A bill to amend the Internal Revenue Code of 1986 to provide special rules for purposes of determining if financial guaranty insurance companies are qualifying insurance corporations under the passive foreign investment company rules.

Sponsor: Bill Cassidy (Republican-LA)

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Introduced

In Committee

Passed One Chamber

Passed Both Chambers

Signed into Law

Read twice and referred to the Committee on Finance.

Lets certain foreign insurance companies use special rules to avoid a specific tax status.

This bill would let certain foreign financial guaranty insurance companies follow new tax rules. These rules would help them avoid being classified as 'passive foreign investment companies,' which can lead to higher taxes. It would also offer a grace period for past years, helping taxpayers who own stock in these companies.

What Would Change

Today, foreign financial guaranty insurance companies might be classified as 'passive foreign investment companies' (PFICs) under existing tax rules, which can have specific tax consequences. After this bill, these companies would be able to use special rules to count their unearned premium reserves as liabilities if they meet certain conditions, helping them avoid PFIC status. For example, they would need to show a financial guaranty exposure of at least 15-to-1 or State or local bond exposure of at least 9-to-1. The bill also provides a grace period for past years (late 2017 to late 2024) for taxpayers holding stock in these companies.

Key Provisions

Lets financial guaranty insurance companies include unearned premium reserves in their insurance liabilities under specific conditions to help them avoid a specific tax status.
Requires these companies to meet certain accounting standards and financial ratios, like a 15-to-1 financial guaranty exposure or 9-to-1 State or local bond exposure, to use the new rules.
Treats these companies as meeting an alternative test for their tax status.
Requires U.S. persons who own interests in certain foreign corporations to report information to the Treasury if they believe those corporations are not passive foreign investment companies.
Provides a 'grace period' for past years (from late 2017 to late 2024) so that taxpayers holding stock in these companies are not penalized for prior tax classifications.

View on Congress.gov

S 1987 · 119th Congress · AI Summary by gemini-2.5-flash · 9/10

A bill to amend the Internal Revenue Code of 1986 to provide special rules for purposes of determining if financial guaranty insurance companies are qualifying insurance corporations under the passive foreign investment company rules.

What Would Change

Key Provisions

Lobbying Activity