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For years, opportunity zone investing has run on a kind of honor system. A client puts capital gains into a qualified opportunity fund, holds it for the required period, and mostly just waits. Reporting has been thin, enforcement has been thinner, and plenty of investors have treated the whole program as something you set up once and forget about.
That era is ending.
On September 11, 2026, Treasury and the IRS released proposed regulations, REG-116506-25, that build out a full information reporting regime for qualified opportunity zones and update the certification and decertification procedures for qualified opportunity funds. The proposal implements reporting mandates written into the One, Big, Beautiful Bill Act, which made the opportunity zone program permanent and, in the same breath, told Treasury to close the visibility gap that has existed since the program launched. You can read the proposed rule directly at irs.gov.
For any firm with clients holding QOZ investments, this is not a background development. It is a compliance shift with a timeline attached.
What the proposal actually does:
The rule creates comprehensive information reporting obligations for qualified opportunity funds, meaning funds will need to report far more detail about their holdings, their investors, and their ongoing compliance than they have in the past. It also overhauls how funds get certified in the first place and, just as important, how they get decertified when they fall out of compliance. Decertification has real teeth. It can trigger gain recognition for investors who assumed their holding period was safely running in the background.
Who is actually exposed:
Two groups need attention, and they need different conversations.
Fund sponsors are facing a new filing burden. If your client base includes anyone who sponsors or manages a QOF, they need to know now that recordkeeping and reporting expectations are about to get significantly more formal, and that decertification risk is now something they need to actively manage rather than assume away.
Individual investors are the quieter risk. Many of them have no idea their fund's compliance status could affect their own tax position. If the fund gets decertified and they were not paying attention, they inherit a problem they did not see coming.
What to do with this before it becomes final:
This is a proposed rule, not a final one, which means you have a window most practitioners will waste. Use it.
Start by pulling a list of every client with a QOZ position, on either side, sponsor or investor. Confirm the current certification status of any fund involved. Ask fund sponsors directly what they are doing to prepare for expanded reporting, and do not accept "we'll figure it out later" as an answer. For investor clients, walk them through what decertification would actually mean for their gain deferral, in plain numbers, not in theory.
This also happens to be an opening. Clients who assumed OZ investing was a low maintenance play are about to learn it is not. Being the advisor who flagged this before it was final, rather than the one explaining it after a client got a surprise notice, is worth more than the billable hour it takes to make the call.
Dr. Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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