U.S. Senator Tim Scott introduced the IMPACT Act today, an expanded bill that would establish reporting requirements for the Opportunity Zones incentive.
“It’s loud and clear that legislative momentum and interest around reporting requirements continues to grow by all sides of the aisle,” said Reid Thomas, EVP of NES Financial’s Specialty Financial Administration Business, which includes Opportunity Zone fund administration. “These are important steps towards transparency because the Opportunity Zone initiative will be measured by whether it ends up doing the good it was intended to do.”
While many are championing for more transparency, some may object to requiring this kind of reporting due to a perceived added amount of complexity and cost, which is not true if approached correctly. “OZ is a specialty fund and requires a different administrative approach than traditional funds,” added Thomas.
“If an investor uses a solution purpose-built to the needs of OZ, which includes the traditional fund administration and accounting, OZ specific tax compliance tracking/reporting and social impact tracking reporting, then the perceived costs and additional overhead requirements become a non-issue.”
Last month, NES Financial wrote about “Why the Newly Introduced Opportunity Zone Reporting Bills are a Win for Transparency” when U.S. Senator Ron Wyden introduced the “Opportunity Zone Reporting and Reform Act”, which would amend the Internal Revenue Code of 1986 to require to increase reporting for qualified opportunity funds.
The IMPACT, or Improving and Reinstating the Monitoring, Prevention, Accountability, Certification, and Transparency Provisions of Opportunity Zones Act includes a variety of reporting requirements, such as: comparison of the data for designated OZ’s for a 5 year period of this study compared against both those same data points for these zones for the 5 years before they were designated and also comparison against low income communities that were eligible to be selected for OZ designation but were not for the same 5 year period.
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