Title: Opportunity Zone Reporting and Reform Act
Policy area: Taxation

Summary:
Opportunity Zone Reporting and Reform Act
This bill establishes annual reporting requirements for qualified opportunity funds and requires certain identifying information on persons investing in such funds. It also provides for penalties for failing to file reports or filing reports with incorrect information, and requires public online disclosure of information in the reports.
The bill expands prohibitions of investments in certain luxury assets, including private planes, sports stadiums, self-storage facilities, and luxury rental properties. It also terminates designations of contiguous communities that are not low-income as opportunity zones.
The Internal Revenue Service must provide a publicly available list of investment vehicles that are certified as qualified opportunity funds.
The Government Accountability Office must report to Congress on the effectiveness of the Opportunity Zone program in the fifth and tenth year after the enactment of this bill.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2787 Introduced in Senate (IS)]

<DOC>






116th CONGRESS
  1st Session
                                S. 2787

  To amend the Internal Revenue Code of 1986 to require reporting for 
   qualified opportunity funds, to make modifications to opportunity 
                     zones, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            November 6, 2019

   Mr. Wyden 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 reporting for 
   qualified opportunity funds, to make modifications to opportunity 
                     zones, 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 ``Opportunity Zone Reporting and 
Reform Act''.

SEC. 2. 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 and the uniform resource 
        locator (URL) for the website for such fund,
            ``(2) the value of all property held by the fund as of each 
        date described in section 1400Z-2(d)(1),
            ``(3) the value of--
                    ``(A) qualified opportunity zone stock held by the 
                fund on each such date,
                    ``(B) qualified opportunity zone partnership 
                interests held by the fund on each such date,
                    ``(C) qualified opportunity zone business property 
                held by the fund on each such date,
                    ``(D) tangible property not described in 
                subparagraphs (A), (B), or (C) and held by the fund on 
                each such date, and
                    ``(E) intangible property (including cash and cash 
                equivalents) not described in subparagraphs (A), (B), 
                or (C) and held by the fund on each such date,
            ``(4) the name, address, and taxpayer identification number 
        of--
                    ``(A) each corporation in which the qualified 
                opportunity fund owns stock, and
                    ``(B) each partnership in which the qualified 
                opportunity fund owns a capital or profits interest,
            ``(5) with respect to each qualified opportunity zone 
        business which is conducted by the qualified opportunity fund, 
        by a corporation in which the qualified opportunity fund owns 
        stock, or by a partnership in which the qualified opportunity 
        fund owns a capital or profits interest--
                    ``(A) the identity of the entity conducting the 
                qualified opportunity zone business, and
                    ``(B) each North American Industry Classification 
                Code that applies to such trade or business,
            ``(6) with respect to each qualified opportunity zone 
        business which is conducted by the qualified opportunity fund 
        or by a corporation or partnership controlled by the qualified 
        opportunity fund--
                    ``(A) the value (as of each date described in 
                section 1400Z-2(d)(1)) of--
                            ``(i) the tangible property of such 
                        business, and
                            ``(ii) the intangible property (including 
                        cash and cash equivalents) of such business, 
                        and
                    ``(B) the average monthly number of full-time 
                equivalent employees of such business during the 
                reporting period,
            ``(7) with respect to each qualified opportunity zone 
        business property held by the fund or by a corporation or 
        partnership controlled by the qualified opportunity fund--
                    ``(A) the qualified opportunity zone with respect 
                to the property,
                    ``(B) the date the property was acquired, and
                    ``(C) in the case of real property--
                            ``(i) the square footage of such property,
                            ``(ii) the number (if any) of residential 
                        units on the property, and
                            ``(iii) the aggregate costs incurred with 
                        respect to such property related to--
                                    ``(I) land acquisition,
                                    ``(II) new construction, and
                                    ``(III) rehabilitation,
            ``(8) with respect to each person who has investments in 
        the qualified opportunity fund during the reporting period--
                    ``(A) the name and taxpayer identification number 
                of such person,
                    ``(B) the date or dates on which such investments 
                were made, and
                    ``(C) the total amount of such investments, 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) Control.--The term `control' has the meaning given 
        such term under section 954(d)(3).
            ``(3) 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).
    ``(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) the date such investment was made in a qualified 
        opportunity fund and the amount of such investment, including a 
        separate statement of the amount of any such investments which 
        are gain for which an election was made under section 1400Z-
        2(a)(1),
            ``(4) the date of the disposition of the investment, and
            ``(5) 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) In General.--If--
            ``(1) any person is required to file a return under section 
        6039K or a statement under section 6039L for any period, and
            ``(2) fails--
                    ``(A) to file such return or statement on or before 
                the required filing date, or
                    ``(B) fails to include all of the information 
                required to be shown on the return or statement or 
                includes incorrect information,
such person shall pay a penalty of $10,000.
    ``(b) Reduction Where Correction in Specified Period.--If any 
failure described in subsection (a)(2) is corrected on or before the 
day 30 days after the required filing date, the penalty imposed by 
subsection (a) shall be $250 in lieu of the amount determined under 
such paragraph.
    ``(c) De Minimis Errors.--If--
            ``(1) there are 1 or more such failures described in 
        subsection (a)(2)(B) relating to an incorrect dollar amount, 
        and
            ``(2) no single amount in error differs from the correct 
        amount by more than $25,
then no correction shall be required, and, for purposes of this 
section, such return or statement shall be treated as having been filed 
with all correct required information.
    ``(d) Penalty in Cases of Intentional Disregard.--If 1 or more 
failures described in subsection (a)(2) are due to intentional 
disregard of the filing requirement (or the correct information 
reporting requirement), then, with respect to each such failure--
            ``(1) subsections (b) and (c) shall not apply, and
            ``(2) the amount of the penalty determined under subsection 
        (a) shall be twice the amount which would be determined without 
        regard to this paragraph.
    ``(e) Inflation Adjustment.--
            ``(1) In general.--In the case of any failure relating to a 
        return or statement required to be filed in a calendar year 
        beginning after 2020, each of the dollar amounts in subsections 
        (a) and (b) 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.
            ``(2) Rounding.--The amount of any increase under paragraph 
        (1) shall be rounded to the nearest multiple of $100 ($10 in 
        the case of any increase in the amount under subsection 
        (b)).''.
            (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.''.
    (b) Information Returns of Qualified Opportunity Funds Made 
Public.--
            (1) Requirement to disclose.--Subchapter B of chapter 61 of 
        the Internal Revenue Code of 1986 is amended by inserting after 
        section 6104 the following new section:

