Establishes the opportunity zone reporting and reform act requiring qualified opportunity funds to file annual returns including information on the investors in the fund, the size of the fund and the use of the funds; establishes penalties for failure to file such returns; requires the comptroller to provide an annual report on the effectiveness of opportunity zones and compliance with the reporting requirements.
STATE OF NEW YORK
________________________________________________________________________
8977
IN SENATE
September 14, 2020
___________
Introduced by Sen. RAMOS -- read twice and ordered printed, and when
printed to be committed to the Committee on Rules
AN ACT to amend the tax law, in relation to establishing the opportunity
zone reporting and reform act; and to amend the executive law, in
relation to requiring the comptroller to prepare a report on the
effectiveness of opportunity zones
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The tax law is amended by adding a new section 45 to read
2 as follows:
3 § 45. Short title. (a) This section may be known and shall be cited as
4 the "opportunity zone reporting and reform act".
5 (b) Reporting requirements on qualified opportunity funds. (1) Every
6 qualified opportunity fund shall file an annual return with the commis-
7 sioner (at such time and in such manner as the commissioner may
8 prescribe) containing the information described in paragraph two of this
9 subdivision.
10 (2) The information required to be included in annual returns required
11 pursuant to paragraph one of this subdivision is:
12 (A) the name, address, and taxpayer identification number of the qual-
13 ified opportunity fund and the uniform resource locator for the website
14 for such fund;
15 (B) the value of all property held by the fund as of each date
16 described in section 1400Z-2(d)(1) of the internal revenue code;
17 (C) the value of:
18 (i) qualified opportunity zone stock held by the fund on each such
19 date;
20 (ii) qualified opportunity zone partnership interests held by the fund
21 on each such date;
22 (iii) qualified opportunity zone business property held by the fund on
23 each such date;
24 (iv) tangible property not described in clause (i), (ii), or (iii) of
25 this subparagraph and held by the fund on each such date; and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD15647-02-0
S. 8977 2
1 (v) intangible property (including cash and cash equivalents) not
2 described in clause (i), (ii), or (iii) of this subparagraph and held by
3 the fund on each such date;
4 (D) the name, address, and taxpayer identification number of:
5 (i) each corporation in which the qualified opportunity fund owns
6 stock; and
7 (ii) each partnership in which the qualified opportunity fund owns a
8 capital or profits interest;
9 (E) with respect to each qualified opportunity zone business which is
10 conducted by the qualified opportunity fund, by a corporation in which
11 the qualified opportunity fund owns stock, or by a partnership in which
12 the qualified opportunity fund owns a capital or profits interest:
13 (i) the identity of the entity conducting the qualified opportunity
14 zone business; and
15 (ii) each North American Industry Classification Code that applies to
16 such trade or business;
17 (iii) the percentage of such businesses which are women or minority-
18 owned business enterprises; and
19 (iv) the percentage of such businesses which are owned by first-time
20 business owners;
21 (F) with respect to each qualified opportunity zone business which is
22 conducted by the qualified opportunity fund or by a corporation or part-
23 nership controlled by the qualified opportunity fund:
24 (i) the value (as of each date described in section 1400Z-2(d)(1) of
25 the internal revenue code) of:
26 (I) the tangible property of such business; and
27 (II) the intangible property (including cash and cash equivalents) of
28 such business, specifying the number of union jobs which were created
29 and the wages associated with such jobs; and
30 (ii) the average monthly number of full-time equivalent employees of
31 such business during the reporting period, including information on the
32 number of employees from low and middle income communities;
33 (iii) the number of new full-time jobs which were created;
34 (iv) the percentage of such businesses which are women or minority-
35 owned business enterprises; and
36 (v) the percentage of such businesses which are owned by first-time
37 business owners;
38 (G) with respect to each qualified opportunity zone business property
39 held by the fund or by a corporation or partnership controlled by the
40 qualified opportunity fund:
41 (i) the qualified opportunity zone with respect to the property;
42 (ii) the date the property was acquired; and
43 (iii) in the case of real property:
44 (I) the square footage of such property, specifying the square footage
45 of such property which is zoned for commercial use and the square
46 footage of such property which is zoned for residential use;
47 (II) the number (if any) of residential units on the property, includ-
48 ing:
49 1. mandate the reporting of rental prices, sales prices, and fees
50 associated with the housing they produce;
51 2. reporting the percentage of the housing stock that is under any
52 regulatory framework and the type of such regulatory framework; and
53 (III) the aggregate costs incurred with respect to such property
54 related to:
55 1. land acquisition;
56 2. new construction; and
S. 8977 3
1 3. rehabilitation;
2 (H) with respect to each person who has investments in the qualified
3 opportunity fund during the reporting period:
4 (i) the name and taxpayer identification number of such person;
5 (ii) the date or dates on which such investments were made;
6 (iii) the total amount of such investments; and
7 (iv) such other information as the commissioner may require; and
8 (I) information pertaining to each individual transaction, including:
9 (i) the purpose of the investment;
10 (ii) the size of the investment;
11 (iii) the location of the qualifying property; and
12 (iv) the type of qualifying property.
