related to impact, etc.

  • Guy Nicio
    July 31, 2019

    Yes, absolutely. We may have additional reporting requirements in the future. In particular, at the fund level it is anticipated that Form 8996 will be expanded to require more information that may include things like FEIN of OZB equity interests, OZ tract info, etc. The compliance and documentation requirements related to OZ funds and the code in general is fairly substantial. Thus, I don't anticipate that any changes down the road would make life noticeably more difficult. It's already at that level as it should be since the tax incentives are extremely robust long term.

  • Matt Campbell
    July 23, 2019

    Yes, there likely are some additional disclosures that will be required when tax forms are filed. The rule I'm most concerned about is if somehow the IRS creates a contemporaneous documentation rule on the 31-month capital plans similar to how transfer pricing reports are certified to have been prepared contemporaneously in a tax year. Currently these plans don't need to be filed anywhere and some folks will be playing fast and loose with their plan. I expect some additional requirements and clarity to come around those plans at a later date.

  • Scott McIntosh
    July 17, 2019

    Yes, I think most folks are expecting that the final regulations will incorporate additional reporting requirements. Doubtful that they'll make investments harder to manage, but they will add a bit to the time required for preparation of annual compliance reports.

  • Adam Yormack
    July 17, 2019

    Yes. However, not necessarily that much harder to manage. It’s actually a win-win, because if the program works as planned, more will be introduced.