IRS Notice 2021-10 Extends 5 Key Deadlines for Qualified Opportunity Zone Participants– January 29, 2021 by Angel Rice

Despite hopes that COVID-19 would be behind us as the calendar turned to a new year, Qualified Opportunity Zone (QOZ) participants, like many others, are still grappling with the pandemic’s effects. In response, the U.S. Treasury released Notice 2021-10 on January 19, providing much needed relief by extending important deadlines under the QOZ program.

The notice modifies prior guidance issued in Notice 2020-39, which in June 2020 clarified relief offered under Section 7508A for Qualified Opportunity Funds (QOFs) and their investors, and addressed the application of certain relief provisions in Section 1400Z-2 regulations.

Which Qualified Opportunity Zone Deadlines Does Notice 2021-10 Change?

Specifically, Notice 2021-10:

1. Extends 180-day investment period to March 2021. If the last day of the 180-day investment period within which a taxpayer must make an investment in a QOF falls on or after April 1, 2020, and before March 31, 2021, the last day of that investment period is automatically postponed to March 31, 2021. 

  • Earlier relief under Notice 2020-39 had provided a postponement of the last day of the 180-day investment period to December 31, 2020.

2. Extends reasonable cause presumption for a QOF’s failure to meet the 90% investment standard to June 2021: QOFs whose last day of the first six-month period of the taxable year, or last day of the taxable year, falls within the period beginning on April 1, 2020, and ending on June 30, 2021, and who fails to meet the 90% investment standard for that taxable year will have its failure presumed to be due to reasonable cause and will not be subject to penalties. This relief is automatic and does not require notification to the IRS. An affected QOF still needs to accurately complete Form 8996, except that the QOF should place a 0 in Part IV, Line 8 (the penalty line). 

  • Prior relief had provided the presumption that a failure by a QOF to meet the 90%  investment standard was due to reasonable cause for standard testing dates that fell between April 1, 2020, and December 31, 2020.

3. Extends tolling of the 30-month substantial improvement period to March 2021. The period from April 1, 2020, to March 31, 2021, is tolled for purposes of the substantial improvement requirement for property held by a QOF or Qualified Opportunity Zone Business (QOZB).

  • The tolling period under previous guidance ended December 31, 2020.

4. Extends working capital safe harbor another 24 months. All QOZBs holding working capital assets intended to be covered by the working capital safe harbor before June 30, 2021, receive an automatic 24-month extension to the 31-month working capital safe harbor period. The maximum safe harbor period is 55 months (86 months total for start-up businesses). This includes any relief provided by Notice 2020-39.

  • The prior working capital safe harbor extension applied to working capital assets intended to be covered by the safe harbor before December 31, 2020.

5. Extends certain QOFs 12-month reinvestment period for 12 months. If any QOF’s 12-month reinvestment period includes June 30, 2020, that QOF receives up to a 12-month extension to reinvest in QOZ property. The maximum reinvestment period is 24 months in total, including any additional months granted under prior relief.

  • The previous 12-month extension applied to the 12-month period that included January 20, 2020.

If your QOF or QOZB is experiencing adverse effects from the pandemic, making it difficult to meet the requirements under the QOZ program, work with your advisors to understand how Notice 2021-10 may provide some relief.

Contact Angel Rice at or a member of your service team to discuss this topic further.

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Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.