The Department of the Treasury and the Internal Revenue Service (IRS) held a public hearing on the second round of Opportunity Zone regulations on July 9, 2019. OFN testified at the hearing to emphasize the need for data collection, transparency, and anti-fraud provisions to ensure the program has positive community impact for the targeted zones.
This past May, the Treasury Department released their second set of proposed regulations to implement the Opportunity Zones tax provision, and OFN submitted written comments in response. The hearing provided an opportunity to speak directly to those drafting the regulations at Treasury and the IRS. This hearing was the second, and most likely final, public hearing for the Opportunity Zone rulemaking process.
At the hearing, nineteen speakers offered testimony and answered questions from IRS and Treasury staff. Several of the speakers, including OFN member Enterprise Community Partners and partner organizations such as the US Impact Investing Alliance, Economic Innovation Group, and the National Community Stabilization Trust, supported data collection and public transparency requirements for Opportunity Zone investments.
Treasury and the IRS expressed that they do not believe they have the legal authority or sufficient resources to require transaction level data from Opportunity Funds. OFN is supportive of bipartisan legislation in the House and Senate to direct and grant the authority for the IRS and Treasury to collect transaction level data.
Several commenters also discussed the need to examine how the proposed regulation affects the ability to pair the Opportunity Zones tax incentive with other tax provisions, such as the New Markets Tax Credit and Low-Income Housing Tax Credit. Treasury asked commenters to submit specific suggestions for better facilitating the use of multiple tax credits on the same project.
As they prepare to draft their final regulations, Treasury and the IRS will now review public comments received on both sets of proposed regulations and responses to their request for information on data collection and reporting. Treasury also may issue additional proposed regulations specifically addressing fraud and abuse. OFN continues to work with both federal agencies and Congress to find ways to improve the Opportunity Zones tax provision to generate positive community development impact.