8 OPPORTUNITY ZONE MAGAZINE | VOLUME 2 • ISSUE 1
Importantly , not every proposed change to the OZ incentive would require legislation .
ADMINISTRATIVE ACTION , NOT LEGISLATION
Importantly , not every proposed change to the OZ incentive would require legislation . As a practical matter , investors , developers and entrepreneurs already have discovered in the three years since OZ became law that the most effective way to proceed with an OZ project or business is to engage with state and local government , business and faith community leaders and visionaries , business and social organizations , tax exempt organizations , and local residents so that the needs and preferences of the OZ community are being addressed .
Another Biden BBB proposal that could be implemented through administrative action is the recommendation to require Treasury ’ s blessing of OZ investments to ensure that the policy goals are being met . Whether this means a Treasury review to certify a Qualified Opportunity Fund ( QOF ), approving the investments the QOF plans to make , or reviewing investor tax returns before allowing tax benefits , this requirement is likely to result in delays , bottlenecks , and inconsistent treatment among QOFs and investors , discouraging the use of OZ and preventing the considerable benefits that could accrue to communities . Instead , enhanced information reporting included with the tax return filed under penalty of perjury could be relied upon and be subject to regular IRS audit procedures to verify compliance with OZ requirements . Such enhanced reporting could include the data necessary to determine the number of jobs created , how many affordable housing units were developed , the types of businesses formed , and other social and economic data necessary to evaluate the merits of OZ .
IMPLEMENTATION OF OPPORTUNITY ZONES
Although the OZ statute has been in place for over three years and two comprehensive sets of regulations have been finalized , questions about OZ implementation remain . Additional regulations and other guidance to clarify lingering issues , or to facilitate foreign investment by adapting withholding requirements on capital gains , could further intensify interest in the OZ incentive .
It is unclear whether the Biden administration will devote the same level of commitment and energy to the OZ incentive as did the Trump administration . Devoting resources at the White House and throughout the executive branch departments and agencies to prioritize , encourage and facilitate the use of OZ will be necessary to maximize the potential of the incentive . This includes outreach and partnering with OZ stakeholders , OZ champions , and other interested parties , like Historically Black
OPPORTUNITYZONE . COM