On September 10, 2026, Treasury and the IRS released proposed regulations, published in the Federal Register the next day, that put the reporting rules from the 2025 law into practice and overhaul how funds certify and decertify.
“This one changes how every single QOF in the country talks to the IRS.”
What would change
- Form 8996 becomes a yearly information return. The first year is still the fund’s self-certification. After that, the fund files a detailed annual return: property addresses, industry codes, acquisition and improvement dates, working capital plan end dates, December 31 real property values, residential unit counts, job ranges, and the fund’s ownership in each QOZB. The new form has not been released yet.
- QOZBs send each fund a sworn statement every year. It confirms the business passes its tests, or that it is using its one cure period. For calendar-year businesses it is due February 1.
- Investor reporting covers every inclusion event, including distributions over basis and redemptions, with statements to investors and reporting by brokers.
- One path to decertify. A fund needs written documentation made at the time, such as minutes, or the decertification is void. Investors must be told within 15 days. Decertifying is an inclusion event, and the ten-year benefit is lost.
The penalties
A late, incomplete, or paper-filed fund return can cost $500 a day, capped at $10,000 per return, or $50,000 for a fund with more than $10 million in assets. For intentional disregard, the daily penalty rises to $2,500, with caps of $50,000, or $250,000 for a large fund. Reasonable cause relief applies.
“Quietly going dark on your Form 8996 filing is no longer it.”
When it applies
The regulations apply once they are final. The reporting rules in the statute already apply to tax years beginning after July 4, 2025, so plan on filing 2026 fund returns on time, complete, and electronically. Comments were due October 26, 2026, and a public hearing was scheduled for November 5.
What to do now
- Start collecting the new data points for every QOZB now, not in March.
- If your fund invests in a QOZB you do not control, ask for the information and the backup.
- Make sure Form 8996 has been filed for every year. See what happens if one was missed.
General information, not tax or legal advice. Rules change, and your facts change the answer.