Treasury, IRS Issue Section 892 Proposed Regulations to Provide Grandfathering Protection and Transitional Relief to Sovereign Investors

WASHINGTON — The Department of the Treasury and the Internal Revenue Service (IRS) issued additional guidance addressing the applicability dates of recent proposed regulations under Section 892 of the Internal Revenue Code, which exempts foreign governments, including sovereign wealth funds, from tax on certain income derived from passive U.S. investments. This additional guidance provides grandfathering protection and transitional relief to foreign governments investing in the United States.“President Trump’s economic policies continue to attract trillions of dollars in investment into the United States. Treasury and the IRS conducted thorough reviews of taxpayer and stakeholder comments on proposed technical U.S. tax rules, which informed the release of additional guidance to provide certainty on the treatment of current investments and transitional relief to sovereign investors,” said Treasury Secretary Scott Bessent.