``SEC. 6104A. PUBLICITY OF INFORMATION REQUIRED FROM QUALIFIED 
              OPPORTUNITY FUNDS.

    ``(a) In General.--Each qualified opportunity fund shall make 
publicly available on the website specified in section 6039K(b)(1) a 
copy of each information return filed under section 6039K(a) at all 
times during the 3-year period beginning on the last day prescribed for 
filing the return (determined with regard to any extension of time for 
filing).
    ``(b) Exceptions From Disclosure Requirement.--The information made 
public under subsection (a) shall not include--
            ``(1) any taxpayer identification number included on the 
        return,
            ``(2) the information described in paragraph (8) of section 
        6039K(b), and
            ``(3) such other information as identified by the Secretary 
        to the extent the exclusion of such information is consistent 
        with the purposes of this section.
    ``(c) Qualified Opportunity Fund.--For purposes of this section, 
the term `qualified opportunity fund' means a fund described in section 
1400Z-2(d).''.
            (2) Penalty.--
                    (A) In general.--Section 6685 of such Code is 
                amended--
                            (i) by inserting ``or the requirements of 
                        section 6104A'' after ``section 6104'', and
                            (ii) by striking ``for certain tax-exempt 
                        organizations'' in the heading thereof.
                    (B) Conforming amendment.--The item relating to 
                section 6685 in the table of sections for part I of 
                subchapter B of chapter 68 of such Code is amended by 
                striking ``for certain tax-exempt organizations''.
            (3) Clerical amendment.--The table of sections for 
        subchapter B of chapter 61 of such Code is amended by inserting 
        after the item relating to section 6104 the following new item:

``Sec. 6104A. Publicity of information required from qualified 
                            opportunity funds.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 3. MODIFICATION OF TRACTS QUALIFIED TO BE DESIGNATED AS QUALIFIED 
              OPPORTUNITY ZONES.

