New OZ Fund Reporting Requirements for Opportunity Funds and Their Investors

Section 6039K turns the fund's annual filing into an impact report

Section 70421 of Public Law 119-21 added section 6039K, which applies to taxable years beginning after July 4, 2025. Every qualified opportunity fund must file an annual return identifying the fund and its organizational form, stating the value of its total assets as of each date on which the 90% test is measured under section 1400Z-2(d)(1), and describing each qualified opportunity zone stock or partnership interest it holds and each item of zone business property it owns or leases, with values.

The new content is about the businesses the fund finances. For each one the return must give the industry code, the census tract where it operates, the approximate number of residential units for any real property, and the approximate average monthly number of full-time equivalent employees for the year. This is the jobs and housing data Congress had asked for since 2019 and never required by statute until now.

Subsection (c) of the statute requires the fund to furnish a written statement to each person named in the return, showing the fund's contact information and the information reported about that person. The statute also directs Treasury to publish aggregate public reports on opportunity zone investment, which is why the tract and employee counts must be reported in a form that can be summed.

Zone businesses must report up the chain under section 6039L

A fund can only report what its portfolio companies tell it. Section 6039L, also effective for taxable years beginning after July 4, 2025, requires every applicable qualified opportunity zone business, including a business operated directly by the fund and any business in which the fund holds stock or a partnership interest, to furnish the fund a written statement containing the information Treasury prescribes by regulation. The section applies equally to the zone businesses of a qualified rural opportunity fund.

Treasury has not yet issued those regulations, and the statute leaves the detail to them. In practice fund sponsors are rewriting operating agreements so that each zone business is obliged to deliver employee counts, unit counts and tract data on a schedule that lets the fund file on time. An investor reviewing a fund in 2027 should ask to see that clause, as QOF due diligence suggests.

The section 6726 penalty, with the 2027 figures

Section 6726 charges a fund that fails to file the section 6039K return $500 for each day the failure continues, up to $10,000 per return, or up to $50,000 for a fund whose gross assets exceed $10,000,000. If the failure is due to intentional disregard the figures become $2,500 a day, capped at $50,000, or $250,000 for the larger funds. Rev. Proc. 2025-32, section 2.16, summarizes the penalty and confirms it applies to taxable years beginning after the act's enactment.

The amounts are indexed for returns required to be filed in calendar years after 2025. Section 3.59 of the same revenue procedure gives the figures for returns required to be filed in 2027: $510 a day with a maximum of $10,000 per return, or $51,000 where gross assets exceed $10,230,000, and for intentional disregard $2,550 a day with a maximum of $51,000, or $255,000 for the larger funds.

The penalty falls on the fund, which means on its investors through lower distributions or capital calls. It is separate from the section 1400Z-2(f) penalty for failing the 90% asset test, which continues to be computed on Form 8996 at the underpayment rate under section 6621(a)(2).

Form 8996 and Form 8997 still carry the existing obligations

The fund's existing filing is Form 8996. The instructions, revised December 2024, require a corporation or partnership that operates as a fund to file it annually with its return to self-certify, to report whether it met the 90% investment standard measured on the last day of its first six-month period and the last day of its tax year, and to compute any penalty in Part IV. Parts V through VII already collect the eleven-digit zone number, the employer identification number of each zone business and the value of property by location, which is the skeleton the section 6039K data will hang on. The December 2024 revision predates the act and does not yet ask for employee or unit counts.

Investors file Form 8997. The 2025 form says an eligible taxpayer holding a fund investment at any point during the tax year must attach it to a timely filed return, including extensions, and a person not otherwise required to file still attaches it to an appropriate return. Part I lists fund holdings at the beginning of the year, Part II the gains deferred by investing during the year, Part III inclusion events and transfers, and Part IV holdings and any uninvested deferred gain at year end.

Both forms sit beside the usual pass-through reporting. A partnership fund issues Schedules K-1, and an investor who elected deferral reports the original gain on Form 8949 with the deferral adjustment, then reports the inclusion the same way when the five-year date, an inclusion event or the December 31, 2026 date arrives. The rolling five-year deferral explains which of those applies to your investment.

What investors should ask a fund about its reporting

Three questions cover most of the risk. Who inside the sponsor is responsible for the section 6039K return and the investor statements, and what is the calendar for collecting tract, unit and employee data from each zone business. What do the zone business agreements say about furnishing statements under section 6039L, and what happens if a business is late. And has the fund filed every Form 8996 on time, with the 90% percentages shown, since inception.

The answers matter more after 2026 because the same act changed what a fund can buy. Property acquired after December 31, 2026 must be in a zone designated after July 4, 2025 unless a transition rule in Notice 2026-40 applies, so a fund's tract reporting will also reveal whether its acquisitions still qualify. The 2027 opportunity zone map explains the designation dates, and opportunity zones after the 2025 act summarizes every change. Our opportunity zone fund page describes how we review funds before placing clients in them.