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Sen. Wyden Targets Scaramucci, Others in Opportunity Zone Probe

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What You Need to Know

  • Wyden said he’s probing the Opportunity Zone Program and whether it has delivered on its goal of spurring investment in low-income communities.
  • The program may permit wealthy investors another opportunity to avoid billions of dollars in taxes, he writes.
  • Wyden has introduced legislation to tighten the program and increase reporting requirements.

Senate Finance Committee Chairman Ron Wyden, D-Ore., is launching an investigation into Opportunity Zone Funds, including the one run by Anthony Scaramucci’s SkyBridge Capital.

In recent letters to SkyBridge CapitalBaker Tilly US LLPCresset Partners LLCHatteras SkyPTM Partners LLCRelated Group and Shopoff Realty Investments, Wyden said he’s probing the Opportunity Zone Program “and whether it has delivered on Republican promises to create jobs and drive investment in low-income communities, rather than just create a loophole for wealthy investors to avoid paying taxes.”

In his letter to Scaramucci, Wyden said that “given the lack of transparency and reporting requirements for Opportunity Funds, I am writing to request information about the organization, operation and economic impact of SkyBridge Opportunity Zone Real Estate Investment Trust, Inc.”

Wyden stated that he’s “long been concerned that the Opportunity Zone program may permit wealthy investors another opportunity to avoid billions of dollars in taxes without meaningfully benefitting the distressed communities the program was intended to help.”

He cited a report released by the Government Accountability Office, which he said “heightened my concern about the effects of the Opportunity Zone program. The GAO report notes that representatives of several Opportunity Funds indicated that they would have proceeded with projects in what are now designated zones without the tax incentives provided by the Opportunity Zone program.”

Nearly all of the Opportunity Funds examined by GAO “were focused on real estate development projects, including a project in Las Vegas that will provide on-site gaming and another project to develop climate-controlled self-storage units,” Wyden said. “Many of the Opportunity Funds GAO examined plan to hold their investments for at least 10 years, which will allow the Opportunity Funds to realize tax-free gains on these investments when they sell them.”

As it stands now, Wyden said, “there are no safeguards or transparency measures in place to ensure taxpayers are not simply subsidizing high-end real estate investments by billionaires without demonstrating the benefit they are providing to low income-communities they claim to help.”

That’s why Wyden said he has introduced legislation to reform the Opportunity Zone program, “including requiring annual, public information reporting from Opportunity Funds, and annual statements to the IRS from fund investors.”

The legislation, he said, “would also prohibit investments in casinos, luxury apartments and stadiums as well as tighten existing rules to ensure that these incentives support new investments and do not provide tax-free gains for investments in projects that were already underway.”

Pictured: Sen. Ron Wyden, D-Ore. (Photo: Bloomberg)