Title: IMPACT Act
Policy area: Taxation

Summary:
Improving and Reinstating the Monitoring, Prevention, Accountability, Certification, and Transparency Provisions of Opportunity Zones or the IMPACT Act
This bill provides statutory authority for annual reporting requirements by qualified opportunity funds and taxpayers investing in such funds and sets forth the information required in the reports. The bill imposes penalties for failure to comply with such reporting requirements.
The bill requires the Department of the Treasury to make publicly available annual reports on qualified opportunity funds, including, among other things, the number of such funds and the aggregate amount of assets held in such funds. Treasury must also provide additional information in every fifth year on the impacts and outcomes of a designation of a census tract as a qualified opportunity zone using specified economic indicators.
Treasury must also establish procedures to protect against disclosure of return information that can be associated with any particular taxpayer or competitive or proprietary information.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2994 Introduced in Senate (IS)]

<DOC>






116th CONGRESS
  1st Session
                                S. 2994

   To amend the Internal Revenue Code of 1986 to require information 
reporting with respect to the qualified opportunity zone tax incentives 
 enacted by the 2017 tax reform legislation, to require public reports 
        related to such tax incentives, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            December 5, 2019

Mr. Scott of South Carolina (for himself, Mr. Grassley, Mr. Young, Mr. 
Gardner, Ms. Ernst, Mr. Cassidy, Mr. Rubio, and Mrs. Capito) introduced 
the following bill; which was read twice and referred to the Committee 
                               on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to require information 
reporting with respect to the qualified opportunity zone tax incentives 
 enacted by the 2017 tax reform legislation, to require public reports 
        related to such tax incentives, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Improving and Reinstating the 
Monitoring, Prevention, Accountability, Certification, and Transparency 
Provisions of Opportunity Zones'' or the ``IMPACT Act''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) The 8,764 census tracts designated as qualified 
        opportunity zones under section 1400Z-1 of the Internal Revenue 
        Code of 1986 span across all 50 States, the District of 
        Columbia, and 5 Territories and overwhelmingly represent 
        communities that have been economically left behind as the 
        American economy has surged forward.
            (2) The average poverty rate of qualified opportunity zone 
        residents is 28.9 percent.
            (3) Seventy-one percent of qualified opportunity zones meet 
        the Treasury Department's definition of ``severely 
        distressed''.
            (4) More adults in qualified opportunity zones lack a high 
        school diploma than have a four-year college degree.
            (5) The Investing in Opportunity Act, which originally 
        proposed opportunity zones, originally incorporated reporting 
        requirements to evaluate the impact the incentive will have on 
        designated communities and it is critical that Congress act to 
        reinstate reporting requirements as soon as possible.

SEC. 3. INFORMATION REPORTING ON QUALIFIED OPPORTUNITY FUNDS.

    (a) In General.--
            (1) Filing requirements for funds and investors.--Subpart A 
        of part III of subchapter A of chapter 61 of the Internal 
        Revenue Code of 1986 is amended by inserting after section 
        6039J the following new sections:

``SEC. 6039K. RETURNS WITH RESPECT TO QUALIFIED OPPORTUNITY FUNDS.

