Accounting
How to use opportunity zone tax credits in the ‘Heartland’
A tax credit for investments in low-income areas could spur long-term job creation in overlooked parts of the country — with the right changes to its rules, according to a new book.
The capital gains deferral and exclusions available through the “opportunity zones” credit represent one of the few areas of the Tax Cuts and Jobs Act of 2017 that drew support from both Republicans and Democrats. The impact of the credit, though, has proven murky in terms of boosting jobs and economic growth in the roughly 7,800 Census tracts qualifying based on their rates of poverty or median family incomes.
Altering the criteria to focus the investments on “less traditional real estate and more innovation infrastructure” and ensuring they reach more places outside of New York and California could “refine the where and the what” of the credit, said Nicholas Lalla, the author of “
“I don’t want to sound naive. I know that investors leveraging opportunity zones want to make money and reduce their tax liability, but I would encourage them to do a few additional things,” Lalla said. “There are communities that need investment, that need regional and national partners to support them, and their participation can pay dividends.”
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A call to action
In the book, Lalla writes about how the Innovation Labs received $200 million in fundraising through public and private investments for projects like a startup unmanned aerial vehicle testing site in the Osage Nation called the Skyway36 Droneport and Technology Innovation Center. Such collaborations carry special relevance in an area like Tulsa, Oklahoma, which has a history marked by the wealth ramifications of the
“This book is a call to action for the United States to address one of society’s defining challenges: expanding opportunity by harnessing the tech industry and ensuring gains spread across demographics and geographies,” he writes. “The middle matters, the center must hold, and Heartland cities need to reinvent themselves to thrive in the innovation age. That enormous project starts at the local level, through place-based economic development, which can make an impact far faster than changing the patterns of financial markets or corporate behavior. And inclusive growth in tech must start with the reinvention of Heartland cities. That requires cities — civic ecosystems, not merely municipal governments — to undertake two changes in parallel. The first is transitioning their legacy economies to tech-based ones, and the second is shifting from a growth mindset to an inclusive-growth mindset. To accomplish both admittedly ambitious endeavors, cities must challenge local economic development orthodoxy and readjust their entire civic ecosystems for this generational project.”
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Researching the shortcomings
And that’s where an “opportunity zones 2.0” program could play an important role in supporting local tech startups, turning midsized cities into innovation engines and collaborating with philanthropic organizations or the federal, state and local governments, according to Lalla.
In
Other research suggested that opportunity-zone investments in metropolitan areas generated a 3% to 4.5% jump in employment, compared to a flat rate in rural places,
“It creates a strong incentive for taxpayers to make investments that will appreciate greatly in market value,” Tax Foundation President Emeritus Scott Hodge wrote in the analysis, “Opportunity Zones ‘Make a Good Return Greater,’ but Not for Poor Residents” shortly after the Treasury study.
“This may be the fatal flaw in opportunity zones,” he wrote. “It explains why most of the investments have been in real estate — which tends to appreciate faster than other investments — and in Census tracts that were already improving before being designated as opportunity zones.”
So far, three other research studies have concluded that the investments made little to no impact on commercial development, no clear marks on housing prices, employment and business formation and a notable boost in multifamily and other residential property,
The credit “deviates a lot from previous policies” that were much more prescriptive, Feldman said.
“It didn’t want the government to have a lot of oversay over what was going on, where the investment was going, the type of investments and things like that,” she said. “It offered uncapped tax incentives for private individual investors to invest unrealized capital gains. So this was the big innovation of OZs. It was taking the stock of unrealized capital gains that wealthy individuals, or even less wealthy individuals, had sitting, and they could roll it over into these funds that could then be invested in these opportunity zones. And there were a lot of tax breaks that came with that.”
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A ‘place-based’ strategy
The shifts that Lalla is calling for in the policy “could either be narrowing criteria for what qualifies as an opportunity zone or creating force multipliers that further incentivize investments in more places,” he said. In other words, investors may consider ideas for, say, semiconductor plants, workforce training facilities or data centers across the Midwest and in rural areas throughout the country rather than trying to build more luxury residential properties in New York and Los Angeles.
While President Donald Trump has certainly favored that type of economic development over his career in real estate, entertainment and politics, those properties could tap into other tax incentives. And a refreshed approach to opportunity zones could speak to the “real innovation and talent potential in midsized cities throughout the Heartland,” enabling a policy that experts like Lalla describe as “place-based,” he said. With any policies that mention the words “
“We can’t have cities across the country isolated from tech and innovation,” he said. “When you take a geographic lens to economic inclusion, to economic mobility, to economic prosperity, you are including communities like Tulsa, Oklahoma. You’re including communities throughout Appalachia, throughout the Midwest that have been isolated over the past 20 years.”
