Being “IN BOUNDS” is Important Even When You Aren’t Playing Golf

(or R-E-L-I-E-F is not spelled A-B-U-S-E)
Client Alert
May 7, 2020

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.

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 people and organizations benefiting from such aid who arguably 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 PPP loan 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 conclusions from this action but leave it as this – the "safe harbor" strongly implies that Treasury believes that some people are taking advantage of and abusing 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-conceived 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 Scott and eight Republican Senators, the group 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 thoughtfully set forth guidance so as to prevent the abusive use of such legislative proposal. 

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, while 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.

The Sullivan Opportunity Zone Working Group has previously highlighted:

While it is uncertain which of the Senators’ proposed changes (if any) will be adopted, our Working Group anticipates that stronger anti-abuse protections will be incorporated by Treasury and the IRS in some fashion. Consistent with our prior updates, our cautionary advice is to keep detailed records and avoid the “out of bounds” stakes, even if they are not clearly marked.

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Sullivan & Worcester's Opportunity Zone Group is part of a national thought leadership initiative working with Treasury to adapt and modify the Opportunity Zone law and regulations in light of the national pandemic. All  our members are available to assist you with any of your questions.

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Sullivan has developed a rapid response team of attorneys to help our clients and our communities cope with the impact of the COVID-19 pandemic and understand the implications of the CARES Act and other actions taken by state governments and the federal government. Please refer to Sullivan’s resource center at for more information and for access to Sullivan’s library of related advisories.

Please know that Sullivan is focusing substantial efforts to provide assistance to businesses and individuals affected by COVID-19 and benefited by the CARES Act. If you have questions about how to move forward and navigate the novel legal issues raised by COVID-19 and/or the CARES Act, please contact your primary Sullivan attorney or send a message to

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