    (a) Disqualification of Certain Census Tracts.--
            (1) Census tracts with high median family income.--
        Paragraph (1) of section 1400Z-1(c) is amended to read as 
        follows:
            ``(1) Low-income communities.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `low-income community' has 
                the same meaning as when used in section 45D(e).
                    ``(B) Exception.--
                            ``(i) In general.--Such term shall not 
                        include any census tract if the median family 
                        income for such tract exceeds 120 percent of 
                        the national median family income (as 
                        determined based on the most recent data 
                        published by the Bureau of the Census on the 
                        date of the enactment of the Opportunity Zone 
                        Reporting and Reform Act).
                            ``(ii) Special rule.--Clause (i) shall not 
                        apply to any census tract if--
                                    ``(I) the poverty rate for such 
                                tract is at least 20 percent, and
                                    ``(II) less than 10 percent of the 
                                population of such tract is enrolled in 
                                an institution of higher education (as 
                                defined in section 101 of the Higher 
                                Education Act of 1965).''.
            (2) Contiguous census tracts.--Section 1400Z-1 of such Code 
        is amended by striking subsection (e) and redesignating 
        subsection (f) as subsection (e).
    (b) Treatment of Previously Designated Tracts.--Section 1400Z-1 of 
the Internal Revenue Code of 1986, as amended by subsection (a)(2), is 
amended by adding at the end the following:
    ``(f) Treatment of Certain Census Tracts.--
            ``(1) In general.--Except as provided in section 1400Z-
        2(d)(2)(D), any census tract (other than a census tract in 
        Puerto Rico) which is not a low-income community and which was 
        designated as a qualified opportunity zone before the date of 
        the enactment of the Opportunity Zone Reporting and Reform Act 
        shall not be treated as a qualified opportunity zone on or 
        after such date of enactment.
            ``(2) Replacement zones.--
                    ``(A) In general.--A State may designate a low-
                income community as a qualified opportunity zone to 
                replace a census tract the status of which as a 
                qualified opportunity zone was terminated by reason of 
                paragraph (1).
                    ``(B) Special rules.--For purposes of this 
                subchapter--
                            ``(i) the determination period with respect 
                        to a designation under subparagraph (A) shall 
                        be the 90-day period beginning on the date of 
                        the enactment of such Act, as extended under 
                        subsection (b)(2), and
                            ``(ii) the period for which any such 
                        designation is in effect shall be the period 
                        beginning with the date such designation takes 
                        effect and ending with the last day of the 10th 
                        calendar year beginning on or after the 
                        designation date as a qualified opportunity 
                        zone for the census tract which it is replacing 
                        as such a zone by reason of the termination 
                        under clause (i).''.
    (c) Treatment of Existing Investments.--Section 1400Z-2(d)(2)(D) of 
such Code is amended by adding at the end the following new clause:
                            ``(iv) Special rule for investments in 
                        certain census tracts.--
                                    ``(I) In general.--For purposes of 
                                applying this paragraph, the use of 
                                property in a qualified census tract 
                                shall be treated as use of property in 
                                a qualified opportunity zone if the 
                                original use of such property occurred 
                                before November 6, 2019, or in the case 
                                of property acquired before such date, 
                                the property was substantially improved 
                                before the close of the 30-month period 
                                beginning with the month of the 
                                acquisition.
                                    ``(II) Qualified census tract.--For 
                                purposes of this clause, the term 
                                `qualified census tract' means any 
                                census tract which is not a low-income 
                                community and which was designated as a 
                                qualified opportunity zone before the 
                                date of the enactment of the 
                                Opportunity Zone Reporting and Reform 
                                Act.''.

SEC. 4. MAINTENANCE OF GEOGRAPHIC BOUNDARIES OF QUALIFIED OPPORTUNITY 
              ZONES.

    Section 1400Z-1(e) of the Internal Revenue Code of 1986, as 
redesignated by section 3(a)(2), is amended by adding at the end the 
following new sentence: ``Such designation shall apply to the 
geographic area as in effect at the time such tract is designated 
without regard to whether adjustments are made to the boundaries of the 
census tract so designated.''.

SEC. 5. MODIFICATION OF PROHIBITION ON CERTAIN TYPES OF TRADES OR 
              BUSINESS AS QUALIFIED OPPORTUNITY ZONE BUSINESSES.

    (a) In General.--Section 1400Z-2(d)(3)(A)(iii) of the Internal 
Revenue Code of 1986 is amended by striking ``in section 144(c)(6)(B)'' 
and inserting ``subsections (a)(8)(B) or (c)(6)(B) of section 144 or 
section 147(e)''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on November 6, 2019.

SEC. 6. OTHER MODIFICATIONS RELATED TO QUALIFIED OPPORTUNITY FUNDS.