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Hope for the future?
In the book, Lalla compares the similar goals of opportunity zones to those of earlier policies under President Joe Biden’s administration like the Inflation Reduction Act, the CHIPS and Science Act, the American Rescue Plan and the Infrastructure Investment and Jobs Act.
“Together, these bills provided hundreds of millions of dollars in grant money for a more diverse group of cities and regions to invest in innovation infrastructure and ecosystems,” Lalla writes. “Although it will take years for these investments to bear fruit, they mark an encouraging change in federal economic development policy. I am cautiously optimistic that the incoming Trump administration will continue this trend, which has disproportionately helped the Heartland. For example, Trump’s opportunity zone program in his first term, which offered tax incentives to invest in distressed parts of the country, should be adapted and scaled to support innovation ecosystems in the Heartland. For the first time in generations, the government is taking a place-based approach to economic development, intentionally seeking to fund projects in communities historically disconnected from the nation’s innovation system and in essential industries. They’re doing so through a decidedly regional approach.”
Advisors and
“This really is a bipartisan issue. Opportunity zones won wide bipartisan approval,” he said. “Heartland cities can flourish and can do so in a complicated political environment.”
President Donald Trump signed legislation to block an Internal Revenue Service rule that would have forced some cryptocurrency brokers to provide tax information on transactions conducted on their platforms, delivering another victory to the digital asset industry he has vowed to champion in office.
The IRS reporting rule — not yet in force — was due to take effect in 2026, but it had already sparked furious opposition from the crypto industry. The regulation required certain decentralized exchanges to report their customers’ gross sales of digital assets to the IRS.
Crypto industry advocates argued that decentralized exchanges can’t be defined as brokers or comply with the rule because they are typically automated and run by software applications, rather than individuals. These exchanges use blockchain technology to directly connect crypto buyers and sellers without the need for an intermediary to hold users’ tokens.
It was finalized at the end of President Joe Biden’s term, making it vulnerable to a Congressional Review Act challenge that gives lawmakers 60 days to “disapprove” of a regulation issued by a federal agency.
The regulations were intended to help curb the amount of unpaid taxes on crypto transactions, with some estimates saying that
The Republican-controlled Congress
Lawmakers are seeking to advance several other crypto priorities while Republicans hold majorities in both chambers, including legislation to create a regulatory framework for
Trump has vowed to bolster the crypto industry by easing regulatory constraints, elevating crypto-friendly officials and hosting industry executives at the White House. His commitment to the industry marks a change for a president who was previously skeptical about digital assets but embraced them during the 2024 election as crypto companies donated to his campaign.
$20 million questions; speared; tag, you’re it; and other highlights of recent tax cases.
Miami: Beatriz Toledo, 61, owner of a tax prep business who pleaded guilty in December to aiding and assisting the preparation of false returns, has been sentenced to almost five years in prison and a year of supervised release.
Toledo owned Immigration and Tax Service Group and for tax years 2017 through 2021 prepared false and fraudulent returns for clients. The returns included false claims for the Residential Energy Credit, false itemized deductions for state and local sales taxes, and false business expenses. She submitted some 7,800 returns with fraudulent claims for energy credits, resulting in her clients’ underpayment of about $20 million in federal taxes. Her practice received some $7.1 million in prep fees that it took out of clients’ refunds.
She did this in violation of a permanent injunction entered against her in 2010. In that civil case, the U.S. sued to bar Toledo from preparing returns; Toledo agreed to an injunction, which the court entered in 2020. She continued to prepare false returns and was indicted last year.
Toledo was also ordered to pay more than $20 million in restitution to the IRS.
Owings Mills, Maryland: Resident Maureen Wilson has been convicted for conspiracy to commit insurance fraud and for related charges for wire fraud, money laundering and filing false tax returns.
She was convicted of one count of conspiracy to commit mail and wire fraud, four counts of mail fraud, two counts of wire fraud, one count of conspiracy to commit money laundering, one count of money laundering and two counts of filing a false return. She was acquitted of one count of mail fraud.
She conspired with her husband to defraud insurance companies by obtaining more than 40 life insurance policies by misrepresenting applicants’ health, wealth and life insurance coverage. The total death benefits from these policies exceeded $20 million. Wilson also conspired to defraud individual investors to obtain funds that she used to pay premiums. The couple transferred the money from the fraud through multiple bank accounts, including those in the name of trusts.
