The 2025 law added three reporting sections: section 6039K requires every Qualified Opportunity Fund (QOF) to file an annual information return, section 6039L requires the businesses it owns to send the fund the data it needs, and section 6726 penalizes a late or wrong fund return at $500 a day, capped at $10,000 (or $50,000 for funds over $10 million). As of October 30, 2026, the statute is in force for tax years beginning after July 4, 2025, while the regulations that set the filing rules, REG-116506-25, are proposed and not final.
Key points
- The statute's start date is tax years beginning after July 4, 2025. For a calendar-year fund, that is 2026.
- The fund-return penalty is per day with a per-return cap. Investor and business statements fall under the separate section 6722 payee-statement penalty.
- Proposed rules would make Form 8996 a stand-alone, electronically filed information return and create formal revocation and decertification procedures.
- The proposals would generally apply only to returns and statements due after final regulations are published.
This page uses "OZ 1.0" for investments made through December 31, 2026 and "OZ 2.0" for investments made after that date. The new reporting applies to funds regardless of which regime their investors are in.
Section 6039K: the fund's annual return
Every QOF must file an annual information return (Public Law 119-21, sec. 70421(d)(1), new section 6039K(a)). The return must show:
- the fund's name, address and TIN, and whether it is a corporation or partnership;
- the value of its total assets and of its Opportunity Zone property on each semiannual test date;
- for each qualified opportunity zone business (QOZB) it invests in: NAICS codes, census tracts, the amount invested, owned and leased tangible property, approximate residential units, and approximate average monthly full-time-equivalent employees;
- each investor who disposed of an investment during the year, with acquisition and disposition dates and the amount disposed of.
Full-time-equivalent employees for a month equal full-time employees plus the hours of other employees divided by 120. The fund must also give a written statement to each investor listed as having disposed of an investment (section 6039K(c)). Qualified Rural Opportunity Funds file the same return with rural substitutions. Returns must be filed electronically or in another machine-readable form (new section 6011(e)(8)).
Section 6039L: statements from the business
Each QOZB owned by or held by a QOF must give that fund a written statement with the information the fund needs for its own return (new section 6039L(a)). In practice the fund's tract, job and housing data comes from the businesses below it, which is why the proposed rules set the business deadline before the fund's.
The section 6726 penalty
| Situation | Per day | Cap per return | Statute |
|---|---|---|---|
| Failure to file a complete and correct return on time | $500 | $10,000 | 6726(a), (b)(1) |
| Same, fund with gross assets over $10 million on the last day of its tax year | $500 | $50,000 | 6726(b)(2) |
| Intentional disregard | $2,500 | $50,000 | 6726(c) |
| Intentional disregard, fund over $10 million | $2,500 | $250,000 | 6726(c) |
All of these amounts are adjusted for inflation for returns required to be filed in calendar years after 2025, using 2024 as the base year (section 6726(d)). As of October 30, 2026, we had not found an IRS revenue procedure publishing the adjusted amounts, so the table shows the statutory base figures.
- Reasonable cause. Section 6726 sits in the same part of the Code as the other information reporting penalties, so the section 6724 waiver for failures due to reasonable cause and not willful neglect applies to it, as the preamble to REG-116506-25 explains.
- One penalty per return. The proposed rules say only one 6726 penalty would be imposed per return, even if a return has several failures.
- The clock stops on filing. Under the proposal, the daily penalty ends on the day the fund files the return with all the correct information.
- Paper can count as late. The proposal treats filing in the wrong manner, such as mailing paper when electronic filing is required, as a failure to file timely.
Example from the proposed regulations
A fund with $10 million or less in gross assets files its 6039K return 15 days late. The penalty is $500 x 15 = $7,500, under the $10,000 cap.
Separately, failing to furnish an investor statement or a QOZB statement falls under the general payee-statement penalty in section 6722: $250 per statement, inflation adjusted, with an annual cap generally of $3 million.
None of this replaces the older penalty for failing the 90 percent asset test, which is figured monthly from the shortfall and the underpayment rate. See the 90 percent asset test.
When it starts, and the conflict
The statute says the reporting amendments "shall apply to taxable years beginning after the date of the enactment" (sec. 70421(d)(5)). The law was enacted July 4, 2025. A calendar-year fund's first covered year is therefore 2026, with returns filed in 2027.
Other sources say otherwise. HUD's Opportunity Zones Updates page states that reporting goes into effect for "the 2026 Tax Year" and, elsewhere, "starting with tax years beginning after December 31, 2026," which contradict each other. The proposed regulations would apply most rules only to returns and statements due on or after final publication. IRS Notice 2026-40 does not address the reporting rules at all.