    ``(a) In General.--Every qualified opportunity fund shall file an 
annual return (at such time and in such manner as the Secretary may 
prescribe) containing the information described in subsection (b).
    ``(b) Information From Funds.--The information described in this 
subsection is--
            ``(1) the name, address, and taxpayer identification number 
        of the qualified opportunity fund,
            ``(2) whether the qualified opportunity fund is organized 
        as a corporation or a partnership,
            ``(3) the value of the total assets held by the fund as of 
        each date described in section 1400Z-2(d)(1),
            ``(4) the value of all qualified opportunity zone property 
        held by the fund on each such date,
            ``(5) with respect to each investment held by the fund in 
        qualified opportunity zone stock or a qualified opportunity 
        zone partnership interest--
                    ``(A) the name, address, and taxpayer 
                identification number of the corporation in which such 
                stock is held or the partnership in which such interest 
                is held, as the case may be,
                    ``(B) each North American Industry Classification 
                Code that applies to the trades or businesses conducted 
                by such corporation or partnership,
                    ``(C) the census tracts in which the qualified 
                opportunity zone property of such corporation or 
                partnership is located,
                    ``(D) the amount of the investment in such stock or 
                partnership interest as of each date described in 
                section 1400Z-2(d)(1),
                    ``(E) the value of property held by such 
                corporation or partnership on each such date which is 
                owned by such corporation or partnership,
                    ``(F) the value of property held by such 
                corporation or partnership on each such date which is 
                leased by such corporation or partnership,
                    ``(G) the approximate number of residential units 
                (if any) for any real property held by such corporation 
                or partnership, and
                    ``(H) whether the approximate average monthly 
                number of full-time equivalent employees of such 
                corporation or partnership for the year is--
                            ``(i) equal to or less than 25,
                            ``(ii) greater than 25 and equal to or less 
                        than 50,
                            ``(iii) greater than 50 and equal to or 
                        less than 75,
                            ``(iv) greater than 75 and equal to or less 
                        than 100,
                            ``(v) greater than 100 and equal to or less 
                        than 500,
                            ``(vi) greater than 500 or equal to or less 
                        than 1,000, or
                            ``(vii) greater than 1,000,
            ``(6) with respect to each item of qualified opportunity 
        zone business property held by the fund--
                    ``(A) the North American Industry Classification 
                Code that applies to the trades or businesses in which 
                such property is held,
                    ``(B) the census tract in which the property is 
                located,
                    ``(C) whether the property is owned or leased,
                    ``(D) the value of the property as of each date 
                described in section 1400Z-2(d)(1), and
                    ``(E) in the case of real property, number of 
                residential units (if any),
            ``(7) whether the average monthly number of full-time 
        equivalent employees of the qualified opportunity fund for the 
        year is--
                    ``(A) equal to or less than 25,
                    ``(B) greater than 25 and equal to or less than 50,
                    ``(C) greater than 50 and equal to or less than 75,
                    ``(D) greater than 75 and equal to or less than 
                100,
                    ``(E) greater than 100 and equal to or less than 
                500,
                    ``(F) greater than 500 or equal to or less than 
                1,000, or
                    ``(G) greater than 1,000,
            ``(8) with respect to each person who disposed of an 
        investment in the qualified opportunity fund during the year--
                    ``(A) the name and taxpayer identification number 
                of such person,
                    ``(B) the date or dates on which the investment 
                disposed was acquired, and
                    ``(C) the date or dates on which any such 
                investment was disposed and the amount of the 
                investment disposed, and
            ``(9) such other information as the Secretary may require.
    ``(c) Definitions.--For purposes of this section--
            ``(1) In general.--Any term used in this section which is 
        also used in subchapter Z of chapter 1 shall have the meaning 
        given such term under such subchapter.
            ``(2) Full-time equivalent employees.--The term `full-time 
        equivalent employees' means, with respect to any month, the sum 
        of--
                    ``(A) the number of full-time employees (as defined 
                in section 4980H(c)(4)) for the month, plus
                    ``(B) the number of employees determined (under 
                rules similar to the rules of section 4980H(c)(2)(E)) 
                by dividing the aggregate number of hours of service of 
                employees who are not full-time employees for the month 
                by 120.

``SEC. 6039L. INFORMATION ON PERSONS INVESTING IN QUALIFIED OPPORTUNITY 
              FUNDS.

    ``(a) In General.--Every taxpayer who makes an investment in a 
qualified opportunity fund shall provide an annual statement (at such 
time and in such manner as the Secretary may prescribe) containing the 
information described in subsection (b) with respect to each such 
investment.
    ``(b) Information From Investors.--The information described in 
this subsection is--
            ``(1) the name, address, and taxpayer identification number 
        of the taxpayer,
            ``(2) the name and taxpayer identification number of the 
        qualified opportunity fund in which the investment was made,
            ``(3) a description of such investment,
            ``(4) the date such investment was made,
            ``(5) the amount of short-term and long-term capital gains 
        for which an election was made under section 1400Z-2(a)(1) for 
        such investment,
            ``(6) in the case of any disposition of such investment 
        during the taxable year--
                    ``(A) a description of the investment disposed,
                    ``(B) the date of the disposition, and
                    ``(C) the amount of any previously deferred short-
                term and long-term capital gain included in income as a 
                result of such disposition, and
            ``(7) such other information as the Secretary may require.
    ``(c) Definitions.--Any term used in this section which is also 
used in subchapter Z of chapter 1 shall have the meaning given such 
term under such subchapter.''.
            (2) Penalties.--Part II of subchapter B of chapter 68 of 
        the Internal Revenue Code of 1986 is amended by inserting after 
        section 6725 the following new section:

``SEC. 6726. FAILURE TO COMPLY WITH INFORMATION REPORTING REQUIREMENTS 
              RELATING TO QUALIFIED OPPORTUNITY FUNDS.

