The IRS's proposed regulations on Opportunity Zone reporting, published September 11, 2026, push a new layer of data collection down to the QOZB level. Josh Zamansky of OZXpro says that many QOFs and their CPAs have been caught by surprise that OZ 2.0 reporting requirements already apply to the 2026 tax year, with real monetary penalties attached.
During the video podcast episode below, Josh gives a live walkthrough of the OZXpro data platform, showing how a QOZB pushes payroll registers and balance sheets up to its QOF for the 90% test and the active business tests. He also shares what QOF managers should do now, ahead of the December 31, 2026 gain recognition event.
Guest: Josh Zamansky
Discussed on This Episode
- IRS Notice of Proposed Rulemaking: Information Reporting Regarding Qualified Opportunity Zones (REG-116506-25)
- Submit a public comment on Regulations.gov (due October 26, 2026)
- OZXpro Opportunity Zone Handbook and demo scheduling
Disclosure: OpportunityZones.com has a referral partnership with OZXpro and earns a commission on referred customers. Jimmy Atkinson serves as a Senior Strategic Advisor to OZXpro. This episode is for educational purposes only and is not tax or legal advice.
Episode Summary
What Changed for Compliance Under OZ 2.0?
When the One Big Beautiful Bill Act made Opportunity Zones permanent, it also added significant reporting requirements for QOFs and especially for the QOZBs underneath them. Josh explains that data collection and reporting were rather limited under OZ 1.0, and the government wanted to rectify that so it could gauge the success of the program. What was a simple self-certification on Form 8996 is becoming a significant ongoing data requirement flowing from the QOF to its investors to the government, and that data lives one level down at the QOZB.
Why 2026 Is Already an OZ 2.0 Reporting Year
Jimmy notes that December 31, 2026 is the demarcation point between OZ 1.0 and OZ 2.0 investors, but the reporting requirements work differently. The statute put the new QOF reporting requirements into effect the year after enactment, which means they apply to the 2026 tax year. QOFs filing Form 8996 in March 2027, or September 2027 on extension, will need to comply with the new data inputs compiled over the course of this year.
Josh says many QOFs have been caught by surprise. The 90% test on June 30 of this year took place under OZ 2.0 reporting requirements that are still somewhat TBD. CPAs are a bit more aware, but they too are somewhat surprised. Right now, the top concern for most QOFs is getting money into OZ 1.0 projects that are not yet completed, followed by the data burden that comes with the December 31 gain recognition event. After that, QOFs are beginning to think about compliance at large heading into 2027.
What Does the Statute Require?
Jimmy outlines what the statute requires of QOFs that was not required before: the NAICS codes for the businesses they invest in, headcount of full-time and full-time equivalent employees, and the number of new housing units their projects have created, plus whatever else the Secretary of the Treasury may require. He argues the added burden is a good thing in the end. The industry has wanted reporting requirements since the Tax Cuts and Jobs Act in 2017, and the Treasury Department will now produce an annual public report on Opportunity Zones that will reveal how well the program is working and shape its future.
What's in the IRS Proposed Regulations?
On September 11, 2026, the IRS issued 121 pages of proposed regulations on the new OZ 2.0 reporting requirements for QOFs and QOZBs. Josh says the most significant change is a new underlayer of data required from QOZBs to go upstream to their QOF owners. The teeth the IRS is putting into these requirements are significant, and they call for data that many QOZBs simply are not collecting today. QOFs face an enhanced version of the Form 8996 and Form 8997 related data, but the collection burden largely falls on the QOZBs. As Jimmy puts it, QOFs report on Form 8996 and get the information to investors who report on Form 8997, but it all has to trickle up from the QOZBs.
Who Is OZXpro Built For?
Josh has invested in QOFs since early in the program. While doing diligence on a new deal in 2025, he found compliance in the industry rather loose and reporting a little bit nonexistent. His team began developing OZXpro in the first quarter of 2026 and launched it at the end of May. Its two primary users are QOFs and the CPAs who support them. The platform houses all the data in a QOF's record so the fund can stay on top of compliance at any moment and keep secure, defensible records for the life of the investment plus another seven to 10 years, since the IRS has indicated a desire to audit. OZXpro can also be white labeled for CPA firms.
How Does Data Flow From the QOZB to the QOF?
In the demo, Josh starts inside a QOZB's admin page. The QOF sets the data it requires, such as payroll registers, bank statements, balance sheets, fixed asset and depreciation schedules, leases and purchase records, and operating agreements. He uploads a payroll register and a balance sheet, which then wait for the fund's approval. At the fund level, the sandbox QOF does not yet have enough data to determine whether it will pass its next 90% test. Its QOZB is passing the 70% tangible property test, but its active business tests are indeterminate.
After Josh approves the two documents, OZXpro surfaces data the user can accept. From the balance sheet, it identifies $88,000 of cash at the QOZB level, within the 5% limit on nonqualified financial property. From the payroll register, it suggests passing the 50% gross income test through hours worked in the zone: 18,900 of 19,400 total hours. With those attestations made, the fund's 90% test is projected to pass at 99.1%.
What Goes in the Evidence Vault?
Every uploaded file lives in a secure, permanent evidence vault, from which the QOF can produce an annual compliance packet and a permanent compliance packet on demand. The permanent file holds items such as the QOF and QOZB operating agreements, working capital safe harbor plans, and investor records, and each finalized annual file rolls up into it. In Josh's view, more records are better than fewer.
What Should QOF Managers Do Before Final Regs Land?
For existing OZ 1.0 funds, Josh says now is the time to get records organized. In the first half of 2027, investors facing tax bills from the December 31 recognition event will call with questions, and those same investors may be weighing OZ 2.0 investments. Going forward, funds need a system of record for compliance at both the QOF and QOZB levels, and anyone needing a valuation should start making calls now. Compliance is no longer a form with three numbers on it. CPAs tell Josh they expect to double or even triple the cost of their engagements, so he recommends using compliance to strengthen internal controls rather than just filling out Form 8996 once a year.
The comment period on the proposed regulations runs through October 26, 2026, and the industry still needs a new Form 8996, which has not been released even in draft.
Where to Learn More
Visit ozxpro.com/podcast to download OZXpro's Opportunity Zone Handbook, updated about monthly, and to schedule a demo with Josh.