July 1
6, 2018
Mr. Scott Dinwiddie
Associate Chief Counsel
Income Tax & Accounting
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC 20224
Re:
Priority Guidance Request
on Opportunity Zones
Dear Mr. Dinwiddie
:
On behalf of the members of the
Novogradac
Opportunity Zones
Working Group
(the
OZ
Working Group)
,
we
are requesting immediate guidance on priority issues
regarding
various provisions of
Interna
l Revenue
Code Section (IRC) 1400Z
-2.
While we identified
numerous
items needing guidance in our
previous
letter dated March 9, 2018
, we are
requesting the Department of Treasury (Treasury) and the Internal Revenue Service (IRS) focus their
immediate attention on providing
quick
answers to the following eleven
questions
. Based upon our
collective experiences, the
lack of guidance around these priority issues are the most common barriers to
taxpayer
investment
. We
are hopeful that guidance on these items can be quickly
provided
through
IRS
FAQs
. We have narrowed
this
guidance request to those areas that are both hindering investmen
t in
opportunity zones and we believe are readily addressable by the IRS through its FAQs page.
We have divided our priority guidance request into five
sections:
A.
Gains eligible for deferral
;
B.
Application of opportunity zones to partnerships
;
C.
Qualification of t
emporary
cash reserves
;
D.
Qualifi
cation of
opportunity zone business
es; and
,
E.
Tax implications of debt.
Our guidance request with respect to each of t
he
identified issues is structured in three parts:
1.
The
question
;
2.
A proposed response
; and
,
3.
A brief explanation of the issue.
Priority Guidance Request on Opportunity Zones
Opportunity Zones Working Group
Hosted by Novogradac & Company LLP
ii
The members of the OZ Working Group
are participants in the community development finance field, and
include
investors, lenders, for-
profit and nonprofit developers, community development financial
institutions, community development entities, trade organizations and other related professionals. These
stakeholders are working together to suggest consensus soluti
ons to technical opportunity zone incentive
issues and provide recommendations to make the opportunity zones incentive more efficient in delivering
benefits to low
-income communities.
We
appreciate your consideration of these comments and look forward t
o an opportunity to discuss these
issues further.
Y
ours very truly,
Novogradac & Company LLP
Novogradac & Company LLP
B
y
By
Michael J. Novogradac
, Managing Partner
John S. Sciarretti, Partner
CC
: Michael Novey, Office of Tax Policy, Treasury
Julie Hanlon
-Bolton, ITA, IRS
Atta
chments: Recommendations for Guidance on Opportunity Zones