Last week, Senator Tim Scott (R-SC) — along with 15 other Senators and Congressmen — sent a letter to Treasury Secretary Steven Mnuchin, seeking clarification on several matters related to the Opportunity Zones tax policy, specifically in regards to investments in operating businesses, certain timing requirements, and community impact.
The letter calls attention to five separate points:
- Agreement with the 70% test as “substantially all” as it pertains to the amount of Opportunity Zone Business Property a business must have.
- Concern with the proposed rule requiring an Opportunity Zone business to derive 50% of its gross income from the active conduct of a trade or business in the qualified opportunity zone. This rule would significantly limit the ability for local operating businesses to qualify, and would also place a large administrative burden on businesses.
- A request that the safe harbor period offered for businesses be extended to Opportunity Funds as well.
- A request that additional time be granted for Opportunity Funds to reinvest capital that has been returned to the fund from an underlying portfolio investment.
- A request for a community impact reporting requirement in order to prevent waste, fraud, and abuse of the incentive.