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Dear Members and Friends,

This morning, Sen. Tim Scott (R-SC) introduced the IMPACT Act, which would establish reporting requirements for the Opportunity Zones incentive. Senate Finance Committee Chairman Chuck Grassley (R-IA), Senators Marco Rubio (R-FL), Shelley Moore Capito (R-WV), Todd Young (R-IN), Joni Ernst (R-IA), Bill Cassidy (R-LA), and Cory Gardner (R-CO) also co-sponsored the legislation. Here is Sen. Scott’s press release and the bill text.

The IMPACT Act would do the following:

Codifies New 2019 Draft Form 8996 and expands it:

  • Requires funds to report their name, address, TIN, how the fund is structured, the value of total assets held by the fund as of the required reporting dates, including the value of all qualified Opportunity Zone property held by the fund on such date, and for
  • Opportunity Zone businesses stock or partnership interests: the name, address, and TIN of the corporation in which the stock is held, the census tracts in which the qualified Opportunity Zone property of such corporation or partnership is located, the amount of the investment in such stock or partnership interest as of the reporting period, the value of property held by such corporation or partnership as well as leased property,
  • Adds:
    • the North American Industry Classification Code (NAIC) that applies to that the business
    • the approximate number of residential units (if any) for real property held, and
    • the approximate average monthly number of full time employees for the 12 month period across a set of ranges
    • Qualified Opportunity Zone property: the NAIC code that applies, the census tract where the property is located, whether it is owned or leased, it’s value as of the reporting dates, number of residential units if applicable, number of employees if applicable
  • For disposed investments, the name and TIN of the taxpayers who disposed of an investment during the year as well as the date of disposal and date of acquisition of the original investment and amount disposed
  • Adds: penalties for funds that fail to comply with their respective reporting requirements of $500 per day with a $10,000 cap, unless total assets of the fund for the tax year exceed $10,000,000 then a $50,000 cap applies; reasonable cause exceptions apply.

Codifies New 2019 Draft Form 8997 and expands it:

  • Requires investors to report their name, TIN, and address as well as the name, TIN of the QOF in which investment was made, description of investment, date of investment, amount of short and long term gains for which deferral was made, for dispositions the description of the investment disposed, the date of disposition, and the amount of any previously deferred short term and long term gain included in income as a result of the disposition and authority for Secretary to go farther if necessary.
  • Adds: 
    • Penalties for investors — $5,000 penalty for failure to comply with their respective reporting requirements with 60 days to correct in which case a $500 penalty applies.
    • Reasonable cause exception applies
    • Heightens penalties for intentional disregard to $25,000

Comprehensive public report of aggregated information on the following as soon as practicable:

  • The total number of funds
  • Total assets of such funds
  • Distribution of QOF investments into OZ property across different industries by North American Industry Classification Codes (NAIC codes)
  • Percentage of all tracts that have received QOF investment into OZ property
  • Aggregate total amount of QOF investments by census tract
  • Distribution of OZ investments in real property vs business equity
  • For each census tract the aggregate amount of residential units and businesses by firm size through employment ranges for QOZ businesses and property that received QOF investment
  • On top of that, every 5 years from the date of enactment the Treasury shall also provide a comprehensive report on the following socioeconomic granular data points:
    • Broader impacts on job creation, poverty reduction, new business starts, and other metrics deemed necessary by the Secretary

Comparison of the below data points for designated OZ’s for 5 year period of this study compared against both those same data points for these zones for the 5 years before they were designated and also compared against low income communities that were eligible to be selected for OZ designation but were not for the same 5 year period of this study on the following factors:

  • Unemployment rate by census tract
  • Number of persons working in the census tract and the percentage of those persons who were not residents of the tract in the preceding year
  • Individual, family, and household poverty rates
  • Median family income
  • Demographic information on tract residents including age, education, income, employment, and race
  • Percentage of income used for rent by census tract
  • Total number of residences in the census tract and the average value of residential property
  • Number of affordable housing units in the tract
  • Number and percentage of residents that were not employed for the preceding year
  • Number of new business starts in the census tract
  • Distribution of employees in the census tract by North American Industry Classification Codes (NAIC codes)
  • Includes language to protect the identity of individuals and entities and prevents exposure of competitive or proprietary information



Anya Coverman

SVP, Government Affairs and General Counsel

Institute for Portfolio Alternatives