The Coronavirus Aid, Relief, and Economic Security Act or the "CARES Act" and related federal stimulus legislation were collectively aimed at providing financial relief to individuals and businesses adversely affected by the COVID-19 Emergency. That initial relief included checks to individuals, forgivable loans to employers who retained their employees, and assistance for industries decimated by the unprecedented consequences of the virus and related government responses.
But, just as night follows day, it quickly became apparent that stimulus checks were not received by all those who needed help. Clearly, some applicants were aggressive, to say the least, in asking for relief resulting, in certain circumstances, people and organizations benefiting from such aid who should not have been receiving it. For example, some small regional airports received "relief" up to several times their annual budgets.
Belatedly, and in response to negative publicity, Treasury hurriedly imposed new certifications in the PPE program, and also offered a "safe harbor" for businesses allowing them to return monies they received by May 14, 2020 without negative ramifications. One can draw their own conclusions from this action but leave it as this – the "safe harbor" strongly implies that Treasury became aware that certain bad actors were taking advantage of loopholes in the stimulus program.
Fortunately, at least one group of Senators, led by Tim Scott, a Republican from South Carolina and one of the architects of Opportunity Zone legislation (codified as Section 1400Z-2 (the "OZ Act"), is pushing for well thought out positive long term economic stimulus to benefit those in need. In a May 4th letter to the Treasury Department and the I.R.S., co-signed by eight Republican Senators, they requested certain specific relief measures targeted at improving the use of Opportunity Zones as a tool for promoting economic recovery (and rewarding those investors willing to put money into low income communities), but they also targeted the issue of "abuse."
Mindful that the OZ Act and related regulations already contain a variety of "anti-abuse" provisions, Scott’s group wants any new OZ relief to incorporate stronger protections keeping in mind that such relief should not "creat(e) undue or unnecessary burdens." The letter specifically suggests:
". . . any guidance provided with respect to the above requests should include strong anti-abuse language and require those taking advantage of the liberalized timelines to document the facts and circumstances to substantiate that their fund or business merits the beneficial treatment . . ."
Keeping records is neither "undue" nor "unnecessary” and certainly should not be a burden to any investor or fund looking to benefit from relaxed rules and/or deadlines.