H. R. 5761

118

CONGRESS

ESSION

H. R. 5761

To amend the Internal Revenue Code of 1986 to modify the rules relating

to qualified opportunity zones, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

EPTEMBER

27, 2023

Mr. K

ELLY

of Pennsylvania (for himself, Mr. K

ILDEE

, Mrs. M

ILLER

of West

Virginia, and Ms. S

EWELL

) introduced the following bill; which was re-

ferred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to modify

the rules relating to qualified opportunity zones, and

for other purposes.

Be it enacted by the Senate and House of Representa-1

tives of the United States of America in Congress assembled, 2

SECTION 1. SHORT TITLE. 3

This Act may be cited as the ‘‘Opportunity Zones 4

Transparency, Extension, and Improvement Act’’. 5

SEC. 2. FINDINGS. 6

Congress makes the following findings: 7

(1) The 8,764 population census tracts des-8

ignated as qualified opportunity zones under section 9

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1400Z–1 of the Internal Revenue Code of 1986 span 1

across all 50 States, the District of Columbia, and 2

5 Territories and overwhelmingly represent commu-3

nities that have been economically left behind as the 4

American economy has surged forward. 5

(2) The average poverty rate of residents in 6

qualified opportunity zones is 26.4 percent. 7

(3) Forty-four percent of qualified opportunity 8

zones are persistently poor, meaning they are census 9

tracts in which the poverty rate has exceeded 20 10

percent since at least 1990. 11

(4) According to the latest available data from 12

the Department of the Treasury through 2020, op-13

portunity zone investment reached at least 3,800 14

communities, or 48 percent of all designated census 15

tracts. 16

(5) The communities that received opportunity 17

zone investment are economically distressed places. 18

On average, they rank in the 87th percentile for pov-19

erty, 81st for median household income, and 80th 20

for unemployment. 21

(6) The total amount of opportunity zone equity 22

invested was at least $48 billion through the end of 23

2020, raised from an estimated 21,000 individuals 24

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and 4,000 corporate investors deployed into 7,800 1

Qualified Opportunity Funds. 2

(7) The Investing in Opportunity Act, which 3

first proposed opportunity zones, originally incor-4

porated reporting requirements to evaluate the im-5

pact the incentive will have on designated commu-6

nities and it is critical that Congress act to reinstate 7

reporting requirements as soon as possible. 8

TITLE I—MODIFICATION OF POP-9

ULATION CENSUS TRACTS 10

DESIGNATED AS QUALIFIED 11

OPPORTUNITY ZONES 12

SEC. 101. MODIFICATION OF POPULATION CENSUS TRACTS 13

DESIGNATED AS QUALIFIED OPPORTUNITY 14

ZONES. 15

Section 1400Z–1 of the Internal Revenue Code of 16

1986 is amended by adding at the end the following new 17

subsection: 18

‘‘(g) D

ISQUALIFICATION OF

ERTAIN

OPULATION

ENSUS

RACTS

.— 20

‘‘(1) I

N GENERAL

.—Except as provided in para-21

graph (5), any disqualified census tract shall not be 22

treated as a qualified opportunity zone for any pe-23

riod after the date that is 30 days after the date on 24

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which the Secretary publishes the final list of dis-1

qualified census tracts under paragraph (4)(B). 2

‘‘(2) R

EPLACEMENT ZONES

.— 3

‘‘(A) I

N GENERAL

.—The chief executive of-4

ficer of a State shall nominate additional popu-5

lation census tracts to replace any population 6

census tract the designation of which as a 7

qualified opportunity zone was terminated by 8

reason of paragraph (1). Except as otherwise 9

provided in this paragraph, the rules of sub-10

sections (b), (c), (d), and (f) shall apply to any 11

population census tract nominated under this 12

paragraph. 13

‘‘(B) C

ONSULTATION

.—No population cen-14

sus tract nominated under subparagraph (A) 15

may be designated as a qualified opportunity 16

zone unless the chief executive officer of the 17

State certifies in writing to the Secretary that 18

the chief executive officer has consulted with 19

the chief executive officer (or the equivalent) of 20

each local jurisdiction in which the population 21

census tract is located. 22

‘‘(C) S

PECIAL RULES

.—For purposes of 23

this subchapter— 24

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‘‘(i) any population census tract which 1

is a disqualified census tract (as defined in 2

paragraph (3) without regard to subpara-3

graph (A)(i) thereof) may not be nomi-4

nated as a qualified opportunity zone 5

under this paragraph, 6

‘‘(ii) the determination period with re-7

spect to a nomination under subparagraph 8

(A) shall be the 45-day period beginning 9

on the date on which the Secretary pub-10

lishes the final list of disqualified census 11

tracts under paragraph (4)(B), as ex-12

tended under subsection (b)(2), and 13

‘‘(iii) the period for which any such 14

designation is in effect shall be the period 15

beginning on the date such designation 16

takes effect and ending on the last day of 17

the 10th calendar year beginning on or 18

after the designation date as a qualified 19

opportunity zone for the population census 20

tract which it is replacing as such a zone 21

by reason of the termination under para-22

graph (1). 23

‘‘(D) R

EGULATIONS AND GUIDANCE

.—The 24

Secretary shall prescribe such regulations or 25

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other guidance as may be necessary or appro-1

priate to carry out the purposes of this para-2

graph. 3

‘‘(3) D

ISQUALIFIED CENSUS TRACT

.—For pur-4

poses of this subsection— 5

‘‘(A) I

N GENERAL

.—The term ‘disqualified 6

census tract’ means any population census tract 7

which— 8

‘‘(i) was designated as a qualified op-9

portunity zone before the date of the en-10

actment of this subsection, and 11

‘‘(ii) is described in subparagraph (B) 12

or (C). 13

‘‘(B) H

IGH MEDIAN FAMILY INCOME

TRACTS

.— 15

‘‘(i) I

N GENERAL

.—Except as pro-16

vided in clauses (ii) and (iii), a population 17

census tract is described in this subpara-18

graph if the median family income for such 19

tract exceeds 130 percent of the national 20

median family income as published by De-21

partment of Housing and Urban Develop-22

ment or the CDFI Fund. 23

‘‘(ii) E

XCEPTION

.—Clause (i) shall 24

not apply if the poverty rate of such popu-25

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lation census tract (excluding students en-1

