IMPACT Act

II 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) in- troduced the following bill; which was read twice and referred to the Com- mittee on Finance A BILL To amend the Internal Revenue Code of 1986 to require information reporting with respect to the qualified oppor- tunity zone tax incentives enacted by the 2017 tax re- form legislation, to require public reports related to such tax incentives, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Improving and Rein- 4 stating the Monitoring, Prevention, Accountability, Cer- 5 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 2994 IS tification, and Transparency Provisions of Opportunity 1 Zones’’ or the ‘‘IMPACT Act’’. 2 SEC. 2. FINDINGS. 3 Congress makes the following findings: 4 (1) The 8,764 census tracts designated as 5 qualified opportunity zones under section 1400Z–1 6 of the Internal Revenue Code of 1986 span across 7 all 50 States, the District of Columbia, and 5 Terri- 8 tories and overwhelmingly represent communities 9 that have been economically left behind as the Amer- 10 ican economy has surged forward. 11 (2) The average poverty rate of qualified oppor- 12 tunity zone residents is 28.9 percent. 13 (3) Seventy-one percent of qualified opportunity 14 zones meet the Treasury Department’s definition of 15 ‘‘severely distressed’’. 16 (4) More adults in qualified opportunity zones 17 lack a high school diploma than have a four-year col- 18 lege degree. 19 (5) The Investing in Opportunity Act, which 20 originally proposed opportunity zones, originally in- 21 corporated reporting requirements to evaluate the 22 impact the incentive will have on designated commu- 23 nities and it is critical that Congress act to reinstate 24 reporting requirements as soon as possible. 25 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 2994 IS SEC. 3. INFORMATION REPORTING ON QUALIFIED OPPOR- 1 TUNITY FUNDS. 2 (a) IN GENERAL.— 3 (1) FILING REQUIREMENTS FOR FUNDS AND 4 INVESTORS.—Subpart A of part III of subchapter A 5 of chapter 61 of the Internal Revenue Code of 1986 6 is amended by inserting after section 6039J the fol- 7 lowing new sections: 8 ‘‘SEC. 6039K. RETURNS WITH RESPECT TO QUALIFIED OP- 9 PORTUNITY FUNDS. 10 ‘‘(a) IN GENERAL.—Every qualified opportunity fund 11 shall file an annual return (at such time and in such man- 12 ner as the Secretary may prescribe) containing the infor- 13 mation described in subsection (b). 14 ‘‘(b) INFORMATION FROM FUNDS.—The information 15 described in this subsection is— 16 ‘‘(1) the name, address, and taxpayer identifica- 17 tion number of the qualified opportunity fund, 18 ‘‘(2) whether the qualified opportunity fund is 19 organized as a corporation or a partnership, 20 ‘‘(3) the value of the total assets held by the 21 fund as of each date described in section 1400Z– 22 2(d)(1), 23 ‘‘(4) the value of all qualified opportunity zone 24 property held by the fund on each such date, 25 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 2994 IS ‘‘(5) with respect to each investment held by 1 the fund in qualified opportunity zone stock or a 2 qualified opportunity zone partnership interest— 3 ‘‘(A) the name, address, and taxpayer 4 identification number of the corporation in 5 which such stock is held or the partnership in 6 which such interest is held, as the case may be, 7 ‘‘(B) each North American Industry Clas- 8 sification Code that applies to the trades or 9 businesses conducted by such corporation or 10 partnership, 11 ‘‘(C) the census tracts in which the quali- 12 fied opportunity zone property of such corpora- 13 tion or partnership is located, 14 ‘‘(D) the amount of the investment in such 15 stock or partnership interest as of each date de- 16 scribed in section 1400Z–2(d)(1), 17 ‘‘(E) the value of property held by such 18 corporation or partnership on each such date 19 which is owned by such corporation or partner- 20 ship, 21 ‘‘(F) the value of property held by such 22 corporation or partnership on each such date 23 which is leased by such corporation or partner- 24 ship, 25 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 2994 IS ‘‘(G) the approximate number of residen- 1 tial units (if any) for any real property held by 2 such corporation or partnership, and 3 ‘‘(H) whether the approximate average 4 monthly number of full-time equivalent employ- 5 ees of such