IRS Issues News Release Providing Transition Relief on Proposed Section 892 Regulations

The IRS issued a news release announcing additional guidance on the applicability dates of recently proposed regulations under I.R.C. §892, which exempts foreign governments from U.S. tax on certain income from passive investments. The guidance provides grandfathering protection for existing foreign government interests and establishes a transition period of at least 90 days after publication of final regulations, or until the start of the first taxable year after publication, for compliance. Treasury and the IRS stated that they continue to accept stakeholder comments as the proposed regulations are finalized. [IR-2026-69, 05/29/26]

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