rolled in an institution of higher education 2

(as defined in section 101 of the Higher 3

Education Act of 1965)) is equal to or 4

greater than 30 percent. 5

‘‘(iii) R

EQUEST TO RETAIN DESIGNA

-6

TION FOR CERTAIN POPULATION CENSUS

TRACTS

.—Clause (i) shall not apply if the 8

Secretary, upon a request of the chief exec-9

utive officer of the State made not later 10

than 60 days after the date the Secretary 11

publishes the list described in paragraph 12

(4)(A), determines that— 13

‘‘(I) the designation of such pop-14

ulation census tract was consistent 15

with the purposes of this subchapter, 16

or 17

‘‘(II) the median family income 18

for the population census tract does 19

not exceed 130 percent of the national 20

median family income as published by 21

Department of Housing and Urban 22

Development or the CDFI Fund. 23

‘‘(C) E

LECTION TO INCLUDE ADDITIONAL

POPULATION CENSUS TRACTS

.— 25

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‘‘(i) I

N GENERAL

.—A population cen-1

sus tract is described in this subparagraph 2

if the Secretary, upon the request of the 3

chief executive officer of the State sub-4

mitted not later than 60 days after the 5

date the Secretary publishes the list de-6

scribed in paragraph (4)(A), determines 7

that the continued designation of such pop-8

ulation census tract as a qualified oppor-9

tunity zone is not consistent with the pur-10

poses of this subchapter. 11

‘‘(ii) C

ONSULTATION

.—No population 12

census tract nominated under clause (i) 13

may be designated as a qualified oppor-14

tunity zone unless the chief executive offi-15

cer of the State certifies in writing to the 16

Secretary that the chief executive officer 17

has consulted with the chief executive offi-18

cer (or the equivalent) of each local juris-19

diction in which the population census 20

tract is located. 21

‘‘(iii) R

EGULATIONS AND GUID

-22

ANCE

.—Not later than the date on which 23

the Secretary publishes the final list of dis-24

qualified census tracts under paragraph 25

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(4)(B), the Secretary shall issue regula-1

tions or guidance with respect to the cri-2

teria to be used for making a determina-3

tion by the Secretary under clause (i). 4

‘‘(4) I

DENTIFICATION AND PUBLICATION OF

DISQUALIFIED CENSUS TRACTS

.— 6

‘‘(A) I

NITIAL IDENTIFICATION

.—As soon 7

as practical, but not later than 12 months after 8

the date of the enactment of this subsection, 9

the Secretary shall make public— 10

‘‘(i) a list of population census tracts 11

described in paragraph (3)(B) (determined 12

without regard to clause (iii) thereof), and 13

‘‘(ii) a list of population census tracts 14

which are low-income communities and 15

were not designated as a qualified oppor-16

tunity zone before the date of enactment of 17

this subsection. 18

‘‘(B) F

INAL LIST OF DISQUALIFIED CEN

-19

SUS TRACTS

.—Not later than 105 days after 20

the date the Secretary publishes the list de-21

scribed in subparagraph (A), the Secretary shall 22

make public a final list of disqualified census 23

tracts. 24

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‘‘(5) R

ULES FOR QUALIFIED PREEXISTING IN

-1

VESTMENTS

.— 2

‘‘(A) I

N GENERAL

.—For purposes of this 3

subchapter, section 1400Z–2 shall be applied 4

without regard to paragraph (1) with respect to 5

any qualified preexisting trade or business. 6

‘‘(B) Q

UALIFIED PREEXISTING TRADE OR

BUSINESS

.—For purposes of this paragraph— 8

‘‘(i) I

N GENERAL

.—The term ‘quali-9

fied preexisting trade or business’ means 10

any trade or business of a qualified oppor-11

tunity fund or qualified opportunity zone 12

business which meets the requirements of 13

clauses (ii) and (iii) of section 1400Z– 14

2(d)(3)(A) and with respect to which— 15

‘‘(I) before the date of the enact-16

ment of this subsection, a registration 17

statement under the Securities Act of 18

1933 (15 U.S.C. 77a et seq.) is filed 19

or any comparable offering memo-20

randum or similar disclosure docu-21

ment is provided in reliance on section 22

230.506 of title 17, Code of Federal 23

Regulations (or successor regulations), 24

promulgated under the Securities Act 25

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of 1933, that discloses the intent of 1

such trade or business to invest in the 2

disqualified census tract, 3

‘‘(II) before the first date on 4

which the disqualified census tract ap-5

pears on any list published under 6

paragraph (4), investments in the dis-7

qualified census tract are made or 8

agreed pursuant to a binding agree-9

ment to be made which— 10

‘‘(aa) aggregate more than 11

$250,000, and 12

‘‘(bb) have been designated 13

in writing for the use in, or the 14

development of, such trade or 15

business, or 16

‘‘(III) the qualified opportunity 17

fund or qualified opportunity zone 18

business is determined by the Sec-19

retary to have relied on the designa-20

tion of the disqualified census tract as 21

a qualified opportunity zone and to 22

have suffered or is expected to suffer 23

a loss as a result of the application of 24

paragraph (1). 25

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‘‘(ii) T

RADE OR BUSINESS

.—The term 1

‘trade or business’ includes any activity in-2

tended to qualify as a trade or business 3

within the meaning of section 162. 4

‘‘(C) R

EGULATIONS AND GUIDANCE

.—The 5

Secretary shall prescribe such regulations or 6

guidance as may be necessary or appropriate to 7

carry out the purposes of this paragraph, in-8

cluding guidance to prevent speculative invest-9

ment solely for the purpose of falling within the 10

definition of a qualified preexisting trade or 11

business. 12

‘‘(6) D

ETERMINATION OF POPULATION CENSUS

TRACT DATA

.—For purposes of applying this sub-14

section, in determining whether a population census 15

tract meets any qualification with respect to poverty 16

rate or any aspect of median income, such deter-17

mination shall be made using the most recent census 18

data that has been published by the Bureau of the 19

Census as of the date of enactment of this sub-20

section.’’. 21

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SEC. 102. CERTAIN FORMER INDUSTRIAL TRACTS PER-1