What REG-116506-25 proposes
The proposed regulations were published in the Federal Register on September 11, 2026 at 91 FR 57968.
| Topic | Proposal |
|---|---|
| Form 8996 | An updated Form 8996 becomes an information return separate from the fund's tax return, subject to section 6726. |
| Self-certification | Made once, in the fund's first tax year. Later Form 8996 filings do not repeat it. |
| First-year deadline | Valid only if Form 8996 is filed in the first tax year by the due date of the original return, including extensions. |
| Revocation | An inadvertent self-certification, such as a QOZB that filed Form 8996 by mistake, may be revoked only if no qualifying investment was ever made, with IRS consent. The entity can never certify again, and its TIN cannot be used by another QOF. |
| Voluntary decertification | Exclusive procedure: contemporaneous written documentation naming the last QOF month, effective the last day of that month, reported on a final Form 8996. |
| 15-day notice | Written notice to every investor no later than 15 days after the decertification date, saying the 10-year election is no longer available and giving the information needed to report the inclusion event. |
| Investor statements | Due March 1 of the following year, or January 15 when the holder of record is a broker. |
| QOZB statements | Due the first day of the second month after the business's year end: February 1 for calendar-year businesses. |
| Brokers | Report dispositions of QOF interests, and inclusion events caused by a voluntary decertification, on Form 1099-B. |
| Rural funds | Specific rural reporting rules are reserved for later. |
Decertification and the investor
Under the current regulations, the decertification of a QOF is an inclusion event (26 CFR 1.1400Z2(b)-1(c)(15)), and the current self-decertification rule leaves the form and manner to the IRS (1.1400Z2(d)-1(a)(3)).
The proposal fills that in. A voluntary decertification would be an inclusion event for the entire qualifying investment of each owner, dated on the decertification date. Investors could not make the 10-year election on that investment afterward. Gain they must include could be deferred again by a timely investment in a different fund, under a different TIN, if all the usual deferral requirements are met. The preamble says the 15-day notice is meant to give investors time to do that within their 180-day window.
If the documentation requirement is not met, the proposal says the decertification is invalid and the entity stays a QOF, still subject to the 90 percent test and its penalty.
Status and dates
Public Law 119-21 enacted. Reporting applies to tax years beginning after this date.
REG-116506-25 published at 91 FR 57968.
Comment period closed.
No final rule found in the Federal Register. The rules remain proposed.
Telephone public hearing scheduled for 10:00 a.m. ET, to be cancelled if no outlines of topics were received by October 13, 2026.
The law also requires Treasury to publish an annual public report on QOFs, with $15 million appropriated through September 30, 2028. To the extent data is available, the report covers the number of funds, their assets, investment by industry and by tract, and jobs and housing units by tract. Starting with the report for the sixth year after enactment, it must also cover outcomes such as job creation, poverty reduction and new business starts.
The compliance calendar tracks these dates, and the updates page will note a final rule when one is published.
Common questions
What is the penalty for a QOF that files its 6039K return late?
Under new section 6726, $500 for each day the failure continues, capped at $10,000 per return, or $50,000 for a fund with gross assets over $10 million at the close of its tax year. For intentional disregard it is $2,500 a day, capped at $50,000 or $250,000. All amounts are adjusted for inflation for returns due in calendar years after 2025.
When do the new Opportunity Zone reporting rules start?
The statute applies them to tax years beginning after July 4, 2025, which is tax year 2026 for a calendar-year fund. HUD's website gives conflicting dates, and the proposed regulations would apply only to returns due after final regulations are published. The statute controls the effective date; the filing rules are still proposed.
Is there a reasonable cause exception to the 6726 penalty?
Yes. Because section 6726 sits in the same part of the Code as the other information reporting penalties, the section 6724 waiver for failures due to reasonable cause and not willful neglect applies, as the preamble to REG-116506-25 explains.
Can a Qualified Opportunity Fund decertify?
Current regulations treat decertification as an inclusion event for investors. Proposed regulations would set the exclusive procedure: contemporaneous written documentation naming the last QOF month, a final Form 8996, and written notice to investors within 15 days. These procedures are proposed, not final.
Are the REG-116506-25 reporting regulations final?
No. They were published as proposed rules on September 11, 2026 at 91 FR 57968, the comment period closed October 16, 2026, and a telephone hearing was scheduled for November 5, 2026, to be cancelled if no outlines were received. No final rule had been published as of October 30, 2026.