The IRS is giving special consideration to the Environmental Protection Agency’s request for clearer language in opportunity zone regulations to spur investment in contaminated properties, or “brownfield sites,” a tax official said.
“We’re looking at that very seriously,” said Julie Hanlon-Bolton, special counsel to the IRS Associate Chief Counsel (Income Tax & Accounting). Hanlon-Bolton spoke Oct. 5 at an American Bar Association tax section meeting in San Francisco. The opportunity zones tax break on capital gains was created in the 2017 tax law.
- The EPA’s comments, dated Dec. 18, 2018, note that, “Brownfield sites often stigmatize neighborhoods and perpetuate blight and socio-economic distress.” The sites consist of land previously used for industrial or commercial purposes that is known or suspected to be polluted or contaminated because of its prior use.
- Clarifying in final rules that investments in the assessment, remediation, and redevelopment of brownfield properties are within the scope of the opportunity zone program will incentivize investors to pump money into those sites, EPA said. This type of development is “integral to the primary purpose” of the tax law’s opportunity zone provision, the environmental agency said.
- Hanlon-Bolton reiterated that the IRS plans to combine the two proposed opportunity zone regulations (REG-115420-18 and REG-120186-18) into one final rule.
- The IRS has received a “substantial amount of comments” on the proposed rules and is still figuring out how to organize and address those in final guidance, Hanlon-Bolton said when asked about timing of the final regulations.
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