Democrats ramp up oversight efforts over 'opportunity zone' incentive

Democrats ramp up oversight efforts over 'opportunity zone' incentive
© Greg Nash

Key congressional Democrats are ramping up their oversight efforts over a program created by President TrumpDonald John TrumpTrump rails against impeachment in speech to Texas farmers Trump administration planning to crack down on 'birth tourism': report George Conway on Trump adding Dershowitz, Starr to legal team: 'Hard to see how either could help' MORE's tax-cut law that was designed to increase investment in low-income communities.

Trump's 2017 law created the "opportunity zone" tax incentive, which provides capital gains tax breaks for those making investments in designated economically distressed areas.

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Lawmakers on both sides of the aisle have expressed interest in boosting reporting requirements in order to evaluate the effect of the opportunity-zone provision on low-income communities. And Democrats have also been raising concerns about allegations of political interference into the program.

House Ways and Means Committee Chairman Richard NealRichard Edmund NealConservative groups aim to sink bipartisan fix to 'surprise' medical bills Treasury watchdog to investigate Trump opportunity zone program House poised to hand impeachment articles to Senate MORE (D-Mass.) and Senate Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenHillicon Valley: Biden calls for revoking tech legal shield | DHS chief 'fully expects' Russia to try to interfere in 2020 | Smaller companies testify against Big Tech 'monopoly power' Lawmakers call for FTC probe into top financial data aggregator Overnight Health Care: Progressives raise red flags over health insurer donations | Republican FTC commish backs Medicare negotiating drug prices | Trump moves to protect money for religious groups MORE (D-Ore.) announced Wednesday that they have sent a letter to Treasury Secretary Steven MnuchinSteven Terner MnuchinSecurity for Trump's Mar-a-Lago visits cost local taxpayers million On The Money — Presented by Wells Fargo — Senate approves Trump trade deal with Canada, Mexico | Senate Dems launch probe into Trump tax law regulations | Trump announces Fed nominees Senate Democrats launch investigation into Trump tax law regulations MORE, requesting more information about the department's decision to designate Storey County, Nev., as an opportunity zone after the department previously determined that the area wasn't eligible.

The letter comes after The New York Times reported late last month that Mnuchin instructed the Treasury Department to grant Storey County the opportunity zone status after spending time with former "junk bond king" Michael Milken, who co-owns a company that holds land in the county.

Wyden and Neal wrote in their letter that the Times article "suggests that favoritism and political pressure may have played a role in the designation of 'qualified opportunity zones' in Nevada." Treasury has called the Times's article inaccurate, saying Mnuchin didn't know about Milken's investments in Storey County and that the Treasury Department considered designating the area as an opportunity zone at the request of Nevada politicians.

Additionally, Wyden, Neal and two other key Democrats sent a letter to the Government Accountability Office (GAO) this week requesting that the office issue a report that includes an analysis of the census tracts designated as opportunity zones, an evaluation of the implementation of the provision by the Treasury Department and the IRS, an evaluation of the controls the IRS has in place to make sure that investors are in compliance with the opportunity-zone provisions, and an evaluation of Treasury's ability to report on the effectiveness of the program. 

The lawmakers also asked GAO to issue a subsequent report when more data becomes available that describes characteristics of opportunity zone investments; describes the effect of opportunity zones on federal and state taxes; and examines the effect of the opportunity zone provisions on economic development, job creation, housing and other factors.

“Given the breadth of the Opportunity Zone incentive, the lack of reporting requirements under current law, as well as the high levels of reported interest from taxpayers, we believe it is critical that the Government Accountability Office (GAO) assist Congress in evaluating the incentive and monitoring its implementation and outcomes,” the lawmakers wrote.

Besides Wyden and Neal, the letter was also signed by Rep. John LewisJohn LewisThe Hill's Morning Report — President Trump on trial John Lewis to miss Martin Luther King Jr. Day event On The Money: USMCA vote held up as committees review deal | Trump legislation added .7T to debt: watchdog | 97 percent of CFOs expect downturn | Trump says 'phase two' China deal could come after election MORE (D-Ga.), the top Democrat on the Ways and Means Committee's oversight subcommittee, and Sen. Cory BookerCory Anthony BookerBooker ahead of Trump impeachment trial: 'History has its eyes on us' Sunday shows preview: Lawmakers gear up for Senate impeachment trial DNC announces new criteria for New Hampshire debate MORE (D-N.J.), a presidential candidate who was also one of the authors of standalone legislation on opportunity zones prior to the 2017 tax law.

A GAO spokesman confirmed that the office received the lawmakers' letter.

Wyden also introduced legislation Wednesday that would impose reporting requirements for funds that invest in the zones, tighten rules to ensure that the tax breaks go productive new investments and terminate areas designated as opportunity zones that are not low income.

A bipartisan bill to impose reporting requirements on funds that invest in opportunity zones was rolled out Wednesday by Reps. Ron KindRonald (Ron) James KindTreasury watchdog to investigate Trump opportunity zone program How the 31 Democrats in Trump districts voted on impeachment Nearly all Democrats expected to back articles of impeachment MORE (D-Wis.), Mike KellyGeorge (Mike) Joseph KellyEven in a time of impeachment, health care is on the agenda Top moments from historic House impeachment debate GOP lawmaker compares impeachment to Pearl Harbor MORE (R-Pa.) and Terri SewellTerrycina (Terri) Andrea SewellSanders, Warren battle for progressive endorsements Biden gains endorsement from Alabama's lone Democratic House rep House panel advances Trump's new NAFTA MORE (D-Ala.).

Treasury and the IRS last week released a draft form to collect information about opportunity zone investments.