On September 10, 2026, the Treasury Department and IRS issued proposed regulations implementing key provisions of the One Big Beautiful Bill Act (OBBBA) related to qualified opportunity zones (QOZs) and qualified opportunity funds (QOFs). For opportunity zone advisors, these proposed rules mark a pivotal step in the compliance landscape that demands immediate attention.
Link to What the Proposed Regulations Cover What the Proposed Regulations Cover
The proposed regulations address several critical areas for QOZs. First, they clarify that a QOF’s annual information return under the new OBBBA requirements will not require repeated self-certification after the initial filing on Form 8996. This resolves a longstanding question about whether self-certification must be renewed annually. Further, an entity that inadvertently self-certified may revoke that election if no qualifying investment was made and only with the IRS’s consent. Such revocation is permanent and the entity can never self-certify again.
Second, the regulations establish a formal voluntary decertification process. A QOF seeking to decertify must timely file Form 8996 for the decertification year and maintain contemporaneous written documentation evidencing its intent to decertify and the last month of certification. Failure to maintain this documentation will nullify the decertification. Voluntary decertification triggers a gain inclusion event for investors, though reinvestment in a different QOF may preserve deferral if completed within 180 days. The decertifying QOF must also notify investors within 15 days after the decertification date providing information needed to report the inclusion event.
Third, the proposed rules expand qualified opportunity zone business (QOZB) reporting, requiring QOZBs to furnish statements to QOFs that include the QOZB’s taxpayer identification number and population census tract numbers. Additionally, the regulations clarify that a QOZB’s semiannual testing dates apply based on the QOZB’s own tax year, not the tax year of any investing QOF.
Finally, the regulations detail penalties under Section 6726 for QOFs that fail to meet the reporting requirements.
Link to Comment Deadline Comment Deadline
Written or electronic comments on the proposed regulations must be submitted by October 16, 2026. A telephonic public hearing is scheduled for November 5, 2026. Fund sponsors and opportunity zone advisors should consider submitting comments, particularly on the documentation requirements for voluntary decertification and the expanded QOZB reporting obligations.
Link to IRS Audit Preparation Checklist IRS Audit Preparation Checklist
In light of the proposed regulations, practitioners and deal sponsors should proactively review and compile the following:
- Form 8996 filing history – Confirm timely filing for every tax year since QOF certification
- Self-certification documentation – Verify the initial self-certification date and supporting records
- QOZB statements – Ensure QOZBs have furnished required statements including taxpayer identification numbers and census tract data
- 70% use test documentation – Collect records showing that QOZ business property meets the holding and use requirements
- Contemporaneous decertification records (if applicable) – Maintain written documentation of decertification intent (e.g., meeting minutes) and the designated last certification month
- Investor notification records – Retain copies of all 15-day decertification notifications and investor statements
- Working capital safe harbor plans – Confirm written plans are documented and adopted before applicable deadlines.
- QOZB reporting deadline – QOZB statements would be due on February 1 (for calendar-year QOZBs) such that QOZBs should ensure procedures are in place to gather and report data promptly
Link to To Be or Not to Be (Qualified) To Be or Not to Be (Qualified)
These proposed regulations signal that the IRS is building a robust enforcement framework around QOZ investments. Now is the time to ensure your files are audit ready.