MITTED TO BE DESIGNATED AS OPPOR-2

TUNITY ZONES. 3

Section 1400Z-1 of the Internal Revenue Code of 4

1986, as amended by section 101, is amended by adding 5

at the end the following new subsection: 6

‘‘(h) S

PECIAL

ULE FOR

ORMER

NDUSTRIAL

RACTS

ONTIGUOUS TO

ESIGNATED

PPORTUNITY

ONES

.— 9

‘‘(1) I

N GENERAL

.—For purposes of this chap-10

ter, the term ‘qualified opportunity zone’ means an 11

population census tract which is described in para-12

graph (2) and designated as a qualified opportunity 13

zone under this subsection. 14

‘‘(2) P

OPULATION CENSUS TRACT DE

-15

SCRIBED

.—A population census tract is described in 16

this subparagraph if— 17

‘‘(A) the tract— 18

‘‘(i) has a population of zero, 19

‘‘(ii) was previously used for industrial 20

purposes and is a brownfield industrial 21

site, and 22

‘‘(iii) is contiguous, including by 23

water, to a population census tract on at 24

least 1 side that has been designated as a 25

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qualified opportunity zone under this sec-1

tion, or 2

‘‘(B) the tract was merged, as a result of 3

the 2020 decennial census, into a census tract 4

described in subparagraph (A)(iii) and met all 5

requirements described in subparagraph (A). 6

‘‘(3) D

ESIGNATION

.—For purposes of para-7

graph (1), a population census tract that is de-8

scribed in paragraph (2) is designated as a qualified 9

opportunity zone if— 10

‘‘(A) not later than 30 days after the date 11

of the enactment of this subsection, the chief 12

executive officer of the State in which the tract 13

is located— 14

‘‘(i) nominates the tract for designa-15

tion as a qualified opportunity zone, and 16

‘‘(ii) notifies the Secretary in writing 17

of such nomination, and 18

‘‘(B) not later than 30 days after receiving 19

the notification under subparagraph (A)(ii), the 20

Secretary certifies such nomination and des-21

ignates such tract as a qualified opportunity 22

zone. 23

‘‘(4) D

ETERMINATION OF CENSUS TRACT IN

-24

FORMATION

.—For purposes of this subsection, the 25

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boundaries and population of a census tract shall be 1

determined based on United States Census Bureau 2

data for the 2010 decennial census. 3

‘‘(5) N

UMBER OF DESIGNATIONS

.—Population 4

census tracts designated as a qualified opportunity 5

zone under this subsection shall not be taken into 6

account for purposes of subsection (d). 7

‘‘(6) D

EFINITIONS

.—For purposes of this sub-8

section— 9

‘‘(A) B

ROWNFIELD INDUSTRIAL SITE

.— 10

The term ‘brownfield industrial site’ means a 11

population census tract that includes real prop-12

erty the expansion, redevelopment, or reuse of 13

which may be complicated by the presence or 14

potential presence of a hazardous substance or 15

pollutant or contaminant, including real prop-16

erty covered by a prospective purchaser agree-17

ment or similar agreement entered into by the 18

Environmental Protection Agency or the appro-19

priate State authority. 20

‘‘(B) H

AZARDOUS SUBSTANCE

.—The term 21

‘hazardous substance’ means— 22

‘‘(i) a hazardous substance as defined 23

in section 101(14) of the Comprehensive 24

Environmental Response, Compensation, 25

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and Liability Act of 1980 (42 U.S.C. 1

9601(14)), or 2

‘‘(ii) petroleum or a petroleum prod-3

uct. 4

‘‘(C) P

OLLUTANT OR CONTAMINANT

.—The 5

term ‘pollutant or contaminant’ has the mean-6

ing given such term in section 101(33) of such 7

Act.’’. 8

TITLE II—INFORMATION 9

REPORTING REQUIREMENTS 10

SEC. 201. INFORMATION REPORTING ON QUALIFIED OP-11

PORTUNITY FUNDS. 12

(a) I

ENERAL

.— 13

(1) F

ILING REQUIREMENTS FOR FUNDS AND

INVESTORS

.—Subpart A of part III of subchapter A 15

of chapter 61 of the Internal Revenue Code of 1986 16

is amended by inserting after section 6039J the fol-17

lowing new sections: 18

‘‘SEC. 6039K. RETURNS WITH RESPECT TO QUALIFIED OP-19

PORTUNITY FUNDS. 20

‘‘(a) I

ENERAL

.—Every qualified opportunity fund 21

shall file an annual return (at such time and in such man-22

ner as the Secretary may prescribe) containing the infor-23

mation described in subsection (b). 24

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‘‘(b) I

NFORMATION

ROM

UALIFIED

PPORTUNITY

UNDS

.—The information described in this subsection 2

is— 3

‘‘(1) the name, address, and taxpayer identifica-4

tion number of the qualified opportunity fund, 5

‘‘(2) whether the qualified opportunity fund is 6

organized as a corporation or a partnership, 7

‘‘(3) the value of the total assets held by the 8

qualified opportunity fund as of each date described 9

in section 1400Z–2(d)(1), 10

‘‘(4) the value of all qualified opportunity zone 11

property held by the qualified opportunity fund on 12

each such date, 13

‘‘(5) with respect to each investment held by 14

the qualified opportunity fund in qualified oppor-15

tunity zone stock or a qualified opportunity zone 16

partnership interest— 17

‘‘(A) the name, address, and taxpayer 18

identification number of the corporation in 19

which such stock is held or the partnership in 20

which such interest is held, as the case may be, 21

‘‘(B) each North American Industry Clas-22

sification Code that applies to the trades or 23

businesses conducted by such corporation or 24

partnership, 25

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‘‘(C) the population census tracts in which 1