corporation or partnership for the 6 year is— 7 ‘‘(i) equal to or less than 25, 8 ‘‘(ii) greater than 25 and equal to or 9 less than 50, 10 ‘‘(iii) greater than 50 and equal to or 11 less than 75, 12 ‘‘(iv) greater than 75 and equal to or 13 less than 100, 14 ‘‘(v) greater than 100 and equal to or 15 less than 500, 16 ‘‘(vi) greater than 500 or equal to or 17 less than 1,000, or 18 ‘‘(vii) greater than 1,000, 19 ‘‘(6) with respect to each item of qualified op- 20 portunity zone business property held by the fund— 21 ‘‘(A) the North American Industry Classi- 22 fication Code that applies to the trades or busi- 23 nesses in which such property is held, 24 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 2994 IS ‘‘(B) the census tract in which the prop- 1 erty is located, 2 ‘‘(C) whether the property is owned or 3 leased, 4 ‘‘(D) the value of the property as of each 5 date described in section 1400Z–2(d)(1), and 6 ‘‘(E) in the case of real property, number 7 of residential units (if any), 8 ‘‘(7) whether the average monthly number of 9 full-time equivalent employees of the qualified oppor- 10 tunity fund for the year is— 11 ‘‘(A) equal to or less than 25, 12 ‘‘(B) greater than 25 and equal to or less 13 than 50, 14 ‘‘(C) greater than 50 and equal to or less 15 than 75, 16 ‘‘(D) greater than 75 and equal to or less 17 than 100, 18 ‘‘(E) greater than 100 and equal to or less 19 than 500, 20 ‘‘(F) greater than 500 or equal to or less 21 than 1,000, or 22 ‘‘(G) greater than 1,000, 23 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 2994 IS ‘‘(8) with respect to each person who disposed 1 of an investment in the qualified opportunity fund 2 during the year— 3 ‘‘(A) the name and taxpayer identification 4 number of such person, 5 ‘‘(B) the date or dates on which the invest- 6 ment disposed was acquired, and 7 ‘‘(C) the date or dates on which any such 8 investment was disposed and the amount of the 9 investment disposed, and 10 ‘‘(9) such other information as the Secretary 11 may require. 12 ‘‘(c) DEFINITIONS.—For purposes of this section— 13 ‘‘(1) IN GENERAL.—Any term used in this sec- 14 tion which is also used in subchapter Z of chapter 15 1 shall have the meaning given such term under 16 such subchapter. 17 ‘‘(2) FULL-TIME EQUIVALENT EMPLOYEES.— 18 The term ‘full-time equivalent employees’ means, 19 with respect to any month, the sum of— 20 ‘‘(A) the number of full-time employees (as 21 defined in section 4980H(c)(4)) for the month, 22 plus 23 ‘‘(B) the number of employees determined 24 (under rules similar to the rules of section 25 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 2994 IS 4980H(c)(2)(E)) by dividing the aggregate 1 number of hours of service of employees who 2 are not full-time employees for the month by 3 120. 4 ‘‘SEC. 6039L. INFORMATION ON PERSONS INVESTING IN 5 QUALIFIED OPPORTUNITY FUNDS. 6 ‘‘(a) IN GENERAL.—Every taxpayer who makes an 7 investment in a qualified opportunity fund shall provide 8 an annual statement (at such time and in such manner 9 as the Secretary may prescribe) containing the informa- 10 tion described in subsection (b) with respect to each such 11 investment. 12 ‘‘(b) INFORMATION FROM INVESTORS.—The infor- 13 mation described in this subsection is— 14 ‘‘(1) the name, address, and taxpayer identifica- 15 tion number of the taxpayer, 16 ‘‘(2) the name and taxpayer identification num- 17 ber of the qualified opportunity fund in which the 18 investment was made, 19 ‘‘(3) a description of such investment, 20 ‘‘(4) the date such investment was made, 21 ‘‘(5) the amount of short-term and long-term 22 capital gains for which an election was made under 23 section 1400Z–2(a)(1) for such investment, 24 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 2994 IS ‘‘(6) in the case of any disposition of such in- 1 vestment during the taxable year— 2 ‘‘(A) a description of the investment dis- 3 posed, 4 ‘‘(B) the date of the disposition, and 5 ‘‘(C) the amount of any previously deferred 6 short-term and long-term capital gain included 7 in income as a result of such disposition, and 8 ‘‘(7) such other information as the Secretary 9 may require. 10 ‘‘(c) DEFINITIONS.—Any term used in this section 11 which is also used in subchapter Z of chapter 1 shall have 12 the meaning given such term under such subchapter.’’. 13 (2) PENALTIES.