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When can we expect the third round of OZ regs to be released?

Can we expect new regs before the end of the year? Will they be retroactive? I’m concerned they will impact investments I have already done throughout this past year.


Answers
  • Erik Kodesch
    December 13, 2019

    My understanding is that there will not be a third round of proposed regulations. Instead, I believe the next thing will be finalizing the regulations, which may include new rules. I am not sure about the timing for this.

  • Debbie Klis
    December 12, 2019

    The U.S. Treasury of the Department submitted final regulations to the Office of Information and Regulatory Affairs (OIRA) on Dec. 6, 2019. These final regulations follow two previous sets of proposed regulations released in October 2018 and April 2019. Stakeholders in the QOZ area eagerly await the final regulations for this very popular program. Stakeholders suspect that the final regulations will reflect these two rounds of proposed regulations and provide guidance on additional questions that have arisen since their issuance. Regarding when Treasury will release the final regulations, it depends on OIRA's review time. Historically, OIRA's review period ranges between ten to 45 days. Stakeholders in the QOZ area believe that the OIRA has been involved throughout Treasury's drafting of the final regulations, thus, there is hope that they may be released this month. As 2019 winds down, the final date to receive full QOZ tax benefits of Dec. 31, 2019 draws near Beginning Jan. 1, 2020, the 15% step-up in basis following a seven-year holding period through 2026 disappears, unless we receive a surprise extension in the final regulations.

  • Matt Campbell
    December 12, 2019

    Within 30-45 days. If you followed the letter of the proposed regulations, you will be allowed to be covered by those rules but would need to meet all the requirements. That's normal practice when proposed and final regulations come out. If one opts to apply only the final regulations for past investments, they can't pick and choose between the regulation sets. I fully expect the next set of regulations will expand and clarify the unclear areas of prior proposed ones.

  • Matthew Rappaport
    December 13, 2019

    Final regulations are due out in January. It's possible that some of them might have a retroactive effect, but it is unlikely.

  • Neil Faden
    December 12, 2019

    We might get new regulations before the end of the year. They are currently undergoing a final review at the applicable government office. Most of the proposed regulations, except for the ones regarding sales of individual projects after 10 years, stated that they could be relied on, so investments you made in accordance with those regulations should be fine.