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Law360 (June 2, 2020, 6:10 PM EDT) -- The opportunity zone program created under the 2017 tax reform law could help the novel coronavirus relief effort by providing an incentive for companies that make personal protective equipment to move to the U.S., Sen. Tim Scott, R-S.C., said Tuesday.
The opportunity zone program, which provides a deferral of capital gains taxes for investments in economically disadvantaged communities, could also be used to entice companies back to the U.S. that supply medical equipment to protect doctors and nurses treating COVID-19, the respiratory disease caused by the novel coronavirus, Scott said, speaking during a webcast hosted by Politico.
He also suggested developing a pilot program to use opportunity zones to bring broadband services to more communities so residents can telework from home or use telemedicine services to get treatment from the best doctors. Opportunity zones could encourage investors to take a "second look" at an area where they would otherwise not invest, said Scott, a senior Republican on the Senate Finance Committee and a longtime supporter of the tax incentive.
Scott said he recently talked to officials in the administration of President Donald Trump who indicated that about $75 billion had been targeted through opportunity funds for opportunity zones and investment in communities.
He also renewed his call for giving investors an additional three months to place capital gains into qualified opportunity funds to encourage participation in the program. In early May, Scott also asked the Internal Revenue Service and U.S. Department of the Treasury to relax the program's requirement that qualified opportunity funds must invest at least 90% of assets in qualified opportunity zone property, at least through the end of the year.
"The timelines that you had to deploy them, pre-COVID-19 and pre-riots, probably need to be relaxed a little bit," Scott said. "I've asked for that and the recommendations seem to be heading in a positive direction." He was alluding to both the public health emergency and nationwide disturbances following the May 25 death of George Floyd in police custody in Minneapolis.
The IRS didn't immediately respond to a request for a comment on Scott's letter.
Scott said he also favored allowing organizations organized under Internal Revenue Code Section 501(c)(6)
, such as business leagues and chambers of commerce, to be eligible to receive loans under the Paycheck Protection Program established under the Coronavirus Aid, Relief and Economic Security . He said the groups tend to be more dependent on the economy than on the federal government."In many states, they are necessary to help prime the pump for economic activity," he said.
Scott predicted that growth would begin rebounding in the third and fourth quarters of this year pending the availability of vaccines and treatments for the virus.
--Additional reporting by Jaqueline McCool. Editing by Robert Rudinger.
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