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properties located within one or more relief had purchased land in a QOZ For other rulings in which the IRS
QOZ census tracts, but failed to timely and engaged a third-party tax adviser permitted a late filing of Form 8996 as
self-certify on Form 8996 with respect to assist in structuring the taxpayer to a result of a tax adviser’s or manager’s
to the tax year in which it first intended meet the requirement to be a valid QOF. error, see Letter Ruling 202301002
to elect QOF status (the “first QOF tax The taxpayer amended its operating (released Jan. 6, 2023), granting relief
year”). The taxpayer seeking this ruling agreement during the year in which it under Regs. Sec. 301.9100-3 to self-
had hired a CPA at an accounting firm was formed to reflect the purpose of certify the taxpayer as a QOF by filing
who had always provided accurate tax being a QOF and subsequently received Form 8996 for its initial tax year when
advice in the past on which the taxpayer contributions from an eligible taxpayer an adviser misconstrued the taxpayer’s
had relied. However, the tax adviser of deferred capital gains to be invested in status as a disregarded entity, rather than
experienced serious health complications QOZP. The taxpayer hired its longtime a partnership, for federal income tax
while preparing the taxpayer’s federal tax preparer to prepare and file the tax- purposes and consequently failed to file
income tax return for the first QOF tax payer’s federal income tax return, together a federal tax return and a Form 8996 for
year. As a result, the adviser mistakenly with all related forms and elections to that tax year on behalf of the taxpayer.
told the taxpayer that it did not need self-certify as a QOF within the meaning Also see Letter Ruling 202233011
to self-certify as a QOF on Form 8996 of Sec. 1400Z-2(d)(1) and be treated as (released Aug. 19, 2022), granting relief
until after the completion of the taxpay- a QOF during the applicable month in under Regs. Sec. 301.9100-3 for the
er’s real estate project in a QOZ. Since which it received the eligible taxpayer’s taxpayer’s Form 8996 to be treated as
the taxpayer did not expect to complete deferred capital gain investment under timely filed for purposes of the QOF
its real estate project in the first QOF Sec. 1400Z-2(a)(1)(A). However, the self-certification election and to be
tax year, the taxpayer filed its federal taxpayer’s preparer was unaware of the treated as a QOF effective as of the
income tax return for that year without requirement for the taxpayer to self- month the taxpayer was formed, after
the Form 8996 necessary to self-certify certify as a QOF by filing Form 8996 an accountant’s failure to timely file
as a QOF during any year in which an with the taxpayer’s timely filed federal Form 8996 with a timely filed federal
eligible entity receives qualifying equity income tax return for the first QOF tax income tax return for the entity’s first
investments of tax-deferred capital gain year, so the tax preparer failed to file year in which it received investments of
under Sec. 1400Z-2(a)(1)(A) and Regs. Form 8996 with the taxpayer’s Form eligible capital gain. Similar issues were
Sec. 1.1400Z2(d)-1(a). The taxpayer 1065 for that year. addressed in Letter Rulings 202302001
ended its professional relationship with Immediately upon discovery of the (released Jan. 13, 2023); 202302002
that tax adviser due to the adviser’s filing errors, the entities in all six let- (Jan. 13, 2023); 202230001 (July 29,
health issues. When the taxpayer subse- ter rulings described above requested 2022); 202229033 (July 22, 2022);
quently engaged the services of another an extension of time under Regs. Secs. 202223012 (June 10, 2022); 202217004
CPA at a different accounting firm to 301.9100-1 and 301.9100-3: (1) to (April 29, 2022); 202215012 (April
discuss the taxpayer’s self-certification make a timely election under Regs. Sec. 15, 2022); 202214001 (April 8, 2022);
as a QOF for the first QOF tax year, the 1.1400Z2(a)-1(a)(2) to be certified as 202213007 (April 1, 2022); 202209009
new accountant informed the taxpayer a QOF as defined in Sec. 1400Z-2(d); (March 4, 2022); 202206016 (Feb. 11,
of its need to have filed Form 8996 and (2) to be treated as a QOF, effective 2022); 202206015 (Feb. 11, 2022);
with a timely filed Form 1065 for the no later than the month in which an eli- 202205020 (Feb. 4, 2022); 202205021
taxpayer’s first QOF tax year and advised gible taxpayer invested (potentially) tax- (Feb. 4, 2022); 202204002 (Jan. 28,
the taxpayer to engage legal counsel to deferred capital in the applicable QOFs, 2022); 202203007 (Jan. 21, 2022);
request an extension of time to file Form as provided under Sec. 1400Z-2(d) and 202202009 (Jan. 14, 2022); 202152017
8996 through a letter ruling request. Regs. Sec. 1.1400Z2(d)-1(a). (Dec. 30, 2021); 202152013 (Dec. 30,
The IRS released Letter Ruling The IRS issued all six requested rul- 2021); 202151003 (Dec. 23, 2021);
202246007 on Nov. 18, 2022. In that ings granting the QOFs an extension of 202149003 (Dec. 10, 2021); 202144010
ruling, the taxpayer had requested re- time to file a timely Form 8996, due to (Nov. 5, 2021); 202141004 (Oct. 15,
lief under Regs. Secs. 301.9100-1 and the lawyer’s, accountant’s, and partner- 2021); 202140012 (Oct. 8, 2021);
301.9100-3 to be treated as self-certified ship representative’s respective errors, as 202123005 (June 11, 2021); 202120014
as of the month in which it was formed it has in similar situations (encompass- (May 21, 2021); and 202120010 (May
as a tax partnership for the purpose of ing a wide range of miscommunications, 21, 2021).
investing in QOZP as defined in Sec. administrative oversights, and other In addition, Letter Ruling
1400Z-2(d)(2). The taxpayer requesting errors) at least 39 times since 2020. 202119003 (May 14, 2021) granted

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