the qualified opportunity zone business property 2

of such corporation or partnership is located, 3

‘‘(D) the amount of the investment in such 4

stock or partnership interest as of each date de-5

scribed in section 1400Z–2(d)(1), 6

‘‘(E) the value, as determined under regu-7

lations issued by the Secretary, of tangible 8

property held by such corporation or partner-9

ship on each such date which is owned by such 10

corporation or partnership, 11

‘‘(F) the value, as determined under regu-12

lations issued by the Secretary, of tangible 13

property held by such corporation or partner-14

ship on each such date which is leased by such 15

corporation or partnership, 16

‘‘(G) the information described in para-17

graph (6)(E) with respect to buildings with 1 or 18

more residential rental units which are held by 19

such corporation or partnership, and 20

‘‘(H) the approximate average monthly 21

number of full-time equivalent employees of 22

such corporation or partnership for the year 23

(within numerical ranges identified by the Sec-24

retary) or such other indication of the employ-25

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ment impact of such corporation or partnership 1

as determined appropriate by the Secretary, 2

which shall account for direct and indirect, tem-3

porary and permanent jobs, 4

‘‘(6) with respect to the items of qualified op-5

portunity zone business property held by the quali-6

fied opportunity fund— 7

‘‘(A) the North American Industry Classi-8

fication Code that applies to the trades or busi-9

nesses in which such property is held, 10

‘‘(B) the population census tract in which 11

the property is located, 12

‘‘(C) whether the property is owned or 13

leased, 14

‘‘(D) the aggregate value, as determined 15

under regulations issued by the Secretary, of 16

the items of qualified opportunity zone property 17

held by the qualified opportunity fund as of 18

each date described in section 1400Z–2(d)(1), 19

and 20

‘‘(E) in the case of each building with 1 or 21

more residential rental units— 22

‘‘(i) the total number of such residen-23

tial rental units, 24

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‘‘(ii) the number of such units occu-1

pied by tenants with an income of 50 per-2

cent or less of area median income ad-3

justed for family size, 4

‘‘(iii) the number of such units occu-5

pied by tenants with an income in excess 6

of 50 percent, but not exceeding 60 per-7

cent of area median income adjusted for 8

family size, and 9

‘‘(iv) whether— 10

‘‘(I) at least 20 percent of such 11

units are occupied by tenants de-12

scribed in clause (ii), or 13

‘‘(II) at least 40 percent of such 14

units are occupied by tenants with in-15

come averaging not more than 60 per-16

cent of area median income adjusted 17

for family size, 18

‘‘(7) the approximate average monthly number 19

of full-time equivalent employees for the year of the 20

trades or businesses of the qualified opportunity 21

fund in which qualified opportunity zone business 22

property is held (within numerical ranges identified 23

by the Secretary) or such other indication of the em-24

ployment impact of such trades or businesses as de-25

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termined appropriate by the Secretary, which shall 1

account for direct and indirect, temporary and per-2

manent jobs, 3

‘‘(8) with respect to each person who disposed 4

of an investment in the qualified opportunity fund 5

during the year— 6

‘‘(A) the name and taxpayer identification 7

number of such person, 8

‘‘(B) the date or dates on which the invest-9

ment disposed was acquired, and 10

‘‘(C) the date or dates on which any such 11

investment was disposed and the amount of the 12

investment disposed, and 13

‘‘(9) such other information as the Secretary 14

may require. 15

‘‘(c) S

TATEMENT

EQUIRED

URNISHED TO

NVESTORS

.—Every person required to make a return 17

under subsection (a) shall furnish to each person whose 18

name is required to be set forth in such return by reason 19

of subsection (b)(8) a written statement showing— 20

‘‘(1) the name, address and phone number of 21

the information contact of the person required to 22

make such return, and 23

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‘‘(2) the information required to be shown on 1

such return by reason of subsection (b)(8) with re-2

spect to such person. 3

‘‘(d) D

EFINITIONS

.—For purposes of this section— 4

‘‘(1) I

N GENERAL

.—Any term used in this sec-5

tion which is also used in subchapter Z of chapter 6

1 shall have the meaning given such term under 7

such subchapter. 8

‘‘(2) F

ULL

TIME EQUIVALENT EMPLOYEES

.— 9

The term ‘full-time equivalent employees’ means, 10

with respect to any month, the sum of— 11

‘‘(A) the number of full-time employees (as 12

defined in section 4980H(c)(4)) for the month, 13

plus 14

‘‘(B) the number of employees determined 15

(under rules similar to the rules of section 16

4980H(c)(2)(E)) by dividing the aggregate 17

number of hours of service of employees who 18

are not full-time employees for the month by 19

120. 20

‘‘SEC. 6039L. INFORMATION ON PERSONS INVESTING IN 21

QUALIFIED OPPORTUNITY FUNDS. 22

‘‘(a) I

ENERAL

.—Every taxpayer who makes an 23

investment in a qualified opportunity fund shall provide 24

an annual statement (at such time and in such manner 25

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as the Secretary may prescribe) containing the informa-1

tion described in subsection (b) with respect to each such 2

investment. 3

‘‘(b) I

NFORMATION

ROM

NVESTORS

.—The infor-4

mation described in this subsection is— 5

‘‘(1) the name, address, and taxpayer identifica-6

tion number of the taxpayer, 7

‘‘(2) the name and taxpayer identification num-8

ber of the qualified opportunity fund in which the 9

investment was made, 10

‘‘(3) a description of such investment, 11

‘‘(4) the date such investment was made, 12

‘‘(5) the amount of short-term and long-term 13

capital gains for which an election was made under 14

section 1400Z–2(a)(1) for such investment, 15

‘‘(6) in the case of any disposition of any in-16

vestment in a qualified opportunity fund during the 17

taxable year— 18

‘‘(A) a description of the investment dis-19

posed, 20

‘‘(B) the date of the disposition, and 21

‘‘(C) the amount of any previously deferred 22

short-term and long-term capital gain included 23

in income as a result of such disposition, and 24

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‘‘(7) such other information as the Secretary 1