—Part II of subchapter B of 14 chapter 68 of the Internal Revenue Code of 1986 is 15 amended by inserting after section 6725 the fol- 16 lowing new section: 17 ‘‘SEC. 6726. FAILURE TO COMPLY WITH INFORMATION RE- 18 PORTING REQUIREMENTS RELATING TO 19 QUALIFIED OPPORTUNITY FUNDS. 20 ‘‘(a) INFORMATION RETURNS BY FUNDS.— 21 ‘‘(1) IN GENERAL.—In the case of any person 22 required to file a return under section 6039K fails 23 to file a complete and correct return under such sec- 24 tion the time and in the manner prescribed therefor, 25 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 2994 IS such person shall pay a penalty of $500 for each day 1 during which such failure continues. 2 ‘‘(2) LIMITATION.— 3 ‘‘(A) IN GENERAL.—The maximum penalty 4 under this subsection on failures with respect to 5 any 1 return shall not exceed $10,000. 6 ‘‘(B) LARGE FUNDS.—In the case of any 7 person the gross assets of which (determined on 8 the last day of the taxable year) are in excess 9 of $10,000,000, subparagraph (A) shall be ap- 10 plied by substituting ‘$50,000’ for ‘$10,000’. 11 ‘‘(3) INFLATION ADJUSTMENT.— 12 ‘‘(A) IN GENERAL.—In the case of any 13 failure relating to a return required to be filed 14 in a calendar year beginning after 2020, each 15 of the dollar amounts in paragraphs (1) and (2) 16 shall be increased by an amount equal to such 17 dollar amount multiplied by the cost-of-living 18 adjustment determined under section 1(f)(3) for 19 the calendar year determined by substituting 20 ‘calendar year 2019’ for ‘calendar year 2016’ in 21 subparagraph (A)(ii) thereof. 22 ‘‘(B) ROUNDING.— 23 ‘‘(i) IN GENERAL.—If the dollar 24 amount in paragraph (1), after being in- 25 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 2994 IS creased under subparagraph (A), is not a 1 multiple of $10, such dollar amount shall 2 be rounded to the next lowest multiple of 3 $10. 4 ‘‘(ii) ASSET THRESHOLD.—If the 5 $10,000,000 dollar amount in paragraph 6 (2)(B), after being increased under sub- 7 paragraph (A), is not a multiple of 8 $10,000, such dollar amount shall be 9 rounded to the next lowest multiple of 10 $10,000. 11 ‘‘(iii) OTHER DOLLAR AMOUNTS.—If 12 any dollar amount in paragraph (2) (other 13 than the amount to which clause (ii) ap- 14 plies), after being increased under sub- 15 paragraph (A), is not a multiple of $1,000, 16 such dollar amount shall be rounded to the 17 next lowest multiple of $1,000. 18 ‘‘(b) STATEMENTS BY INVESTORS.— 19 ‘‘(1) IN GENERAL.—If— 20 ‘‘(A) any person is required to file a state- 21 ment under section 6039L for any period, and 22 ‘‘(B) fails— 23 ‘‘(i) to file such statement on or be- 24 fore the required filing date, or 25 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 12 •S 2994 IS ‘‘(ii) fails to include all of the infor- 1 mation required to be shown on the state- 2 ment or includes incorrect information, 3 such person shall pay a penalty of $5,000. 4 ‘‘(2) REDUCTION WHERE CORRECTION IN SPEC- 5 IFIED PERIOD.—If any failure described in para- 6 graph (1)(B) is corrected on or before the day 60 7 days after the required filing date, the penalty im- 8 posed by paragraph (1) shall be $500 in lieu of the 9 amount determined under such paragraph. 10 ‘‘(3) DE MINIMIS ERRORS.—If— 11 ‘‘(A) there are one or more such failures 12 described in paragraph (1)(B)(ii) relating to an 13 incorrect dollar amount, and 14 ‘‘(B) no single amount in error differs 15 from the correct amount by more than $100, 16 then no correction shall be required, and, for pur- 17 poses of this section, such statement shall be treated 18 as having been filed with all correct required infor- 19 mation. 20 ‘‘(4) PENALTY IN CASES OF INTENTIONAL DIS- 21 REGARD.—If one or more failures described in para- 22 graph (1)(B) are due to intentional disregard of the 23 filing requirement (or the correct information report- 24 VerDate Sep 11 2014 23:41 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994 pamtmann on DSKBC07HB2PROD with BILLS 13 •S 2994 IS ing requirement), then, with respect to each such 1 failure— 2 ‘‘(A) paragraphs (2) and (3) shall not 3 apply, and 4 ‘‘(B) the amount of the penalty determined 5 under paragraph (1) shall be $25,000. 6 ‘‘(5) INFLATION ADJUSTMENT.— 7 ‘‘(A) IN GENERAL.—In the case of any 8 failure relating to a statement [Text truncated for display. 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