Kentucky Senators Raise Concerns Over O-Zone Regs

January 7, 2019

The Honorable Steven T. Mnuchin
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Dear Secretary Mnuchin,

Thank you for your continued work to implement the improvements to the federal tax code made by the Tax Cuts and Jobs Act, particularly with regard to the Opportunity Zone program. Since passage of this historic tax reform law, Americans have seen decreased unemployment, rising wages, and greater investment in our communities. We supported the inclusion of the Opportunity Zones program in the tax bill, which will ensure economically depressed areas benefit fully from these new economic opportunities.

We appreciate that you have certified 144 census tracts in 84 counties in Kentucky as Opportunity Zones. We have already heard from many constituents throughout the Commonwealth who are eager to begin using this tax incentive to attract investment and grow jobs in their communities.

However, we have also heard concerns that the proposed regulations could unnecessarily hinder much-needed investments in deserving regions due to confusion over the application of the phrase "substantially all." These concerns center on the small number of instances in which a single, contiguous Qualified Opportunity Zone Business may extend over a census tract line between an Opportunity Zone and a non-designated zone.

Opportunity Zones were specifically included in the Tax Cuts and Jobs Act to spur investment and job creation in economically distressed communities. We appreciate the importance of preventing misuse of this tax incentive by developing strong, clear regulations that keep investments in the intended communities. At the same time, given that this program is intended to rely on self-certification, we urge you to promulgate a final regulation that offers more clarity and fosters solutions to the concerns we have expressed in order to encourage — rather than discourage — economic investment in distressed communities.

We look forward to continuing to work with you on policies that benefit families and small businesses across our nation. Your work to implement historic tax reform is a critical piece of our shared agenda of job creation and economic growth, and we appreciate your time and attention to this matter.

Sincerely,

Mitch McConnell
U.S. Senator

Rand Paul, M.D.
U.S. Senator