    (a) Application of Qualified Opportunity Zone Business Rules to 
Trades or Businesses Conducted by Qualified Opportunity Zone Funds.--
            (1) In general.--Section 1400Z-2(d)(1) of the Internal 
        Revenue Code of 1986 is amended to read as follows:
            ``(1) In general.--The term `qualified opportunity fund' 
        means any investment vehicle--
                    ``(A) which is organized as a corporation or a 
                partnership for the purpose of investing in qualified 
                opportunity zone property (other than another qualified 
                opportunity fund) that holds at least 90 percent of its 
                assets in qualified opportunity zone property, 
                determined by the average of the percentage of 
                qualified opportunity zone property held in the fund as 
                measured--
                            ``(i) on the last day of the first 6-month 
                        period of the taxable year of the fund, and
                            ``(ii) on the last day of the taxable year 
                        of the fund, and
                    ``(B) any trade or business of which is a qualified 
                opportunity zone business.''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect as if included in section 13823 of Public Law 
        115-97.
    (b) Clarification of Substantially All.--
            (1) In general.--Section 1400Z-2(d) of the Internal Revenue 
        Code of 1986 is amended--
                    (A) by striking ``during substantially all'' each 
                place it appears in paragraphs (2)(B)(i)(III), 
                (2)(C)(iii), and (2)(D)(i)(III) and inserting ``for not 
                less than 90 percent'',
                    (B) by striking ``substantially all of the use'' in 
                paragraph (2)(D)(i)(III) and inserting ``not less than 
                90 percent of the use'', and
                    (C) by striking ``in which substantially all'' in 
                paragraph (3)(A)(i) and inserting ``in which not less 
                than 90 percent''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect as if included in section 13823 of Public Law 
        115-97.
    (c) Certain Property Excluded From Qualified Opportunity Zone 
Business Property.--
            (1) In general.--Section 1400Z-2(d)(2)(D) of the Internal 
        Revenue Code of 1986 is amended--
                    (A) in clause (i), by inserting ``(other than self-
                storage property, stadium property, or disqualified 
                residential rental property)'' after ``tangible 
                property'', and
                    (B) by adding at the end the following new clauses:
                            ``(iv) Self-storage property.--The term 
                        `self-storage property' means property designed 
                        and used for the purpose of renting or leasing 
                        individual storage space to occupants who are 
                        to have access to such space for the purpose of 
                        storing and removing personal property.
                            ``(v) Stadium.--The term `stadium property' 
                        means any facility (or appurtenant real 
                        property) which, during at least 5 days during 
                        any calendar year, is used as a stadium or 
                        arena for professional sports exhibitions, 
                        games, or training.
                            ``(vi) Disqualified residential rental 
                        property.--The term `disqualified residential 
                        rental property' means any residential rental 
                        property unless 50 percent or more of the 
                        residential units of such property are both 
                        rent-restricted (within the meaning of section 
                        42(g)(2)) and occupied by individuals whose 
                        income is 50 percent or less of area median 
                        income.''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect as if included in section 13823 of Public Law 
        115-97.
    (d) Treatment of Leased Property.--
            (1) In general.--Section 1400Z-2(d)(2)(D)(i)(I) of the 
        Internal Revenue Code of 1986 is amended by inserting ``or 
        under a lease (other than a lease from a related person) 
        entered into after December 31, 2017,'' after ``December 31, 
        2017,''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in section 13823 of Public Law 
        115-97.
    (e) Correction Relating to Original Use of Qualified Opportunity 
Zone Business Property.--
            (1) In general.--Section 1400Z-2(d)(2)(D)(i)(II) of the 
        Internal Revenue Code of 1986 is amended by striking ``in the 
        qualified opportunity zone''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in section 13823 of Public Law 
        115-97.
    (f) Modification of Determination of Substantial Improvement of 
Qualified Opportunity Zone Business Property.--
            (1) In general.--Section 1400Z-2(d)(2)(D)(ii) of the 
        Internal Revenue Code of 1986 is amended by inserting 
        ``(including land)'' after ``adjusted basis of such property''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in section 13823 of Public Law 
        115-97.

SEC. 7. PUBLIC LIST OF QUALIFIED OPPORTUNITY FUNDS.

    The Secretary of the Treasury (or the Secretary's delegate) shall 
maintain and make publicly available on the internet and at the offices 
of the Internal Revenue Service--
            (1) a list of investment vehicles that are certified as 
        qualified opportunity funds (as defined in section 1400Z-
        2(d)(1) of the Internal Revenue Code of 1986) pursuant to the 
        rules established under section 1400Z-2(e)(4)(A) of such Code, 
        and
            (2) the name, address, and the uniform resource locator 
        (URL) for the website for such fund.

SEC. 8. GAO REPORT.

    (a) In General.--Not later than each applicable date, the 
Comptroller General of the United States shall submit to Congress a 
report on the effectiveness of the provisions of subchapter Z of 
chapter 1 of the Internal Revenue Code of 1986 in achieving the 
policies of such provisions.
    (b) Matters Included.--The reports submitted under subsection (a) 
shall include an analysis of--
            (1) the distribution of investments of qualified 
        opportunity funds among qualified opportunity zones,
            (2) the distribution of such investments across different 
        industries or investment purposes,
            (3) the impact of the designation of an area as a qualified 
        opportunity zone on--
                    (A) economic indicators, including employment, new 
                business start-ups, and poverty reduction,
                    (B) housing costs, and
                    (C) income distribution among residents of such 
                zones,
            (4) the economic benefits provided by such designations 
        compared to economic costs, and
            (5) to the extent practicable, the impact of the provisions 
        of such subchapter Z on low-income communities that have not 
        been designated as qualified opportunity zones.
    (c) Definitions.--
            (1) Applicable date.--The term ``applicable date'' means--
                    (A) the date that is 5 years after the date of the 
                enactment of this Act, and
                    (B) the date that is 10 years after the date of the 
                enactment of this Act.
            (2) Other terms.--Any term used in this section 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.
                                 <all>