may require. 2

‘‘(c) D

EFINITIONS

.—Any term used in this section 3

which is also used in subchapter Z of chapter 1 shall have 4

the meaning given such term under such subchapter. 5

‘‘SEC. 6039M. INFORMATION REQUIRED FROM CERTAIN 6

QUALIFIED OPPORTUNITY ZONE BUSI-7

NESSES. 8

‘‘(a) I

ENERAL

.—Every applicable qualified oppor-9

tunity zone business shall furnish to the qualified oppor-10

tunity fund described in subsection (b) a written state-11

ment in such manner and setting forth such information 12

as the Secretary may by regulations prescribe for purposes 13

of enabling such qualified opportunity fund to meet the 14

requirements of section 6039(b)(5). 15

‘‘(b) A

PPLICABLE

UALIFIED

PPORTUNITY

ONE

USINESS

.—For purposes of subsection (a), the term ‘ap-17

plicable qualified opportunity zone business’ means any 18

qualified opportunity zone business (as defined in section 19

1400Z–2(d)(3))— 20

‘‘(1) which is a trade or business of a qualified 21

opportunity fund, 22

‘‘(2) in which a qualified opportunity fund holds 23

qualified opportunity zone stock, or 24

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‘‘(3) in which a qualified opportunity fund holds 1

a qualified opportunity zone partnership interest. 2

‘‘(c) O

THER

ERMS

.—Any term used in this section 3

which is also used in subchapter Z of chapter 1 shall have 4

the meaning given such term under such subchapter.’’. 5

(2) P

ENALTIES

.— 6

(A) I

N GENERAL

.—Part II of subchapter 7

B of chapter 68 of the Internal Revenue Code 8

of 1986 is amended by inserting after section 9

6725 the following new section: 10

‘‘SEC. 6726. FAILURE TO COMPLY WITH INFORMATION RE-11

PORTING REQUIREMENTS RELATING TO 12

QUALIFIED OPPORTUNITY FUNDS. 13

‘‘(a) I

NFORMATION

ETURNS BY

UALIFIED

PPOR

-14

TUNITY

UNDS

.— 15

‘‘(1) I

N GENERAL

.—In the case of any person 16

required to file a return under section 6039K fails 17

to file a complete and correct return under such sec-18

tion in the time and in the manner prescribed there-19

for, such person shall pay a penalty of $500 for each 20

day during which such failure continues. 21

‘‘(2) L

IMITATION

.— 22

‘‘(A) I

N GENERAL

.—The maximum penalty 23

under this subsection on failures with respect to 24

any 1 return shall not exceed $10,000. 25

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‘‘(B) L

ARGE QUALIFIED OPPORTUNITY

FUNDS

.—In the case of any failure described in 2

paragraph (1) with respect to a fund the gross 3

assets of which (determined on the last day of 4

the taxable year) are in excess of $10,000,000, 5

subparagraph (A) shall be applied by sub-6

stituting ‘$50,000’ for ‘$10,000’. 7

‘‘(3) R

EDUCTION WHERE CORRECTION IN SPEC

-8

IFIED PERIOD

.—If any failure described in para-9

graph (1) is corrected on or before the day 60 days 10

after the due date (including extensions) for filing 11

the return, the penalty imposed by paragraph (1) 12

shall be $500 in lieu of the amount determined 13

under such paragraph. 14

‘‘(4) D

E MINIMIS ERRORS

.—If— 15

‘‘(A) there are one or more such failures 16

described in paragraph (1) relating to an incor-17

rect dollar amount, and no single amount in 18

error differs from the correct amount by more 19

than $100, or 20

‘‘(B) there are one or more such failures 21

described in paragraph (1) relating to a non-nu-22

merical amount and such error is inconsequen-23

tial, then no correction shall be required, and, 24

for purposes of this section, such statement 25

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shall be treated as having been filed with all 1

correct required information. 2

‘‘(5) P

ENALTY IN CASES OF INTENTIONAL DIS

-3

REGARD

.—If a failure described in paragraph (1) is 4

due to intentional disregard, then— 5

‘‘(A) paragraph (1) shall be applied by 6

substituting ‘$2,500’ for ‘$500’, 7

‘‘(B) paragraph (2)(A) shall be applied by 8

substituting ‘$50,000’ for ‘$10,000’, and 9

‘‘(C) paragraph (2)(B) shall be applied by 10

substituting ‘$250,000’ for ‘$50,000’. 11

‘‘(6) I

NFLATION ADJUSTMENT

.— 12

‘‘(A) I

N GENERAL

.—In the case of any 13

failure relating to a return required to be filed 14

in a calendar year beginning after 2023, each 15

of the dollar amounts in paragraphs (1), (2), 16

(3), and (5) shall be increased by an amount 17

equal to such dollar amount multiplied by the 18

cost-of-living adjustment determined under sec-19

tion 1(f)(3) for the calendar year determined by 20

substituting ‘calendar year 2022’ for ‘calendar 21

year 2016’ in subparagraph (A)(ii) thereof. 22

‘‘(B) R

OUNDING

.— 23

‘‘(i) I

N GENERAL

.—If the $500 dollar 24

amount in paragraph (1), (3), or (5)(A) or 25

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the $2,500 amount in paragraph (5)(A), 1

after being increased under subparagraph 2

(A), is not a multiple of $10, such dollar 3

amount shall be rounded to the next lowest 4

multiple of $10. 5

‘‘(ii) A

SSET THRESHOLD

.—If the 6

$10,000,000 dollar amount in paragraph 7

(2)(B), after being increased under sub-8

paragraph (A), is not a multiple of 9

$10,000, such dollar amount shall be 10

rounded to the next lowest multiple of 11

$10,000. 12

‘‘(iii) O

THER DOLLAR AMOUNTS

.—If 13

any dollar amount in paragraph (2), (3), 14

or (5) (other than any amount to which 15

clause (i) or (ii) applies), after being in-16

creased under subparagraph (A), is not a 17

multiple of $1,000, such dollar amount 18

shall be rounded to the next lowest mul-19

tiple of $1,000. 20

‘‘(b) S

TATEMENTS BY

NVESTORS

.— 21

‘‘(1) I

N GENERAL

.—If— 22

‘‘(A) any person is required to file a state-23

ment under section 6039L for any period, and 24

‘‘(B) fails— 25

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‘‘(i) to file such statement on or be-1

