This week (May 8-12)

Congress: The House is back in session, and the Senate is also in. The "Big Four" congressional leaders meeting with President Biden at the White House is Tuesday, May 9. The Senate next convenes on Tuesday, May 9 at 3 p.m. Vote at 5:30 p.m. on the motion to invoke cloture on L. Felice Gorordo to be US Alternate Executive Director of the International Bank for Reconstruction and Development.

Finance: On Thursday, May 11 at 10 a.m., the Senate Finance Committee will hold a hearing, "Cross-border Rx: Pharmaceutical Manufacturers and U.S. International Tax Policy." The hearing, which is expected to have a dual focus on pharmaceutical companies specifically and international tax more broadly (including the OECD BEPS Pillar 2 agreement), features a panel of witnesses from the Council on Foreign Relations, academia, accounting, and the Tax Foundation.

Ways & Means: House Ways and Means Committee Chairman Jason Smith (R-MO) set a field hearing titled "Trade in America: Securing Supply Chains and Protecting the American Worker-Staten Island" on Tuesday, May 9, at 10 a.m., at Global Container Terminals New York in Staten Island, New York.

The TCPI 24th Annual Tax Policy & Practice Symposium, "Fostering Sound & Durable Tax Policy: The Vital Role of Business," will take place May 11-12.

Last week (May 1-5)

Debt limit: The deadline for action on the debt limit has become clearer and could be less than a month away — Treasury Secretary Janet Yellen said the so-called "X date" for default without congressional action could come as soon as June 1 — and President Biden has set a meeting with House Speaker Kevin McCarthy (R-CA) and other congressional leaders for May 9. A resolution to the partisan impasse has not become clearer with the two sides still in their corners: House Republicans satisfied with their debt limit bill to also cut spending and green energy tax incentives, and Democrats, while agreeing to meet, calling for a clean debt limit bill and stoking concerns about repercussions of the House bill. (The House was, in fact, out of session this week.) The focus for next developments on plans to address the debt limit is on the bipartisan "Big Four" meeting May 9. Behind the scenes, "Biden administration officials and lawmakers have started to weigh potential alternatives to their negotiating position, including a short-term increase in the borrowing limit that would buy them time to find a compromise," as well as workarounds, the Wall Street Journal said.

Majority Leader Chuck Schumer (D-NY) has directed the Senate to hold hearings to examine the negative repercussions of the House-passed Limit, Save, Grow Act of 2023 (H.R. 2811), which would suspend the statutory debt ceiling until March 31, 2024, or until $1.5 trillion of debt over the current statutory limit is incurred (whichever happens first). The debt limit has been entwined with tax policy as the House bill would also repeal many green-energy tax incentives from last year's Inflation Reduction Act (IRA). While the bill won't pass the Senate (and would be vetoed by President Biden in any case), it demonstrates the enduring enmity Republicans have for the IRA and Democrats' steadfast defense of the new law's incentives to curb climate change. Some of the Democratic concerns with the House bill were aired during a May 4 Senate Budget Committee hearing with Chairman Sheldon Whitehouse (D-RI), a strong proponent of fighting climate change, hosting witnesses who focused on the negative effects of Republican proposals to repeal green energy provisions, particularly for solar investment and methane emissions reduction. Other witnesses were economists who described the urgency of addressing the debt limit, options for doing so, past positions taken by both parties, and the risks of doing nothing to address the escalating federal debt. On timing, Mark Zandi of Moody's Analytics predicted the "X date" when the government risks default without additional action could occur on June 8 or, as Secretary Yellen warned, as early as June 1. He said early August is the latest the deadline could arrive.

IRS: On May 2, the IRS issued proposed regulations (REG-124064-19) under IRC Section 367(d) addressing situations in which intangible property that had been transferred to a foreign corporation is repatriated to certain US persons. The proposed regulations would terminate, in some situations, the continued application of certain tax provisions arising from the initial transfer. The IRS invites comments to be submitted within 60 days of May 3, 2023, when the rules will be published in the Federal Register. An EY Tax Alert has details.

In Notice 2023-36 May 4, Treasury and IRS invited public recommendations for items to be included on the 2023–2024 Priority Guidance Plan, by Friday, June 9.

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