Wilson filed false individual income tax returns for 2018 and 2019 that did not report as income some $9.7 million from her fraud.
Sentencing is June 20. She faces up to 20 years in prison for each count of conspiracy, wire fraud, mail fraud and money laundering and up to three years in prison for each count of filing a false return.
Providence, Rhode Island: Businesswoman Gail M. Hynson, who collected but failed to pay over to the government eight years’ employee federal withholding taxes and properly report her income to the IRS, has been sentenced to two years of probation.
President of Hynson Electrical Services, she pleaded guilty in October to 10 counts of failure to account for and pay over payroll taxes and three counts of filing a false return.
From 2016 through 2024, Hynson, who also acted as the company bookkeeper, withheld employment taxes from employees’ paychecks but failed to provide the funds to the IRS. Much of the money was transferred to her bank accounts and used to pay personal expenses, including her mortgage, car payments and her daughter’s student loans.
Hynson and her husband also submitted personal federal returns that failed to reflect their income, which included company withholdings earmarked for the IRS.
Hynson failed to remit a total of some $1.22 million to the IRS.
She was also ordered to perform 100 hours of community service.
Phoenix: Jackie Marie Peters, 53, of Mansfield, Texas, has been sentenced to 18 months in prison, to be followed by three years of supervised release, after pleading guilty in connection with hacking a tax preparer’s computer system.
From around January 2020 through April 2022, her co-conspirators hacked into an Arizona tax prep firm’s computer network and modified in-progress tax documents for more than 40 individuals without their knowledge or the knowledge of the firm. Peters then opened 10 bank accounts at different banks where numerous refunds based on the modified tax documents were deposited.
Peters transferred more than $2.5 million from the accounts to buy cryptocurrency.
Rogers Park, Illinois: Tax preparer and tax prep business owner Farooq Khan, 31, has pleaded guilty to stealing more than $3.6 million from federal pandemic relief loan programs, according to news reports.
Khan reportedly faces up to four to five years in prison for defrauding the Paycheck Protection Program and Economic Injury Disaster Loan program. News outlets said he admitted to submitting false applications for himself and others who paid him kickbacks of up to 20%. He pocketed more than $1 million in fraudulent loans, prosecutors told news outlets, and arranged about $2.6 million in loans for people who applied using fake or insolvent companies.
Khan said he would pay the government $1.2 million, along with $629,000 the government seized from his bank accounts, reports said.
Great Falls, Virginia: Businessman Rick Tariq Rahim has been sentenced to 78 months in prison for tax crimes and wire fraud.
Rahim owned and operated several businesses, including laser tag facilities and an Amazon reseller. From 2015 to 2021, he did not pay the IRS the taxes withheld from his employees’ paychecks or file the required quarterly employment returns.
Between October 2010 and October 2012, Rahim filed two personal income tax returns on which he reported owing substantial taxes but did not pay all the taxes due. When the IRS attempted to collect, he submitted a false statement that omitted valuable assets he owned, including a helicopter, a Bentley, a Lamborghini and real estate. Some two weeks later, Rahim transferred ownership of the property to his wife.
He paid personal expenses from his business bank accounts, including more than $889,000 toward his mortgages and more than $669,000 to purchase or lease cars; he also withdrew more than $1.1 million in cash in amounts less than $10,000.
Rahim has not filed a personal income tax return since 2012 despite earning more than $34 million. In total, he caused a loss to the IRS of at least $4.4 million.
He also agreed to forfeit over $1.3 million, and must pay restitution to the IRS and to his fraud victims.
Belle Chasse, Louisiana: Bookkeeper Mary B. Katicich, of Marrero, Louisiana, has been sentenced to a year and a day in prison and three years of supervised release for wire fraud and for making and subscribing a false return.
She used her position as bookkeeper for a local company to steal money from its bank accounts. She also filed a return for 2016 that failed to report some $120,190.58 of income.
Katicich, who
The Los Angeles entertainment industry has long relied on highly skilled freelancers and independent contractors to power its film, television and musical entertainment projects. According to a
Even before the wildfires, employment in California’s film, television and sound sector had dropped nearly 30% between 2022 and 2024, according to
Gig workers in LA’s entertainment industry already operate in a volatile environment where job security is almost nonexistent, and their income is heavily project dependent. The wildfires compounded an already tough situation — many lost their homes, their workplaces and the infrastructure they rely on to find gigs. Unlike full-time employees, gig economy workers don’t have benefits, severance packages or unemployment safety nets to fall back on. And when production suddenly halts, there are no guarantees about when or if their work will resume. This leaves tens of thousands of workers scrambling to make ends meet. This situation has hit close to home. My brother is a choreographer/dancer who also has a talent agency. When the fires canceled a performance, it cost him (and his clients) a five-figure job. That job would have been his biggest deal yet, and it all went away so suddenly.
