Treasury, IRS propose form to collect data about investments in opportunity zones

Treasury, IRS propose form to collect data about investments in opportunity zones
© Greg Nash

The Treasury Department and IRS on Thursday released a draft form that is designed to collect information about investments made under the "opportunity zone" provision in President TrumpDonald John TrumpDavis: Supreme Court decision is bad news for Trump, good news for Vance Meadows trying to root out suspected White House leakers by feeding them info: Axios Pressley hits DeVos over reopening schools: 'I wouldn't trust you to care for a house plant let alone my child' MORE's tax-cut law.

The release of the form comes amid concerns from lawmakers that the opportunity-zone program doesn't have enough guardrails to ensure that it is actually meeting its intended goal of revitalizing economically distressed areas.

ADVERTISEMENT

“This is an important step towards a thorough evaluation of the Opportunity Zone tax incentive,” Treasury Secretary Steven MnuchinSteven Terner MnuchinOn The Money: Supreme Court upholds NY prosecutors' access to Trump's tax returns, rebuffs Congress | Trump complains of 'political prosecution' | Biden rebukes Trump, rolls out jobs plan Mnuchin: Next stimulus bill must cap jobless benefits at 100 percent of previous income Why Trump can't make up his mind on China MORE said in a statement. “We want to understand where Opportunity Zone investments are going and strengthening the economy so that investors and communities can learn from the successes of this bipartisan, pro-growth policy.”

Trump's 2017 law created a program called opportunity zones that allows investors in designated economically distressed areas to receive capital gains tax breaks. 

The opportunity-zone provision has some bipartisan support, but there have also been concerns that the program does not have enough transparency, and that it will not effectively target investments to where they are most needed.

The New York Times published a story last weekend reporting that Mnuchin instructed Treasury to take an action relating to the opportunity-zone program that benefited former "junk bond king" Michael Milken. The article has raised concerns among Democrats. Treasury and Milken have both pushed back strongly against the Times story.

Policymakers have for months had an interest in boosting reporting requirements about opportunity zones. 

When Treasury released proposed regulations on opportunity zones in the spring, the department also released a document requesting comments from stakeholders about how best to measure the economic impact in opportunity zones.

A bipartisan group of lawmakers, including Sens. Tim ScottTimothy (Tim) Eugene ScottThe Hill's Morning Report - Presented by Facebook - Trump takes on CDC over schools Finger-pointing, gridlock spark frustration in Senate Tim Scott says he's talking with House Democrats about reviving police reform bill MORE (R-S.C.) and Cory BookerCory Anthony BookerIn politics, as in baseball, it ain't over till it's over Democrats blast Trump for commuting Roger Stone: 'The most corrupt president in history' Koch-backed group urges Senate to oppose 'bailouts' of states in new ads MORE (D-N.J.), introduced legislation earlier this year to require Treasury to collect data on the impact of the program in underserved communities, and to report that information annually to Congress. It's unclear exactly if or when the bill will get a vote.

Treasury's draft form, which is designed for the 2019 tax year, includes new reporting requirements for funds that make investments in opportunity zones. Under the form, funds would be required to report the employer identification numbers of each business in which the fund has a stock or partnership interest, the census tract in which the business has property, and the value of the investment apportioned to each census tract. Funds would also be required to report information about the value of business property that they own or lease directly.

Treasury said the information it wants funds to report would allow it to track the amount of investments that different census tracts receive over time. Treasury added that policymakers would be able to use the data — along with income and employment numbers — to evaluate the effects of the opportunity zone tax breaks.

Sen. Ron WydenRonald (Ron) Lee WydenTrump administration to impose tariffs on French products in response to digital tax Mnuchin: Next stimulus bill must cap jobless benefits at 100 percent of previous income Congress must act now to fix a Social Security COVID-19 glitch and expand, not cut, benefits MORE (D-Ore.), the top Democrat on the Senate Finance Committee, said in a statement that “requiring taxpayers to prove they’re actually following the rules of the Opportunity Zone program is a positive first step, but it’s one that should have been taken two years ago, instead of prioritizing rules to let the Treasury secretary’s cronies profit at taxpayers’ expense."

"The Opportunity Zone program has been operating without any effort to ensure compliance and that’s inexcusable,” he added.

Booker, who is running for president, said in a statement issued by his Senate office that Treasury took a step toward putting in place transparency measures, but that "in order for the tax incentive to truly fulfill the type of economic development intended from the original legislation, these oversight requirements must be much more comprehensive and the Administration has a long way to go."

Booker and Reps. Emanuel Cleaver (D-Mo.) and Ron KindRonald (Ron) James KindBottom line Coronavirus culture war over reopening economy hits Capitol Hill How the GOP hopes to overcome steep odds in House battle MORE (D-Wis.) also sent a letter to the Treasury Department inspector general on Thursday, asking for an investigation into allegations of misconduct by senior Treasury officials in implementing the opportunity zones provision.

--Updated at 5:15 p.m.