Impossible to predict.
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?
Answers
I do not know. Additional reporting to help quantify the benefits to the economy may be required. Currently, there are none.
Yes, there are new reporting requirements brewing, and chances are they will be introduced before the end of the year. These will include compliance reporting for QOZBs, reporting for purposes of Treasury gathering data about economic impact, and additional reporting by investors into QOFs.
No, they have pretty much finalized the regulations. As long as your fund is run correctly, reporting shouldn’t be a problem.
Anything is possible both federal and state. The federal program was designed to be very user-friendly.
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.
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.
Absolutely. In fact, Congress is discussing additional reporting requirements.
There has been a great deal of discussion of reporting requirements for OZs and Qualified Opportunity Funds, and it will not be surprising if additional reporting requirements are eventually adopted either by statute or IRS requirement or both. I don't think that they would necessarily make investments harder to manage, but they may add to the cost, depending on just what rules are adopted.
The regulations that have been issued to date are not final, so there is no way to know whether additional reporting requirements will be imposed.
It is expected, but there is nothing official or final.
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.
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.
It is expected that there will be additional data point collection related to impact, etc.
DISCLAIMER:the information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal and financial experts prior to participating in any aspect relating to Opportunity Zones. Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public; do not include confidential information in your question.