H.R. 2567 — 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 section amends the passive foreign investment company (PFIC) rules in IRC Section 1297(f) to treat qualifying foreign financial guaranty insurance companies (i.e., those solely writing or reinsuring financial guaranty insurance under the Financial Guaranty Insurance Guideline) as active insurance companies. Specifically, it (1) permits such companies to include unearned premium reserves in applicable insurance liabilities—despite general prohibitions under IRC Section 1297(f)(3)(A)(ii) and (B)—if they are prohibited under GAAP from reporting loss reserves exceeding unearned premiums, report financial guaranty exposure of at least 15-to-1 or State or local bond exposure of at least 9-to-1, and limit reserves to insurance within single risk limits under the Guideline; (2) deems them to satisfy the alternative facts-and-circumstances test under IRC Section 1297(f)(2)(B); and (3) clarifies reporting of relevant financial statement items and requires U.S. persons owning interests in specified non-publicly traded foreign corporations (i.e., those that would be PFICs absent the facts-and-circumstances test and lack publicly traded interests) claiming non-PFIC status to report required information to the Secretary. (As background, PFIC rules subject U.S. shareholders to punitive tax treatment on passive income and gains unless the corporation qualifies as an active business, such as a qualifying insurance company based on insurance liabilities.) The amendments generally apply to taxable years beginning after December 31, 2024 (with reporting requirements applying after that date), and provide that stock in qualified financial guaranty insurance companies is not tainted as PFIC stock during a specified grace period for holding period purposes under IRC Section 1298(b)(1).