Certain taxpayers may need to take action to self-certify as a Qualified Opportunity Fund or face possible scrutiny from the Internal Revenue Service.
Taxpayers who attached or indicated they attached a Form 8996 to their return may receive Letter 6250, “Self-certifying as Qualified Opportunity Fund,” from the IRS. This letter lets them know that if they intended to self-certify as a QOF they may need to take additional action to meet the annual requirement.
To correct a 2018 self-certification as a QOF, these taxpayers should file an amended return or an administrative adjustment request.
The IRS has also begun sending out Letter 6251, “Reporting Qualified Opportunity Fund Investments,” to notify some taxpayers that they may not have followed the instructions for their Form 8949 or don’t appear to have an eligible gain that would enable them to make a valid deferral election.
If these taxpayers intended to make such an election, they can also file an amended return or an AAR.
Taxpayers who receive either letter and don’t take action may have the IRS refer the tax account for examination. Investors who elected to defer tax on eligible gains invested in that entity may also be subject to examination.