The fires came after the pandemic shut down movie theaters and production five years ago. Then came the 2023 writers and actors strikes, which halted projects, delayed film releases and cut into box office revenue. As a result, studios cut back spending, leading to massive layoffs while streamers reevaluated content strategies and projects were scrapped.
Now, the wildfires have added another layer of devastation, displacing thousands of workers and destroying homes, sets and production facilities. Hollywood hasn’t had a chance to catch its breath, and the ripple effect of these disruptions is massive.
Losing a home is more than just losing a roof over your head — it also means you lose stability, security, and in many cases, the tools you need to work. For actors, directors and producers, it might mean losing scripts, gear or a home office where they edit, write or produce. For below-the-line workers — crew members, sound engineers, set designers — losing your home could mean losing equipment, props or even an entire workshop. In an industry where many workers are freelancers or small business owners, rebuilding isn’t as simple as filing an insurance claim. It’s a financial and emotional blow that can take years to recover from, all while trying to find work in an already struggling industry.
Accounting profession steps up to help
I’m proud to report that two organizations you wouldn’t normally associate with the LA entertainment industry are taking the lead in the region’s disaster recovery efforts.
The National Association of Black Accountants is focused on financial recovery and stability, especially for displaced workers and for small business owners in the entertainment industry. As NABA’s LA Chapter President, I can assure you we’re working to provide financial literacy resources, guidance on navigating relief funds and direct support for impacted workers through our network of professionals. Whether it’s helping with the tax implications of disaster relief funds, advising on business continuity plans, or connecting affected workers to financial assistance programs, NABA is committed to ensuring that those impacted aren’t left behind as LA rebuilds. NABA has started a
Meanwhile, I continue my involvement with the
Entertainment is the heartbeat of LA. It’s more than just an industry; it’s a culture, a community and an economic powerhouse. I’ve worked closely with “creatives,” content creators and production teams, and I’ve seen firsthand how much passion and dedication goes into the amazing work they do. But I’ve also seen how financially vulnerable many of these workers are, especially gig workers who don’t have a safety net when disaster strikes. Providing financial stability to these talented, “essential” workers is a key part of rebuilding LA — not just for individuals, but for the entire industry.
10 ways you can help
1. Donate to local relief funds
- Organizations like the Entertainment Community Fund, the California Fire Foundation, and Red Cross LA provide immediate assistance to those displaced or affected.
- Consider donating directly to union-supported initiatives like SAG-AFTRA Disaster Relief Fund or the IATSE Local 600 Hardship Fund.
2. Support impacted businesses
- Many small studios, rental houses and creative vendors lose revenue during wildfires. Seek out and support these businesses once they reopen — from indie theaters to prop houses to local production crews.
3. Share resources
- Use your platform to amplify verified relief efforts, fundraisers or mutual aid lists. Especially in the entertainment industry, visibility helps drive action.
4. Volunteer (if you’re local)
- Join community cleanup efforts, deliver meals or offer temporary housing support via platforms like Airbnb’s emergency housing program.
5. Offer pro bono financial services
- Entertainment professionals, especially freelancers, are often unprepared for the financial chaos caused by sudden work stoppages or evacuation.
- CPAs and financial advisors can volunteer their time to help affected workers apply for emergency assistance, file insurance claims or restructure debt.
6. Help production companies and studios navigate business interruption insurance
- These employers may be eligible for insurance payouts due to delays or cancellations. Financial pros can provide vital guidance with organizing claims and documenting losses.
7. Assist nonprofits with emergency budgeting
- Many nonprofit arts organizations will be hit hard by fire-related shutdowns. Accountants can assist with cash flow forecasting, grant applications or budget adjustments to help them stay afloat.
8. Host financial literacy webinars for affected creatives
- Partner with guilds, unions or community centers to offer freelancers workshops about managing disaster-related disruptions, taxes and rebuilding savings.
9. Advocate for disaster-resilient policies
- Use your professional voice to push for better financial safety nets in the entertainment industry. These include income protection, disaster savings accounts, or revised insurance policies for independent creators.
10. Get involved
Consider joining the
If we want Hollywood and LA’s creative scene to come back stronger, we need to support the people who make it all happen. That’s where you come in. There are so many ways you can help.
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