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There is a lot of attention on the congressional calendar, with upcoming recesses for Memorial Day, then 4th of July ahead of the August recess that can be viewed as a soft deadline for pre-election accomplishments in an election year. In the latest check-in on prospects for a post-BBBA reconciliation bill, Politico reported Senator Joe Manchin (D-WV), the member seen as the key to whether a package moves forward, as saying he sees no deadlines aside from September 30, which is when budget reconciliation instructions expire. Sen. Manchin has expressed an openness to a climate-focused bill with tax and deficit reduction elements and suggested it is fair to say not much is happening with the effort. Some Democrats were cited as skeptical.

Still, “If we get the right piece of legislation that’s able to fight inflation, give us energy independence. And we’re able to do it in the cleanest fashion possible with a reduction in emissions? That’s a win-win for everybody. So I don’t know how you put a time limit on that if you can do it right,” Manchin said. The report coincided with the second recent meeting of late between Senator Manchin and Majority Leader Chuck Schumer (D-NY) over how inflation can be addressed. The meeting also follows President Biden last week, on May 10, laying out some recommendations to fight inflation that could be viewed as a slimmed-down BBB and saying a package should be paid for with tax increases on the wealthy and corporations.

On another matter being eyed for action prior to the midterm elections, an ambitious timeline has been set for the House-Senate conference committee on competitiveness legislation. Consistent with House Majority Leader Steny Hoyer’s (D-MD) reported comments calling for resolving issues by the end of May and votes by the end of June, Punchbowl said in a more detailed report that leaders want legislative items “closed out” by May 25, ahead of the Memorial Day recess, and to file the finished conference report by June 21, the Tuesday of the last week the Senate is in session before the 4th of July. House Speaker Nancy Pelosi (D-CA) said yesterday, at her weekly press conference, “We’re confident that we can pass the bill, and hopefully we can do so in time to celebrate our Independence on Fourth of July.”

It has been well-reported that members are at odds over whether to include a tax title, but the Punchbowl report said tax committee leaders are tasked with one of the toughest policy disputes of the conference: reconciling trade issues between the bills including Trade Adjustment Assistance to affected workers, which is a Democratic priority included only in the House bill. House Ways and Means Committee Chairman Richard Neal (D-MA), Senate Finance Committee Chairman Ron Wyden (D-OR), Banking Committee Chairman Sherrod Brown (D-OH), and Senator Mark Warner (D-VA) met to discuss the issue May 18. Senator Warner was a key figure in the run-up to the 2021 infrastructure bill that President Biden is seeking to model with the 2022 competitiveness bill – referring to them as the Bipartisan Infrastructure Law and Bipartisan Innovation Act, respectively – and is a well-regarded negotiator generally. He is a proponent of tech innovation, including a FABS Act investment tax credit for semiconductor plants also pushed by Wyden. A spreadsheet of outstanding issues was posted by Punchbowl.

Tax – Treasury is considering changes to foreign tax credit regulations that could be a combination of new rules, clarifications to the existing regulations that Treasury issued in December, and other guidance from the IRS, to include examples to illustrate how the regulations are intended to apply to certain taxes, Jose Murillo, deputy assistant Treasury secretary for tax affairs, said in a Bloomberg Tax report.

On the BEPS 2.0 project, Bloomberg reported May 18 of uncertainty in Congress: “With the GOP predicted to win at least one of the two congressional chambers in the November elections, it leaves the agreement on tenterhooks in the US. Globally, only a portion of the deal may survive, with the risk of renewed battles over moves by foreign nations to collect more from US corporate giants. The 15% minimum rate, known as Pillar Two, is included in a broader bill incorporating President Joe Biden’s long-term economic agenda. But, just months away from a full-campaign mode that will shut down most legislative work, there’s no sign the White House is engaging with two Democratic senators who’ve been reticent on the package — Joe Manchin of West Virginia and Arizona’s Kyrsten Sinema. Pillar One would reshape the rules for how corporate profits are allocated across borders, a plan that would require the revision of many global tax treaties. In the US, that’s particularly fraught, because it could require at least 67 senators to vote in favor of treaty changes — a highly unlikely outcome in that ultra-partisan chamber.”

Also, regarding the BEPS 2.0 project, public comments on the Regulated Financial Services Exclusion under Amount A of Pillar One are due today, May 20.

EY Global Tax Policy Leader Barbara Angus was presented yesterday with the Tax Council Policy Institute’s (TCPI) 2022 Pillar of Excellence Award in recognition of her substantial and meaningful contributions to the tax community and efforts to formulate sound tax policy. She is the twelfth recipient of the award. House Ways & Means Committee Ranking Member Kevin Brady (R-TX) participated in the presentation and highlighted her contributions, as the Chief Tax Counsel at the Committee, to the 2017 Tax Cuts & Jobs Act (TCJA).

Congress – The Senate May 19 approved a nearly $40 billion Ukraine funding bill 86-11.

The House May 19 approved 217-207 the Consumer Fuel Price Gouging Prevention Act (H.R. 7688), to give the President the power to issue an Energy Emergency Declaration that would make it unlawful to increase gasoline and home energy fuel prices in an excessive or exploitative manner. The bill is viewed as having slim prospects for passage in the Senate.

The Small Business COVID Relief Act (S. 4008), a $48 billion aid package for restaurants and other businesses, failed a Senate procedural vote May 19 52-43, with 60 votes needed for the bill to advance, despite assurances from the bill’s sponsors, including Senator Ben Cardin (D-MD), that the cost could be cut.

Looking ahead – The Senate will convene for a pro forma session only on Monday, and will next convene for business on Tuesday morning, May 24, with two votes related to nominations at 2:30 p.m. The House is in a Committee Work Week next week, meaning no floor activity. There is a European Union Economic and Financial Affairs Council (ECOFIN) meeting next week, on May 24. The Pillar Two minimum tax directive is on the agenda, though it isn’t clear whether a vote will be held.

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