fore the required filing date, or 2

‘‘(ii) fails to include all of the infor-3

mation required to be shown on the state-4

ment or includes incorrect information, 5

such person shall pay a penalty of $5,000. 6

‘‘(2) R

EDUCTION WHERE CORRECTION IN SPEC

-7

IFIED PERIOD

.—If any failure described in para-8

graph (1)(B) is corrected on or before the day 60 9

days after the due date (including extensions) for fil-10

ing the return, the penalty imposed by paragraph 11

(1) shall be $500 in lieu of the amount determined 12

under such paragraph. 13

‘‘(3) D

E MINIMIS ERRORS

.—If— 14

‘‘(A) there are one or more such failures 15

described in paragraph (1)(B)(ii) relating to an 16

incorrect dollar amount, and no single amount 17

in error differs from the correct amount by 18

more than $100, or 19

‘‘(B) there are one or more such failures 20

described in paragraph (1)(B)(ii) relating to a 21

non-numerical amount and such error is incon-22

sequential, 23

then no correction shall be required, and, for pur-24

poses of this section, such statement shall be treated 25

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as having been filed with all correct required infor-1

mation. 2

‘‘(4) P

ENALTY IN CASES OF INTENTIONAL DIS

-3

REGARD

.—If one or more failures described in para-4

graph (1)(B) are due to intentional disregard of the 5

filing requirement (or the correct information report-6

ing requirement), then, with respect to each such 7

failure— 8

‘‘(A) paragraphs (2) and (3) shall not 9

apply, and 10

‘‘(B) the amount of the penalty determined 11

under paragraph (1) shall be $25,000. 12

‘‘(5) I

NFLATION ADJUSTMENT

.— 13

‘‘(A) I

N GENERAL

.—In the case of any 14

failure relating to a statement required to be 15

filed in a calendar year beginning after 2023, 16

each of the dollar amounts in paragraphs (1), 17

(2), and (4) shall be increased by an amount 18

equal to such dollar amount multiplied by the 19

cost-of-living adjustment determined under sec-20

tion 1(f)(3) for the calendar year determined by 21

substituting ‘calendar year 2022’ for ‘calendar 22

year 2016’ in subparagraph (A)(ii) thereof. 23

‘‘(B) R

OUNDING

.—The amount of any in-24

crease under subparagraph (A) shall be round-25

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ed to the nearest multiple of $100 ($10 in the 1

case of any increase in the amount under para-2

graph (2)).’’. 3

(B) I

NFORMATION REQUIRED TO BE SENT

TO OTHER TAXPAYERS

.—Section 6724(d)(2) of 5

such Code is amended— 6

(i) by striking ‘‘or’’ at the end of sub-7

paragraph (II), 8

(ii) by striking the period at the end 9

of the first subparagraph (JJ) (relating to 10

section 6226) and inserting a comma, 11

(iii) by redesignating the second sub-12

paragraph (JJ) (relating to section 6050Y) 13

as subparagraph (KK), 14

(iv) by striking the period at the end 15

of subparagraph (KK) (as redesignated by 16

clause (iii)) and inserting a comma, and 17

(v) by inserting after subparagraph 18

(KK) (as so redesignated) the following 19

new subparagraphs: 20

‘‘(LL) section 6039K(c) (relating to dis-21

position of qualified opportunity fund invest-22

ments), or 23

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‘‘(MM) section 6039M (relating to infor-1

mation required from certain qualified oppor-2

tunity zone businesses).’’. 3

(3) E

LECTRONIC FILING

.—Section 6011(e) of 4

such Code is amended by adding at the end the fol-5

lowing new paragraph: 6

‘‘(8) Q

UALIFIED OPPORTUNITY FUNDS

.—Not-7

withstanding paragraphs (1) and (2), any return 8

filed by a qualified opportunity fund shall be filed on 9

magnetic media or other machine-readable form.’’. 10

(4) C

LERICAL AMENDMENTS

.— 11

(A) The table of sections for subpart A of 12

part III of subchapter A of chapter 61 of such 13

Code is amended by inserting after the item re-14

lating to section 6039J the following new items: 15

‘‘Sec. 6039K. Returns with respect to qualified opportunity funds.

‘‘Sec. 6039L. Information on persons investing in qualified opportunity funds.

‘‘Sec. 6039M. Information required from certain qualified opportunity zone

businesses.’’.

(B) The table of sections for part II of 16

subchapter B of chapter 68 of such Code is 17

amended by inserting after the item relating to 18

section 6725 the following new item: 19

‘‘Sec. 6726. Failure to comply with information reporting requirements relating

to qualified opportunity funds.’’.

(5) E

FFECTIVE DATE

.—The amendments made 20

by this subsection shall apply to taxable years begin-21

ning after the date of the enactment of this Act. 22

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(b) R

EPORTING OF

ATA ON

PPORTUNITY

ONE

NCENTIVES

.— 2

(1) I

N GENERAL

.—As soon as practical after 3

the date of the enactment of this Act, and annually 4

thereafter, the Secretary of the Treasury, or the 5

Secretary’s delegate (referred to in this section as 6

the ‘‘Secretary’’), in consultation with the Director 7

of the Bureau of the Census and such other agencies 8

as the Secretary determines appropriate, shall make 9

publicly available a report on qualified opportunity 10

funds. 11

(2) I

NFORMATION INCLUDED

.—The report re-12

quired under paragraph (1) shall include, to the ex-13

tent available, the following information: 14

(A) The number of qualified opportunity 15

funds. 16

(B) The aggregate dollar amount of assets 17

held in qualified opportunity funds. 18

ments made by qualified opportunity funds in 20

qualified opportunity fund property across each 21

industry class under the North American Indus-22

try Classification Code. 23

(D) The percentage of population census 24

tracts designated as qualified opportunity zones 25

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that have received qualified opportunity fund 1

