The U.S. Department of the Treasury and the Internal Revenue Service (IRS) released new guidance on May 29, 2026 regarding the timing of proposed Section 892 regulations. These rules, which exempt foreign governments and sovereign wealth funds from tax on income from passive U.S. investments, were first proposed on December 15, 2025. The guidance offers a two‑part approach: a grandfathering rule that keeps existing foreign government interests exempt under the final regulations, and a 90‑day transition period for governments to adjust before the rules take effect. Treasury and the IRS invite comments on all aspects of the proposals, with instructions for submission included in the guidance. The guidance is available online.
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