IRS Sending Letters to Qualified Opportunity Funds and Investors
The IRS announced that it is sending letters to Qualified Opportunity Funds (QOFs) and investors. The letters are intended to be a “heads up” that a QOF or investor might need to correct or perfect a filing/election. Failure to act on these letters may cause the IRS to refer taxpayers for examination.
- Letter 6250, Self-Certifying as a Qualified Opportunity Fund
- Sent to taxpayers who attached or were required to attach IRS Form 8996, Qualified Opportunity Fund, to their tax return.
- Certain additional action may be necessary to satisfy, correct or perfect the self-certification requirements.
- Examples might include the failure to provide a valid EIN for a QOZ business; a failure to attach IRS Form 8996 to their tax return; or the failure to report a valid Opportunity Zone parcel identification number.
- Letter 6251, Reporting Qualified Opportunity Fund Investments
- Sent to QOF investors to notify them of an incorrect or incomplete capital gain deferral election.
- Examples might include an incomplete or inaccurately prepared IRS Form 8949, Sales and Other Dispositions of Capital Assets; reporting a gain deferral for an investment in a QOF that did not have an EIN at the time of filing of the tax return; reporting a contribution to a QOF that is dated after the filing date of the tax return; reporting a gain that may be ineligible for deferral by investment in a QOF due to inconsistent or incorrect dates that were reported on IRS Form 4797, Sales of Business Property; or the incomplete preparation of IRS Form 8997, Initial and Annual Statement of Qualified Opportunity Fund Investments.
Acceptable further action may include filing an amended tax return or an administrative adjustment request.
Source: IRS.gov
- Carey M. Heyman, CPA
- Managing Principal of Industry - Real Estate
- CliftonLarsonAllen LLP
- Century City (Los Angeles)
Carey is the Managing Principal of the Real Estate Industry at CLA. He is a trusted advisor with close to 20 years of experience providing accounting, assurance, tax, and consulting services to real estate industry owners, operators, family offices, developers and syndicators. Carey has a strong track record of helping clients build and retain capital by leveraging tax- and cost-saving strategies and employing tax credits and incentives. He also consults with high net worth individuals, large family groups, and owners of closely-held businesses on all aspects of tax planning, estate planning, and retirement planning.
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