To amend the Internal Revenue Code of 1986 to establish a system for the taxation of catastrophic risk transfer companies to ensure sufficient capital to cover catastrophic insurance losses, and for other purposes.
Analysis under review: This bill has generated analysis that may be too generic or incomplete. Clause-level evidence remains available below.
Summary
What This Bill Does
The bill amends the Internal Revenue Code to add a new Part V to Subchapter M, creating Catastrophic Risk Transfer Companies (CARTs) as a new category of tax-advantaged entities that can provide insurance or reinsurance, defines a catastrophic risk transfer company as a domestic corporation organized under state law as a special purpose insurer, regulated by the state insurance commissioner, that issues securities and enters into, and establishes the taxation method for CARTs, requiring distribution of at least 90% of taxable income to maintain pass-through status. It relies on tax rate changes, definition changes, compliance mandates, and exemptions. The main policy areas are Finance and Tax Policy.
Who Benefits and How
Catastrophic risk transfer companies could see lower costs, Insurance and reinsurance companies establishing CART subsidiaries could gain revenue opportunities, and Special purpose insurers meeting CART requirements could see lower costs.
Who Bears the Burden and How
State and local tax authorities could lose revenue opportunities, U.S. Treasury could face higher costs, and State insurance regulators would take on compliance duties.
Key Provisions
- Amends the Internal Revenue Code to add a new Part V to Subchapter M, creating Catastrophic Risk Transfer Companies (CARTs) as a new category of tax-advantaged entities that can provide insurance or reinsurance...
- Defines a catastrophic risk transfer company as a domestic corporation organized under state law as a special purpose insurer, regulated by the state insurance commissioner, that issues securities and enters into...
- Establishes the taxation method for CARTs, requiring distribution of at least 90% of taxable income to maintain pass-through status.
- Requires CARTs to provide statements to security holders identifying the character of dividend income (interest, tax-exempt interest, qualified dividends, capital gains, or insurance premiums).
- Requires allows CARTs to declare dividends up to the 15th day of the 9th month after the tax year (or filing extension date) and distribute within 12 months, with such dividends treated as paid during the prior taxable...
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
The bill amends the Internal Revenue Code to add a new Part V to Subchapter M, creating Catastrophic Risk Transfer Companies (CARTs) as a new category of tax-advantaged entities that can provide insurance or reinsurance, defines a catastrophic risk transfer company as a domestic corporation organized under state law as a special purpose insurer, regulated by the state insurance commissioner, that issues securities and enters into, and establishes the taxation method for CARTs, requiring distribution of at least 90% of taxable income to maintain pass-through status.
Key Policy Areas
Finance, Tax Policy
Primary Purpose
The bill amends the Internal Revenue Code to add a new Part V to Subchapter M, creating Catastrophic Risk Transfer Companies (CARTs) as a new category of tax-advantaged entities that can provide insurance or reinsurance, defines a catastrophic risk transfer company as a domestic corporation organized under state law as a special purpose insurer, regulated by the state insurance commissioner, that issues securities and enters into, and establishes the taxation method for CARTs, requiring distribution of at least 90% of taxable income to maintain pass-through status.
Policy Domains
Section 1 - Short Title
Identified Gains
- Catastrophic risk transfer companies
- Insurance and reinsurance companies establishing CART subsidiaries
- Special purpose insurers meeting CART requirements
- Foreign investors in CART securities
- Capital markets investors in catastrophe bonds
Identified Costs
- State and local tax authorities
- U.S. Treasury
- State insurance regulators
- Catastrophic risk transfer companies
Sponsors
Legislative Progress
IntroducedMr. LaHood (for himself and Mr. Himes) introduced the following …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
CART security holders and investors, Capital markets investors in catastrophe bonds, Catastrophic risk transfer companies
Catastrophic risk transfer companies faces effects in multiple directions
State and local tax authorities, State insurance regulators
Large corporations with assets over 100 million dollars
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "the_secretary"
- → Secretary of the Treasury
- "state_commissioner"
- → State commissioner of insurance or other State official charged with regulation of insurance
Key Definitions
Terms defined in this bill
A domestic corporation created under State law as a special purpose insurer, regulated by the State insurance commissioner, whose principal purpose is carrying out catastrophic risk transfer activities through issuing securities, owning qualified investments, and entering into insurance/reinsurance agreements covering catastrophic risks from unrelated persons.
Any of the several States, the District of Columbia, or any territory or possession of the United States, any municipality, city, county, or any other political subdivision within the territorial limits of the United States with the authority to impose a premium tax on a policy of reinsurance.
A risk of loss which has a low likelihood of occurring but which will be large in amount (exceeding 25,000,000 dollars for direct insurance; or a pool of mortality/longevity risks).
Any company which is licensed to engage in the business of insurance in a State and which is subject to State law which regulates insurance.
Cash, interests in money market funds, and investment-grade debt securities and funds primarily holding such debt securities.
Interest that is accrued or received on, distributions in connection with, or proceeds from the disposition of, qualified investments.
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
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