13 (3) Every qualified opportunity fund shall integrate the investment
14 strategies employed by such fund with the needs of local communities and
15 shall engage the community by:
16 (A) creating a community needs assessment;
17 (B) reporting on non-governmental organization partnerships; and
18 (C) giving public notice of development.
19 (4) Definitions. For purposes of this section, the following terms
20 shall have the following meanings:
21 (A) Any term used in this section which is also used in subchapter Z
22 of chapter 1 of the internal revenue code shall have the same meaning
23 given such term under such subchapter.
24 (B) The term "control" shall have the same meaning given such term
25 under section 954(d)(3) of the internal revenue code.
26 (C) The term "full-time equivalent employees" means, with respect to
27 any month, the sum of:
28 (i) the number of full-time employees (as defined in section
29 4980H(c)(4) of the internal revenue code) for the month, plus
30 (ii) the number of employees determined (under rules similar to the
31 rules of section 4980H(c)(2)(E) of the internal revenue code) by divid-
32 ing the aggregate number of hours of service of employees who are not
33 full-time employees for the month by one hundred twenty.
34 (5) Each qualified opportunity fund shall make the return filed pursu-
35 ant to this section publicly available on the qualified opportunity
36 fund's website; provided, however, that information included in the
37 return pursuant to subparagraph (H) of paragraph two of this subdivision
38 shall be excluded from such publicly available report.
39 (c) Information on persons investing in qualified opportunity funds.
40 (1) Every taxpayer who makes an investment in a qualified opportunity
41 fund shall provide an annual statement to the commissioner (at such time
42 and in such manner as the commissioner may prescribe) containing the
43 information described in paragraph two of this subdivision.
44 (2) The information required to be included in annual statements
45 required pursuant to paragraph one of this subdivision is:
46 (A) the name, address, and taxpayer identification number of the
47 taxpayer;
48 (B) the name and taxpayer identification number of the qualified
49 opportunity fund in which the investment was made;
50 (C) the date such investment was made in a qualified opportunity fund
51 and the amount of such investment, including a separate statement of the
52 amount of any such investments which are gain for which an election was
53 made under section 1400Z-2(a)(1) of the internal revenue code;
54 (D) the date of the disposition of the investment; and
55 (E) such other information as the commissioner may require.
S. 8977 4
1 (d) Penalties. (1) In the case of a failure to make a report or state-
2 ment required under subdivision (b) or (c) of this section that contains
3 the information required by such subdivisions on the date prescribed
4 therefor, or for failure to meet the requirements specified in paragraph
5 two of such subdivision, there shall be a fine in an amount equal to a
6 percentage of the amount allocated under subdivision (b) or (c) of this
7 section, as follows:
8 (A) For the first failure, a penalty of one-half of one percent.
9 (B) For the second failure, a penalty of one percent.
10 (C) For the third failure, a penalty of one and one-half percent.
11 (D) For the fourth failure, a penalty of two percent.
12 (E) For the fifth failure, a penalty of two and one-half percent.
13 (F) After the fifth failure, any subsequent failure shall result in
14 revocation of the qualified opportunity zone fund allocation.
15 (2) In the case of a failure to make a return or statement as required
16 under subdivision (b) or (c) of this section on or before the due date
17 of the return or statement, a penalty of ten percent of the capital
18 gains required to be included on a return pursuant to this chapter.
19 § 2. The executive law is amended by adding a new section 171 to read
20 as follows:
21 § 171. Report on opportunity zones. 1. The comptroller shall submit an
22 annual report on the effectiveness of opportunity zones and compliance
23 with the reporting requirements established pursuant to section forty-
24 five of the tax law.
25 2. The report submitted under subdivision one of this section shall
26 include an analysis of:
27 (a) the distribution of investments of qualified opportunity funds
28 among qualified opportunity zones;
29 (b) the distribution of such investments across different industries
30 or investment purposes;
31 (c) the impact of the designation of an area as a qualified opportu-
32 nity zone on:
33 (i) economic indicators, including employment, new business start-ups,
34 and poverty reduction;
35 (ii) housing costs; and
36 (iii) income distribution among residents of such zones;
37 (d) the economic benefits provided by such designations compared to
38 economic costs; and
39 (e) to the extent practicable, the impact of the provisions of
40 subchapter Z of chapter 1 of the internal revenue code on low-income
41 communities that have not been designated as qualified opportunity
42 zones.
43 3. The comptroller shall submit an annual report of his or her find-
44 ings and recommendations to the governor and the legislature on or
45 before December thirty-first of each year.
46 § 3. This act shall take effect on the first of January next succeed-
47 ing the date upon which it shall have become a law.