Publications

IRS Provides Additional Deferral of Due Dates for QOZ Actions

January 21, 2021

On January 19, 2021, the IRS issued Notice 2021-10 (the “Notice”) providing additional deadline relief to qualified opportunity zone (“QOZ”) investors and qualified opportunity funds (“QOFs”). The Notice extends the relief provided in Notice 2020-39 (the “First Notice”), as discussed in our previous client alert, IRS Defers Due Dates for QOZ Actions to Provide Relief for Taxpayers Affected by the Coronavirus Pandemic, dated June 9, 2020.

The Notice extends the following relief measures:

  • The First Notice deferred the last day on which an investor must invest qualified gain in a QOF, that otherwise would have fallen between March 31, 2020 and December 31, 2020, until December 31, 2020. The Notice further defers that deadline until March 31, 2021. (Note that, although this extension of the deadline is automatic, it does not relieve the taxpayer of the obligation to make a valid election to defer the gain in question.)
  • Under the First Notice, the period from April 1, 2020 through December 31, 2020 was disregarded in determining the 30-month period during which investments must be made for property held by a QOF or qualified opportunity zone business (“QOZB”) to be treated as substantially improved. Under the Notice, the disregarded period is extended until March 31, 2021.
  • The First Notice provided that a failure by a QOF to satisfy the 90-Percent Investment Standard on a testing date that falls in the period beginning April 1, 2020 and ending December 31, 2020 will be treated as due to reasonable cause. Under the Notice, this period is extended to June 30, 2021.
  • The First Notice provided that QOZBs holding working capital assets intended to be covered by the working capital safe harbor before December 31, 2020 would have a maximum working capital safe harbor period of 55 months (86 months in the case of start-up businesses). Under the Notice, this extended safe harbor period is available for QOZBs that hold working capital assets intended to be covered by the working capital safe harbor before June 30, 2021.
  • Under the First Notice, if any QOF’s 12-month period to reinvest proceeds from the return of capital or the sale or disposition of qualified opportunity zone property included January 20, 2020, the QOF received an additional 12 months for a maximum reinvestment period of 24 months. The Notice provides the same 12-month extension of the reinvestment period to QOFs with a 12-month reinvestment period that includes June 30, 2020. 

These measures provide additional flexibility for investors (or potential investors) in QOFs to avail themselves of the benefits of the QOZ program despite the impact that the Coronavirus pandemic has had on this segment of the market. Please reach out to us if we can assist you in determining the impact to these extensions on your particular situation.


For more information on this issue or other tax matters, please contact us.

Louis Tuchman at +1 212 592 1490 or [email protected]
Patrick J. O’Sullivan, Jr. at +1 212 592 1503 or [email protected] 
Benjamin P. Oklan at +1 212 592 1527 or [email protected]

© 2021 Herrick, Feinstein LLP. This information is provided to keep clients and interested parties informed of legal developments that may affect or interest them. The information is not intended as legal advice or legal opinion and should not be construed as such.