investments. 2

(E) For each population census tract des-3

ignated as a qualified opportunity zone, the ap-4

proximate average monthly number of full-time 5

equivalent employees of the qualified oppor-6

tunity zone businesses in such qualified oppor-7

tunity zone for the preceding 12-month period 8

(within numerical ranges identified by the Sec-9

retary) or such other indication of the employ-10

ment impact of such qualified opportunity fund 11

businesses as determined appropriate by the 12

Secretary. 13

(F) The percentage of the total amount of 14

investments made directly or indirectly by quali-15

fied opportunity funds in— 16

(i) qualified opportunity zone business 17

property which is real property; and 18

(ii) other qualified opportunity zone 19

business property. 20

(G) For each population census tract, the 21

aggregate approximate number of residential 22

units resulting from investments made by quali-23

fied opportunity funds in real property. 24

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(H) The aggregate dollar amount of in-1

vestments made by qualified opportunity funds 2

in each population census tract. 3

(3) A

DDITIONAL INFORMATION

.— 4

(A) I

N GENERAL

.—Beginning with the re-5

port submitted under paragraph (1) for the 6th 6

year after the date of the enactment of this Act, 7

the Secretary shall include in such report the 8

impacts and outcomes of a designation of a 9

population census tract as a qualified oppor-10

tunity zone as measured by economic indicators, 11

such as job creation, poverty reduction, new 12

business starts, and other metrics as deter-13

mined by the Secretary. 14

(B) S

EMI

DECENNIAL INFORMATION

.— 15

(i) I

N GENERAL

.—In the case of any 16

report submitted under paragraph (1) in 17

the 6th year or the 11th year after the 18

date of the enactment of this Act, the Sec-19

retary shall include the following informa-20

tion: 21

(I) For population census tracts 22

designated as a qualified opportunity 23

zone, a comparison (based on aggre-24

gate information) of the factors listed 25

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in clause (iii) between the 5-year pe-1

riod ending on the date of the enact-2

ment of Public Law 115–97 and the 3

most recent 5-year period for which 4

data is available. 5

(II) For population census tracts 6

designated as a qualified opportunity 7

zone, a comparison (based on aggre-8

gate information) of the factors listed 9

in clause (iii) for the most recent 5- 10

year period for which data is available 11

between such population census tracts 12

and a similar population census tracts 13

that were not designated as a quali-14

fied opportunity zone. 15

(ii) C

ONTROL GROUPS

.—For purposes 16

of clause (i), the Secretary may combine 17

population census tracts into such groups 18

as the Secretary determines appropriate 19

for purposes of making comparisons. 20

(iii) F

ACTORS LISTED

.—The factors 21

listed in this paragraph are the following: 22

(I) The unemployment rate. 23

(II) The number of persons 24

working in the population census 25

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tract, including the percentage of such 1

persons who were not residents in the 2

population census tract in the pre-3

ceding year. 4

(III) Individual, family, and 5

household poverty rates. 6

(IV) Median family income of 7

residents of the population census 8

tract. 9

(V) Demographic information on 10

residents of the population census 11

tract, including age, income, edu-12

cation, race, and employment. 13

(VI) The average percentage of 14

income of residents of the population 15

census tract spent on rent annually. 16

(VII) The number of residences 17

in the population census tract. 18

(VIII) The rate of home owner-19

ship in the population census tract. 20

(IX) The average value of resi-21

dential property in the population cen-22

sus tract. 23

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(X) The number of affordable 1

housing units in the population census 2

tract. 3

(XI) The number and percentage 4

of residents in the population census 5

tract that were not employed for the 6

preceding year. 7

(XII) The number of new busi-8

ness starts in the population census 9

tract. 10

(XIII) The distribution of em-11

ployees in the population census tract 12

by North American Industry Classi-13

fication Code. 14

(4) P

ROTECTION OF IDENTIFIABLE RETURN IN

-15

FORMATION

.—In making reports required under this 16

subsection, the Secretary— 17

(A) shall establish appropriate procedures 18

to ensure that any amounts reported do not dis-19

close taxpayer return information that can be 20

associated with any particular taxpayer or com-21

petitive or proprietary information, 22

(B) if necessary to protect taxpayer return 23

information, may combine information required 24

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with respect to individual population census 1

