Opportunity Zone Reform Act
This bill modifies requirements relating to qualified opportunity zones. A "qualified opportunity zone" is an area in which investment is encouraged to promote economic development and job creation in distressed communities by providing tax benefits to investors.
The bill revises requirements for the designation of certain census tracts as qualified opportunity zones based on median family income. It also excludes certain property from the term "qualified opportunity zone business property," including self storage property, parking property, stadiums, and certain residential rental property.
The bill requires the Internal Revenue Service to provide a publicly available list of investment vehicles that are certified as qualified opportunity funds.
The Government Accountability Office must report to Congress on the effectiveness of the Opportunity Zone program in the fifth and tenth year after the enactment of this bill.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5042 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 5042
To amend the Internal Revenue Code of 1986 to reform rules related to
qualified opportunity zones.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 12, 2019
Mr. Clyburn (for himself, Ms. Adams, and Mr. Clay) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to reform rules related to
qualified opportunity zones.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Opportunity Zone Reform Act''.
SEC. 2. MODIFICATION OF TRACTS QUALIFIED TO BE DESIGNATED AS QUALIFIED
OPPORTUNITY ZONES.
(a) Disqualification of Certain Census Tracts.--
(1) Census tracts with high median family income.--
Paragraph (1) of section 1400Z-1(c) of the Internal Revenue
Code of 1986 is amended to read as follows:
``(1) Low-income communities.--
``(A) In general.--Except as provided in
subparagraph (B), the term `low-income community' has
the same meaning as when used in section 45D(e).
``(B) Exception.--
``(i) In general.--Such term shall not
include any census tract if the median family
income for such tract exceeds 120 percent of
the national median family income (as
determined based the most recent data published
by the Bureau of the Census on the date of the
enactment of the Opportunity Zone Reform Act).
``(ii) Special rule.--Clause (i) shall not
apply to any census tract if--
``(I) the poverty rate for such
tract is at least 20 percent, and
``(II) less than 10 percent of the
population of such tract is enrolled in
an institution of higher education (as
defined in section 101 of the Higher
Education Act of 1965).''.
(2) Contiguous census tracts.--Section 1400Z-1 of such Code
is amended by striking subsection (e) and redesignating
subsection (f) as subsection (e).
(b) Treatment of Previously Designated Tracts.--Section 1400Z-1 of
such Code, as amended by subsection (a)(2), is amended by adding at the
end the following:
``(f) Treatment of Certain Census Tracts.--
``(1) In general.--Except as provided in section 1400Z-
2(d)(2)(D), any census tract (other than a census tract in
Puerto Rico) which is not a low-income community and which was
designated as a qualified opportunity zone before the date of
the enactment of the Opportunity Zone Reform Act shall not be
treated as a qualified opportunity zone on or after such date
of enactment.
``(2) Replacement zones.--
``(A) In general.--A State may designate a low-
income community as a qualified opportunity zone to
replace a census tract the status of which as a
qualified opportunity zone was terminated by reason of
paragraph (1).
``(B) Special rules.--For purposes of this
subchapter--
``(i) the determination period with respect
to a designation under subparagraph (A) shall
be the 90-day period beginning on the date of
the enactment of such Act, as extended under
subsection (b)(2), and
``(ii) the period for which any such
designation is in effect shall be the period
beginning with the date such designation takes
effect and ending with the last day of the 10th
calendar year beginning on or after the
designation date as a qualified opportunity
zone for the census tract which it is replacing
as such a zone by reason of the termination
under clause (i).''.
(c) Treatment of Existing Investments.--Section 1400Z-2(d)(2)(D) of
such Code is amended by adding at the end the following new clause:
``(iv) Special rule for investments in
certain census tracts.--
``(I) In general.--For purposes of
applying this paragraph, the use of
property in a qualified census tract
shall be treated as use of property in
a qualified opportunity zone if the
original use of such property occurred
before November 6, 2019, or in the case
of property acquired before such date,
the property was substantially improved
before the close of the 30-month period
beginning with the month of the
acquisition.
``(II) Qualified census tract.--For
purposes of this clause, the term
`qualified census tract' means any
census tract which is not a low-income
community and which was designated as a
qualified opportunity zone before the
date of the enactment of the
Opportunity Zone Reform Act.''.
SEC. 3. MAINTENANCE OF GEOGRAPHIC BOUNDARIES OF QUALIFIED OPPORTUNITY
ZONES.
Section 1400Z-1(e) of the Internal Revenue Code of 1986, as
redesignated by section 2(a)(2), is amended by adding at the end the
following new sentence: ``Such designation shall apply to the
geographic area as in effect at the time such tract is designated
without regard to whether adjustments are made to the boundaries of the
census tract so designated.''.
SEC. 4. MODIFICATION OF PROHIBITION ON CERTAIN TYPES OF TRADES OR
BUSINESS AS QUALIFIED OPPORTUNITY ZONE BUSINESSES.
(a) In General.--Section 1400Z-2(d)(3)(A)(iii) of the Internal
Revenue Code of 1986 is amended by striking ``in section 144(c)(6)(B)''
and inserting ``subsections (a)(8)(B) or (c)(6)(B) of section 144 or
section 147(e)''.
(b) Effective Date.--The amendment made by this section shall take
effect on November 6, 2019.
SEC. 5. OTHER MODIFICATIONS RELATED TO QUALIFIED OPPORTUNITY FUNDS.
