The special tax treatment under IRC 831(b) is not automatic. The reinsurance company must file an 831(b) election with its initial income tax return (Form 1120PC) to receive the 831(b) tax treatment. The Insurance Manager will oversee the process for making this election.
The election need only be made once. However, the requirements of IRC 831(b) must be met each year to receive the elective treatment. For example, the premium limitation must be adhered to each year in for which the 831(b) elective tax treatment is sought. See IRC section 831(b) for requirements relating to the election.