Bill Summary
This legislation, known as the "Financial Guaranty Insurance Protection Act", aims to amend the Internal Revenue Code of 1986 in regards to how financial guaranty insurance companies are treated under the passive foreign investment company rules. The main goal of this bill is to ensure that these companies are recognized as qualifying insurance corporations, and therefore eligible for certain tax benefits. The bill includes several provisions and amendments, including a special rule for financial guaranty insurance companies, reporting requirements for certain items on financial statements, and the authority for the Secretary of the Treasury to require reporting on specified non-publicly traded foreign corporations. These amendments will take effect as if they were included in a previous law passed in 2017, with the reporting requirements applying to reports made after the enactment of this new legislation.
Possible Impacts
1. The legislation could potentially affect people who work for or own financial guaranty insurance companies, as it would change the way these companies are treated under the Internal Revenue Code and could potentially impact their financial statements and reporting requirements.
2. The legislation could also affect people who own interests in specified non-publicly traded foreign corporations, as it would require them to report certain information to the Secretary of the Treasury if they claim the corporation is not a passive foreign investment company.
3. The legislation could impact the financial industry as a whole, as it would introduce new regulations and guidelines for financial guaranty insurance companies and could potentially change the way these companies operate and report their financial information.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5746 Introduced in House (IH)]
<DOC>
116th CONGRESS
2d Session
H. R. 5746
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 3, 2020
Ms. Moore (for herself and Mr. Smith of Nebraska) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. TREATMENT OF FINANCIAL GUARANTY INSURANCE COMPANIES AS
QUALIFYING INSURANCE CORPORATIONS UNDER PASSIVE FOREIGN
INVESTMENT COMPANY RULES.
(a) In General.--Section 1297(f)(3) of the Internal Revenue Code of
1986 is amended by adding at the end the following new subparagraph:
``(C) Special rule for financial guaranty insurance
companies.--
``(i) In general.--Notwithstanding
subparagraphs (A)(ii) and (B), the applicable
insurance liabilities of a financial guaranty
insurance company shall include its unearned
premium reserves if--
``(I) such company is prohibited
under generally accepted accounting
principles from reporting on its
applicable financial statements
reserves for losses and loss adjustment
expenses with respect to a financial
guaranty insurance or reinsurance
contract except to the extent that such
reserve amounts are expected to exceed
the unearned premium reserves on the
contract,
``(II) the applicable financial
statement of such company reports
financial guaranty exposure of at least
15-to-1, and
``(III) such company includes in
its insurance liabilities only its
unearned premium reserves relating to
insurance written or assumed that is
within the single risk limits set forth
in subsection (D) of section 4 of the
Financial Guaranty Insurance Guideline
(modified by using total shareholder's
equity as reported on the applicable
financial statement of the company
rather than aggregate of the surplus to
policyholders and contingency
reserves).
``(ii) Financial guaranty insurance
company.--For purposes of this subparagraph,
the term `financial guaranty insurance company'
means any insurance company the sole business
of which is writing or reinsuring financial
guaranty insurance (as defined in subsection
(A) of section 1 of the Financial Guaranty
Insurance Guideline) which is permitted under
subsection (B) of section 4 of such Guideline.
``(iii) Financial guaranty exposure.--For
purposes of this subparagraph, the term
`financial guaranty exposure' means the ratio
of--
``(I) the net debt service
outstanding insured or reinsured by the
company that is within the single risk
limits set forth in the Financial
Guaranty Insurance Guideline (as
reported on such company's applicable
financial statement), to
``(II) the company's total assets
(as so reported).
``(iv) Financial guaranty insurance
guideline.--For purposes of this subparagraph,
the term `Financial Guaranty Insurance
Guideline' means the October 2008 model
regulation that was adopted by the National
Association of Insurance Commissioners on
December 4, 2007.''.
(b) Reporting of Certain Items.--Section 1297(f)(4) of such Code is
amended by adding at the end the following new subparagraph:
``(C) Clarification that certain items on
applicable financial statement be separately reported
with respect to corporation.--An amount described in
paragraph (1)(B) or clause (i)(II), (i)(III), (iii)(I),
or (iii)(II) of paragraph (3)(C) shall not be treated
as reported on an applicable financial statement for
purposes of this section unless such amount is
separately reported on such statement with respect to
the corporation referred to in paragraph (1).
``(D) Authority of secretary to require
reporting.--
``(i) In general.--Each United States
person who owns an interest in a specified non-
publicly traded foreign corporation and who
takes the position that such corporation is not
a passive foreign investment company shall
report to the Secretary such information with
respect to such corporation as the Secretary
may require.
``(ii) Specified non-publicly traded
foreign corporation.--For purposes of this
subparagraph, the term `specified non-publicly
traded foreign corporation' means any foreign
corporation--
``(I) which would be a passive
foreign investment company if
subsection (b)(2)(B) did not apply, and
``(II) no interest in which is
traded on an established securities
market.''.
(c) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect as if included in section 14501 of Public Law 115-97.
(2) Reporting.--The amendment made by subsection (b) shall
apply to reports made after the date of the enactment of this
Act.
<all>