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.

This bill changes how the IRS decides if certain bond insurers count as “real” insurance companies (and not investment companies) for tax purposes. It lets these companies count certain unearned premiums as insurance liabilities if they meet strict accounting and risk tests tied to how much debt or state and local bonds they guarantee compared to their assets . It also adds reporting rules so U.S. people who own shares in certain private foreign companies must give the IRS information if they claim the company is not treated as an investment company under these rules.

Most changes start with tax years beginning in 2025. The bill also gives a grace period for past years (2018–2024) so some financial guaranty insurers won’t be treated as investment companies just because of their status in those years, and it directs Treasury to issue guidance for how to handle that shift.

• Who is affected: Financial guaranty insurance companies, especially those that insure state or local bonds; U.S. investors who own shares in such foreign companies .
• What changes: New rules for what counts as insurance liabilities so qualifying firms are treated as insurance companies; added IRS reporting for owners claiming a foreign company is not an investment company; possible relief for prior years .
• When: Applies to tax years beginning after December 31, 2024; reporting after that date; special grace period covers 2018–2024.