    ``(a) Information Returns by Funds.--
            ``(1) In general.--In the case of any person required to 
        file a return under section 6039K fails to file a complete and 
        correct return under such section the time and in the manner 
        prescribed therefor, such person shall pay a penalty of $500 
        for each day during which such failure continues.
            ``(2) Limitation.--
                    ``(A) In general.--The maximum penalty under this 
                subsection on failures with respect to any 1 return 
                shall not exceed $10,000.
                    ``(B) Large funds.--In the case of any person the 
                gross assets of which (determined on the last day of 
                the taxable year) are in excess of $10,000,000, 
                subparagraph (A) shall be applied by substituting 
                `$50,000' for `$10,000'.
            ``(3) Inflation adjustment.--
                    ``(A) In general.--In the case of any failure 
                relating to a return required to be filed in a calendar 
                year beginning after 2020, each of the dollar amounts 
                in paragraphs (1) and (2) shall be increased by an 
                amount equal to such dollar amount multiplied by the 
                cost-of-living adjustment determined under section 
                1(f)(3) for the calendar year determined by 
                substituting `calendar year 2019' for `calendar year 
                2016' in subparagraph (A)(ii) thereof.
                    ``(B) Rounding.--
                            ``(i) In general.--If the dollar amount in 
                        paragraph (1), after being increased under 
                        subparagraph (A), is not a multiple of $10, 
                        such dollar amount shall be rounded to the next 
                        lowest multiple of $10.
                            ``(ii) Asset threshold.--If the $10,000,000 
                        dollar amount in paragraph (2)(B), after being 
                        increased under subparagraph (A), is not a 
                        multiple of $10,000, such dollar amount shall 
                        be rounded to the next lowest multiple of 
                        $10,000.
                            ``(iii) Other dollar amounts.--If any 
                        dollar amount in paragraph (2) (other than the 
                        amount to which clause (ii) applies), after 
                        being increased under subparagraph (A), is not 
                        a multiple of $1,000, such dollar amount shall 
                        be rounded to the next lowest multiple of 
                        $1,000.
    ``(b) Statements by Investors.--
            ``(1) In general.--If--
                    ``(A) any person is required to file a statement 
                under section 6039L for any period, and
                    ``(B) fails--
                            ``(i) to file such statement on or before 
                        the required filing date, or
                            ``(ii) fails to include all of the 
                        information required to be shown on the 
                        statement or includes incorrect information,
        such person shall pay a penalty of $5,000.
            ``(2) Reduction where correction in specified period.--If 
        any failure described in paragraph (1)(B) is corrected on or 
        before the day 60 days after the required filing date, the 
        penalty imposed by paragraph (1) shall be $500 in lieu of the 
        amount determined under such paragraph.
            ``(3) De minimis errors.--If--
                    ``(A) there are one or more such failures described 
                in paragraph (1)(B)(ii) relating to an incorrect dollar 
                amount, and
                    ``(B) no single amount in error differs from the 
                correct amount by more than $100,
        then no correction shall be required, and, for purposes of this 
        section, such statement shall be treated as having been filed 
        with all correct required information.
            ``(4) Penalty in cases of intentional disregard.--If one or 
        more failures described in paragraph (1)(B) are due to 
        intentional disregard of the filing requirement (or the correct 
        information reporting requirement), then, with respect to each 
        such failure--
                    ``(A) paragraphs (2) and (3) shall not apply, and
                    ``(B) the amount of the penalty determined under 
                paragraph (1) shall be $25,000.
            ``(5) Inflation adjustment.--
                    ``(A) In general.--In the case of any failure 
                relating to a statement required to be filed in a 
                calendar year beginning after 2020, each of the dollar 
                amounts in paragraphs (1), (2), and (4) shall be 
                increased by an amount equal to such dollar amount 
                multiplied by the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year determined 
                by substituting `calendar year 2019' for `calendar year 
                2016' in subparagraph (A)(ii) thereof.
                    ``(B) Rounding.--The amount of any increase under 
                subparagraph (A) shall be rounded to the nearest 
                multiple of $100 ($10 in the case of any increase in 
                the amount under paragraph (2)).''.
            (3) Clerical amendments.--
                    (A) The table of sections for subpart A of part III 
                of subchapter A of chapter 61 of such Code is amended 
                by inserting after the item relating to section 6039J 
                the following new items:

``Sec. 6039K. Returns with respect to qualified opportunity funds.
``Sec. 6039L. Information on persons investing in qualified opportunity 
                            funds.''.
                    (B) The table of sections for part II of subchapter 
                B of chapter 68 of such Code is amended by inserting 
                after the item relating to section 6725 the following 
                new item:

``Sec. 6726. Failure to comply with information reporting requirements 
                            relating to qualified opportunity funds.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after the date of the 
        enactment of this Act.
    (b) Reporting of Data on Opportunity Zone Tax Incentives.--
            (1) In general.--As soon as practical after the date of the 
        enactment of this Act, and annually thereafter, the Secretary 
        of the Treasury, or the Secretary's delegate (referred to in 
        this section as the ``Secretary''), in consultation with the 
        Director of the Bureau of the Census and such other agencies as 
        the Secretary determines appropriate, shall make publicly 
        available a report on qualified opportunity funds.
            (2) Information included.--The report required under 
        paragraph (1) shall include the following information:
                    (A) The number of qualified opportunity funds.
                    (B) The aggregate amount of assets held in 
                qualified opportunity funds.
                    (C) The aggregate amount of investments made by 
                qualified opportunity funds in qualified opportunity 
                fund property across each industry class under the 
                North American Industry Classification Code.
                    (D) The percentage of census tracts designated as 
                qualified opportunity zones that have received 
                qualified opportunity fund investments.
                    (E) For each census tract designated as a qualified 
                opportunity zone, whether the average monthly number of 
                full-time equivalent employees of qualified opportunity 
                zone businesses for the preceding 12-month period is--
                            (i) equal to or less than 25;
                            (ii) greater than 25 and equal to or less 
                        than 50;
                            (iii) greater than 50 and equal to or less 
                        than 75;
                            (iv) greater than 75 and equal to or less 
                        than 100;
                            (v) greater than 100 and equal to or less 
                        than 500;
                            (vi) greater than 500 or equal to or less 
                        than 1,000; or
                            (vii) greater than 1,000.
                    (F) The percentage of the total amount of 
                investments made by qualified opportunity funds in--
                            (i) qualified opportunity zone property 
                        which is real property; and
                            (ii) other qualified opportunity zone 
                        property.
                    (G) For each census tract, the aggregate 
                approximate number of residential units for investments 
                made by qualified opportunity funds in real property.
                    (H) The aggregate amount of investments made by 
                qualified opportunity funds in each census tract.
            (3) Additional information.--
                    (A) In general.--Beginning with the report 
                submitted under paragraph (1) for the 6th year after 
                the date of the enactment of this Act, the Secretary 
                shall include in such report the impacts and outcomes 
                of a designation of a census tract as a qualified 
                opportunity zone as measured by economic indicators, 
                such as job creation, poverty reduction, new business 
                starts, and other metrics as determined by the 
                Secretary.
                    (B) Semi-decennial information.--
                            (i) In general.--In the case of any report 
                        submitted under paragraph (1) in the 6th year 
                        or the 11th year after the date of the 
                        enactment of this Act, the Secretary shall 
                        include the following information:
                                    (I) For each census tract 
                                designated as a qualified opportunity 
                                zone, a comparison (based on aggregate 
                                information) of the factors listed in 
                                clause (ii) between the 5-year period 
                                ending on the date of the enactment of 
                                Public Law 115-97 and the most recent 
                                5-year period for which data is 
                                available.
                                    (II) For each census tract 
                                designated as a qualified opportunity 
                                zone, a comparison (based on aggregate 
                                information) of the factors listed in 
                                clause (ii) for the most recent 5-year 
                                period for which data is available 
                                between such census tract and any 
                                census tract that was a low-income 
                                community eligible to be designated as 
                                a qualified opportunity zone but was 
                                not so designated.
                            (ii) Factors listed.--The factors listed in 
                        this paragraph are the following:
                                    (I) The unemployment rate.
                                    (II) The number of persons working 
                                in the census tract, including the 
                                percentage of such persons who were not 
                                residents in the census tract in the 
                                preceding year.
                                    (III) Individual, family, and 
                                household poverty rates.
                                    (IV) Median family income of 
                                residents of the census tract.
                                    (V) Demographic information on 
                                residents of the census tract, 
                                including age, income, education, race, 
                                and employment.
                                    (VI) The average percentage of 
                                income of residents of the census tract 
                                spent on rent annually.
                                    (VII) The number of residences in 
                                the census tract.
                                    (VIII) The average value of 
                                residential property in the census 
                                tract.
                                    (IX) The number of affordable 
                                housing units in the census tract.
                                    (X) The number and percentage of 
                                residents in the census tract that were 
                                not employed for the preceding year.
                                    (XI) The number of new business 
                                starts in the census tract.
                                    (XII) The distribution of employees 
                                in the census tract by North American 
                                Industry Classification Code.
            (4) Protection of identifiable return information.--In 
        making reports required under this subsection, the Secretary 
        shall establish appropriate procedures to ensure that any 
        amounts reported do not disclose taxpayer return information 
        that can be associated with any particular taxpayer or 
        competitive or proprietary information.
            (5) Definitions.--Any term used in this subsection which is 
        also used in subchapter Z of chapter 1 of the Internal Revenue 
        Code of 1986 shall have the meaning given such term under such 
        subchapter.
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