(a) Application of Qualified Opportunity Zone Business Rules to
Trades or Businesses Conducted by Qualified Opportunity Zone Funds.--
(1) In general.--Section 1400Z-2(d)(1) of the Internal
Revenue Code of 1986 is amended to read as follows:
``(1) In general.--The term `qualified opportunity fund'
means any investment vehicle--
``(A) which is organized as a corporation or a
partnership for the purpose of investing in qualified
opportunity zone property (other than another qualified
opportunity fund) that holds at least 90 percent of its
assets in qualified opportunity zone property,
determined by the average of the percentage of
qualified opportunity zone property held in the fund as
measured--
``(i) on the last day of the first 6-month
period of the taxable year of the fund, and
``(ii) on the last day of the taxable year
of the fund, and
``(B) any trade or business of which is a qualified
opportunity zone business.''.
(2) Effective date.--The amendments made by this subsection
shall take effect as if included in section 13823 of Public Law
115-97.
(b) Clarification of Substantially All.--
(1) In general.--Section 1400Z-2(d) of the Internal Revenue
Code of 1986 is amended--
(A) by striking ``during substantially all'' each
place it appears in paragraphs (2)(B)(i)(III),
(2)(C)(iii), and (2)(D)(i)(III) and inserting ``for not
less than 90 percent'',
(B) by striking ``substantially all of the use'' in
paragraph (2)(D)(i)(III) and inserting ``not less than
90 percent of the use'', and
(C) by striking ``in which substantially all'' in
paragraph (3)(A)(i) and inserting ``in which not less
than 90 percent''.
(2) Effective date.--The amendments made by this subsection
shall take effect as if included in section 13823 of Public Law
115-97.
(c) Certain Property Excluded From Qualified Opportunity Zone
Business Property.--
(1) In general.--Section 1400Z-2(d)(2)(D) of the Internal
Revenue Code of 1986 is amended--
(A) in clause (i), by inserting ``(other than self-
storage property, parking property, stadium property,
or disqualified residential rental property)'' after
``tangible property'', and
(B) by adding at the end the following new clauses:
``(iv) Self-storage property.--The term
`self-storage property' means property designed
and used for the purpose of renting or leasing
individual storage space to occupants who are
to have access to such space for the purpose of
storing and removing personal property.
``(v) Parking property.--The term `parking
property' means any property 90 percent or more
of the square footage of which is used for
parking or for the ingress or egress of
vehicles.
``(vi) Stadium.--The term `stadium
property' means any facility (or appurtenant
real property) which, during at least 5 days
during any calendar year, is used as a stadium
or arena for professional sports exhibitions,
games, or training.
``(vii) Disqualified residential rental
property.--The term `disqualified residential
rental property' means any residential rental
property unless 50 percent or more of the
residential units of such property are both
rent-restricted (within the meaning of section
42(g)(2)) and occupied by individuals whose
income is 50 percent or less of area median
income.''.
(2) Effective date.--The amendments made by this subsection
shall take effect as if included in section 13823 of Public Law
115-97.
(d) Treatment of Leased Property.--
(1) In general.--Section 1400Z-2(d)(2)(D)(i)(I) of the
Internal Revenue Code of 1986 is amended by inserting ``or
under a lease (other than a lease from a related person)
entered into after December 31, 2017,'' after ``December 31,
2017,''.
(2) Effective date.--The amendment made by this subsection
shall take effect as if included in section 13823 of Public Law
115-97.
(e) Correction Relating to Original Use of Qualified Opportunity
Zone Business Property.--
(1) In general.--Section 1400Z-2(d)(2)(D)(i)(II) of the
Internal Revenue Code of 1986 is amended by striking ``in the
qualified opportunity zone''.
(2) Effective date.--The amendment made by this subsection
shall take effect as if included in section 13823 of Public Law
115-97.
(f) Modification of Determination of Substantial Improvement of
Qualified Opportunity Zone Business Property.--
(1) In general.--Section 1400Z-2(d)(2)(D)(ii) of the
Internal Revenue Code of 1986 is amended by inserting
``(including land)'' after ``adjusted basis of such property''.
(2) Effective date.--The amendment made by this subsection
shall take effect as if included in section 13823 of Public Law
115-97.
SEC. 6. PUBLIC LIST OF QUALIFIED OPPORTUNITY FUNDS.
The Secretary of the Treasury (or the Secretary's delegate) shall
maintain and make publicly available on the internet and at the offices
of the Internal Revenue Service--
(1) a list of investment vehicles that are certified as
qualified opportunity funds (as defined in section 1400Z-
2(d)(1) of the Internal Revenue Code of 1986) pursuant to the
rules established under section 1400Z-2(e)(4)(A) of such Code,
and
(2) the name, address, and the uniform resource locator
(URL) for the website for such fund.
SEC. 7. GAO REPORT.
(a) In General.--Not later than each applicable date, the
Comptroller General of the United States shall submit to Congress a
report on the effectiveness of the provisions of subchapter Z of
chapter 1 of the Internal Revenue Code of 1986 in achieving the
policies of such provisions.
(b) Matters Included.--The reports submitted under subsection (a)
shall include an analysis of--
(1) the distribution of investments of qualified
opportunity funds among qualified opportunity zones,
(2) the distribution of such investments across different
industries or investment purposes,
(3) the impact of the designation of an area as a qualified
opportunity zone on--
(A) economic indicators, including employment, new
business start-ups, and poverty reduction,
(B) housing costs, and
(C) income distribution among residents of such
zones,
(4) the economic benefits provided by such designations
compared to economic costs, and
(5) to the extent practicable, the impact of the provisions
of such subchapter Z on low-income communities that have not
been designated as qualified opportunity zones.
(c) Definitions.--
(1) Applicable date.--The term ``applicable date'' means--
(A) the date that is 5 years after the date of the
enactment of this Act, and
(B) the date that is 10 years after the date of the
enactment of this Act.
(2) Other terms.--Any term used in this section which is
also used in subchapter Z of chapter 1 of the Internal Revenue
Code of 1986 shall have the meaning given such term under such
subchapter.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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