In September, Rep. Mark Meadows (R-NC) introduced the Creating Advancement and Personal Improvement in Targeted American Localities (CAPITAL) Act of 2018 (H.R. 6890) to allow for the designation of Opportunity Zones every ten years. The new Opportunity Zones tax incentive was enacted in the Tax Cuts and Jobs Act of 2017 and offers investors a tax reduction on their capital gains if they roll over unrealized capital gains into an Opportunity Fund. Opportunity Funds must invest in designated low-income communities, known as Opportunity Zones, that were nominated by each state’s governor and approved by the Treasury Department. The benefit is currently set to expire at the end of 2026. Rep. Meadows’ bill would allow governors to nominate another round of Opportunity Zones every ten years, effectively renewing the Opportunity Zones benefit indefinitely. The bill currently has five Republican co-sponsors.
Stakeholders are anticipating additional guidance from the IRS on Opportunity Zones in the coming weeks. On September 12, the IRS and Treasury Department sent a proposed rule to the White House Office of Information and Regulatory Affairs (OIRA), which has a mandated 10 to 45 days to review the rule before it can be published for public comment. Treasury Secretary Steven Mnuchin has also recently indicated that he expects initial guidance on Opportunity Zones in the next few weeks. Enterprise urges the Department of Treasury and IRS to create a transparent process for developing reporting requirements and regulations that enables robust public input and fosters equitable and inclusive economic growth. Stay tuned to the Enterprise blog for updates about the proposed rule.