What requirements do I have to meet to qualify for an extension?
The regulations just state that exceeding the 31-month period does not violate the safe harbor if the delay is attributable to waiting for government action for which application has being completed during the 31-month period. Nevertheless, the regulations do not provide more details as to how to document and for how much is the period extended.
Unfortunately, until we receive more regulatory guidance the only specific reason Treasury provides for an extension is a delay in government approval on a project that was requested during the 31-month period.
My understanding is the cause has to be an act of God/government delay type thing. You'd want to discuss this with your tax attorney.
There is no extension to the working capital safe harbor except for an allowed pause in the timeframe due to government inaction. Presumably this would be from permitting, studies, etc.
The only extension is if delays are due to delays in government entity approval of a project. There is no formal process since you self-certify. Just document the delays in the event of an audit. Otherwise you just pay the penalty for the months that you are short on meeting the 90% test.
There's not really an application process, but upon audit, you'll need to demonstrate any delay was legitimately based on circumstances outside of your control. The IRS will have no patience for folks who try to extend the 31-month window for reasons falling within their locus of control. Be sure to have your business plan ready on day one or thereabouts, allowing for deviations only when the government, a third-party vendor, or perhaps nature (disasters, etc.) cause problems.
I am not aware of an ability to get a formal extension. Rather, if a government delay (e.g., waiting for permitting) results in you not being able to follow the 31-month schedule, the IRS will be reasonable.
The proposed regulations provide a working capital safe harbor for QOF investments in QOZBs that acquire, construct or rehabilitate property in a QOZ. The safe harbor allows the QOZBs to benefit for a period of up to 31 months, provided that there is a written plan that identifies the financial assets as being held for the acquisition, construction or substantial improvement of property in the OZ, there is a written schedule setting for compliance, and the QOZB substantially complies with the schedule. The proposed regulations grant relief by providing that exceeding the 31-month period does not violate the safe harbor if the delay resulted from delays caused by waiting for government action (for zoning, permits, etc.) if the application was completed during the original 31-month period.
There are really no extensions to file, as there is nothing to submit with the tax return regarding the 31-month capital plan as of now. You just need to document everything clearly. If there are delays in the government approving applications, then you will get an automatic implied extension equal to the delay in government action. Also, if plans change for valid reasonable business reasons, you need to document and create a new plan that is reasonable and that you closely follow and document.
To date, I am not aware of any extension requirements. However, based upon the individual circumstances if compelling enough, an extension could be requested, although I wouldn't recommend it.
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