tracts into larger geographic areas, and 2

graph as a violation of section 6103. 4

(5) D

EFINITIONS

.—Any term used in this sub-5

section which is also used in subchapter Z of chapter 6

1 of the Internal Revenue Code of 1986 shall have 7

the meaning given such term under such subchapter. 8

TITLE III—MODIFICATION OF 9

RULES FOR INVESTMENTS IN 10

QUALIFIED OPPORTUNITY 11

FUNDS 12

SEC. 301. EXTENSION OF DEFERRAL AND INVESTMENT PE-13

RIOD. 14

(a) I

ENERAL

.—Subparagraph (B) of sections 15

1400Z–2(a)(2) and 1400Z–2(b)(1) of the Internal Rev-16

enue Code of 1986 is amended by striking ‘‘December 31, 17

2026’’ and inserting ‘‘December 31, 2028’’. 18

(b) E

FFECTIVE

ATE

.—The amendment made by 19

this section shall apply to amounts invested after Decem-20

ber 22, 2017. 21

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SEC. 302. MODIFICATION OF DEFINITION OF QUALIFIED 1

OPPORTUNITY FUND. 2

(a) I

ENERAL

.—Section 1400Z–2(d)(1) of the In-3

ternal Revenue Code of 1986 is amended to read as fol-4

lows: 5

‘‘(1) I

N GENERAL

.—The term ‘qualified oppor-6

tunity fund’ means— 7

‘‘(A) any qualified feeder fund, or 8

‘‘(B) any other investment vehicle if— 9

‘‘(i) such investment vehicle is orga-10

nized as a corporation or a partnership for 11

the purpose of investing in qualified oppor-12

tunity zone property (other than another 13

qualified opportunity fund), and 14

‘‘(ii) such investment vehicle holds at 15

least 90 percent of its assets in qualified 16

opportunity zone property, determined by 17

the average of the percentage of qualified 18

opportunity zone property held in the fund 19

as measured— 20

‘‘(I) on the last day of the first 21

6-month period of the taxable year of 22

the fund, and 23

‘‘(II) on the last day of the tax-24

able year of the fund.’’. 25

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(b) Q

UALIFIED

EEDER

UND

.—Section 1400Z– 1

2(d) of such Code is amended by adding at the end the 2

following new paragraph: 3

‘‘(4) Q

UALIFIED FEEDER FUND

.—The term 4

‘qualified feeder fund’ means any investment vehicle 5

that invests in a qualified opportunity fund if— 6

‘‘(A) such investment vehicle is organized 7

as a domestic partnership for the purpose of in-8

vesting in one more corporations or partner-9

ships described in paragraph (1)(B), 10

‘‘(B) all investments made in the invest-11

ment vehicle are made in cash, and 12

‘‘(C) not less than 95 percent of the assets 13

of which are equity investments in corporations 14

or partnerships described in paragraph (1)(B) 15

as measured— 16

‘‘(i) on the last day of the first 6- 17

month period of the taxable year of the 18

feeder fund, and 19

‘‘(ii) on the last day of the tax- able 20

year of the feeder fund.’’. 21

FFECTIVE

ATE

.—The amendments made by 22

this section shall take effect on the date of the enactment 23

of this Act. 24

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TITLE IV—STATE AND 1

COMMUNITY DYNAMISM FUND 2

SEC. 401. STATE AND COMMUNITY DYNAMISM FUND. 3

(a) E

STABLISHMENT

.—There is established a State 4

and Community Dynamism Fund to support public and 5

private investment, including capital for qualified oppor-6

tunity zones designated under section 1400Z–1(a) of the 7

Internal Revenue Code of 1986, and existing small busi-8

ness and community economic development programs and 9

incentives, to underserved businesses and communities. 10

(b) A

LLOCATION

.— 11

(1) I

N GENERAL

.—Funds appropriated to the 12

State and Community Dynamism Fund shall be allo-13

cated to States. 14

(2) F

ORMULA

.— 15

(A) I

N GENERAL

.—The Secretary of the 16

Treasury shall determine the allocation by allo-17

cating Federal funds among the States based 18

on the proportion of prime working age adults 19

not employed in each State bears to the total of 20

prime working age adults not employed for all 21

the States. 22

(B) M

INIMUM ALLOCATION

.—The Sec-23

retary shall adjust the allocations under sub-24

paragraph (A) for each State to the extent nec-25

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essary to ensure that no State receives less than 1

0.9 percent of the Federal funds. 2

(3) R

EQUIREMENT

.—To receive an allocation 3

under paragraph (2), a State shall certify that the 4

State will use funds to— 5

(A) build capacity in high-poverty, under-6

banked, rural, and otherwise underserved com-7

munities; 8

(B) advance investment in minority-, 9

women, and veteran-owned businesses; 10

tegic sectors of the State’s economy; and 12

(D) align priorities to support affordably 13

priced housing. 14

(4) S

UBALLOCATION

.—A State may spend 15

funds allocated under this subsection directly or sub-16

allocate the funds to other entities, including units 17

of general local government and nonprofits. 18

(5) E

LIGIBLE USES

.—Funds allocated under 19

this subsection shall be used for any eligible use in 20

a low-income community, as defined in section 21

45D(e) of the Internal Revenue Code of 1986, in-22

cluding for— 23

(A) operating support and community ca-24

pacity building, with priority to given to oper-25

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ating support and community capacity building 1

in qualified opportunity zones, including— 2

(i) personnel to support activities, in-3

cluding coordination, education, and in-4

vestment; 5

(ii) community-level capacity building, 6

training, and strategic planning; 7

(iii) outreach, technical assistance, 8

and professional services to underserved 9

businesses and underserved opportunity 10

zone fund managers; 11

(B) high-impact projects, including— 12

(i) predevelopment costs associated 13

with individual Qualified Opportunity Zone 14

projects; and 15

(ii) risk mitigation for qualified oppor-16

tunity zone funds; and 17

percent of the funds allocated. 19

(6) E

LIGIBLE PROJECTS

.—Funds used for 20

high-impact project activities, as described in para-21

graph (5)(B), shall only be used for— 22

(A) business with less than 200 employees; 23

(B) projects that provide community goods 24

or services, including health care, social serv-25

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ices, healthy food access, education, broadband, 1

and culture; or 2

percent of the units that are affordable to fami-4

lies making less than 80 percent of area median 5

family income. 6

(7) P

RIORITIZATION

.—A State that receives 7

funds under this section must prioritize activities 8

that— 9

(A) promote investment in projects that 10

substantially support minorities, as defined in 11

section 1204(c) of the Financial Institutions 12

Reform, Recovery, and Enforcement Act of 13

1989 (12 U.S.C. 1811 note), or other targeted 14

populations, as defined in section 103 of the 15

Riegle Community Development and Regulatory 16

Improvement Act of 1994 (12 U.S.C. 4702); 17

and 18

(B) have demonstrated meaningful engage-19

ment with community stakeholders. 20

UTHORIZATION OF

PPROPRIATIONS

.—There is 21

authorized to be appropriated $1,000,000,000 to carry out 22

this section. 23

(d) G

UDIT

.—The Comptroller General of the 24

United States shall perform an annual audit of the Fund 25

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and submit to the appropriate committees of Congress a 1

report containing the results of the audit. 2

(e) A

NNUAL

EPORT

.—Not later than March 31 of 3

each year, each State receiving funds under this title shall 4

submit to the Secretary a report on the performance of 5

the State and participating entities in the State that in-6

cludes— 7

(1) an accounting of the expenditure of funds 8

received by the State, including on administrative or 9

indirect costs; 10

(2) information on the number and characteris-11

tics of participants served under this title; and 12

(3) a summary describing the training, capac-13

ity-building, and technical assistance offered by the 14

State and participating entities. 15

(f) D

EFINITIONS

.—In this section: 16

(1) P

RIME WORKING AGE ADULTS NOT EM

-17

PLOYED

.—The term ‘‘prime working age adults not 18

employed’’ means, with respect to a State, the share 19

of the adult population aged 25 to 54 that was not 20

employed for the most recent year for which data is 21

available. 22

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(2) S

TATE

.—The term ‘‘State’’ includes the 1

District of Columbia, any territory or possession of 2

the United States, and any Indian Tribe. 3

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