"It is belated, but it is welcome," Steven R. Meier of Seyfarth says about the recent IRS guidance on written plans for working capital safe harbor compliance for opportunity zone businesses. After a year of questions, the IRS has officially allowed opportunity zone businesses to revise or replace written plans following federally declared disasters, like the pandemic.

The new guidance gives qualified opportunity zone businesses an additional 24 months to expend its working capital assets in light, according to Meier. The guidance does require that businesses maintain a new plan that is in alignment with the original pre-pandemic plan. "The guidance is retroactive from written plans back to January 1, 2020, which is before the COVID pandemic hit. Any plan that was in place on December 31, 2019, which a number of them were put in place at that point to capture capital going into businesses, effectively can be rewritten," Meier, a partner at Seyfarth tells GlobeSt.com.

The extension provides relief and flexibility to opportunity zone businesses that were negatively impacted by the pandemic. "There are a fair number of opportunity zone programs that are high-growth projects given the nature of the model is to avoid gain after a 10-year hold. A fair number of them tend to be in upside-heavy business sectors, like hospitality," says Meier. "It is helpful to be able to have explicit written guidance that allows opportunity funds to reconfigure, pivot and change business plans and move forward on a post-pandemic basis."