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New Reporting Rules and Census Tract Designations Signal the Next Phase of Opportunity Zones
Phil Jelsma, Partner, Crosbie Gliner Schiffman Southard & Swanson (CGS3)
SAN DIEGO (October 5, 2026) – The Opportunity Zone program is entering a significant new phase. Following the 2025 enactment of the One Big Beautiful Bill Act (“OBBBA”), which made the program permanent and substantially modified the rules for investments beginning in 2027, the U.S. Department of the Treasury and Internal Revenue Service are now developing the administrative framework for what is emerging as “OZ 2.0.”
Recent developments are giving investors, fund sponsors and Opportunity Zone businesses greater visibility into what lies ahead. On September 11, 2026, Treasury and the IRS released proposed regulations addressing new information-reporting requirements for Qualified Opportunity Funds (“QOFs”) and Qualified Opportunity Zone Businesses (“QOZBs”), as well as procedures for QOF certification, revocation and decertification. The proposed rules would significantly expand reporting obligations and impose substantial penalties for noncompliance.
At the same time, states are selecting census tracts for the next generation of Opportunity Zones, with new designations generally taking effect January 1, 2027. Treasury has indicated that it expects the new zones to be designated before the new program takes effect, giving investors and developers an opportunity to evaluate potential projects in newly eligible communities. The OBBBA also provides enhanced incentives for certain investments in rural Opportunity Zones, potentially broadening the geographic reach of the program.
Meanwhile, investors with existing Opportunity Zone investments must prepare for the transition from the original program to the new framework, including potential recognition of deferred gain at the end of 2026.
CGS3 partner Phil Jelsma, chair of our tax practice group, recently examined the latest Opportunity Zone developments – including what the new reporting requirements mean for QOFs and QOZBs, how the 2027 census tract designations could affect investment decisions, and steps investors and sponsors should consider taking now as OZ 2.0 takes shape – in an article published in The Los Angeles Daily Journal and The Daily Transcript (subscriber only).
About Crosbie Gliner Schiffman Southard & Swanson LLP (CGS3)
CGS3 is a recognized leader among a new generation of commercial real estate law firms with practice areas covering the entire commercial real estate life cycle, including finance, acquisition/disposition, entity formation, tax, construction and development, land use, leasing, distressed asset workouts and dispute resolution. Earning a reputation as one of California’s leading commercial real estate law firms, CGS3 recruits some of the state’s top real estate attorneys from both large corporate firms and senior in-house positions. For more information, visit http://www.cgs3.com.