The US Senate is now the focus of attention following House passage on 22 May of the budget reconciliation bill (H.R. 1) to extend Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025. The bill also provides border security funding and cuts to certain mandatory spending programs. The question now is how the Senate will amend the budget bill and how long it will take for the Senate to develop its version. The House and Senate were out of session this week for the Memorial Day holiday and will return to Washington the week of 2 June. The Joint Committee on Taxation also this week released the revenue estimate of tax provisions in the budget reconciliation bill passed by the House.

Although there is much agreement among House and Senate Republicans, there are a number of areas where Republicans in the two chambers differ in terms of budget reconciliation priorities. For instance, there is some Senate opposition to certain clean energy reductions in the House bill, particularly the Inflation Reduction Act energy tax credit rollbacks. There is also some Republican concern in the Senate on the general contours and revenue demands of the legislation and the fact that the bill will not be revenue neutral and could increase the deficit by $4t.

One provision to watch is the House bill's proposed new Code Section 899, which targets "unfair foreign taxes" and would increase applicable tax rates and expand the base erosion and anti-abuse tax (BEAT) rules in certain circumstances. If ultimately enacted, new IRC Section 899 would apply to certain inbound investors that are "applicable persons," including certain entities and individuals from so-called "discriminatory foreign countries."

In terms of a timeline, the Trump Administration has not deviated from a 4 July target for enactment of the bill. Congress will also have to address a debt limit increase that would probably need to be in place before the August recess.

The US Court of Appeals for the Federal Circuit, on 29 May, temporarily stayed a decision by the US Court of International Trade (CIT), which found that President Trump had exceeded his authority in imposing certain tariffs under the International Emergency Economic Powers Act (IEEPA). The CIT ruling, issued on 28 May, blocked tariffs enacted under the IEEPA that were included in the 2 April "Liberation Day" announcement, including the 10% global rate and the higher per-country tariff rates currently subject to a 90-day pause. The CIT ruling also covered tariffs on Mexico, Canada, and China in response to migration and drug smuggling.

The Federal Circuit's stay temporarily reinstates the IEEPA tariffs and will remain in place pending the Trump Administration's appeal of the CIT ruling.

In other trade news, President Trump paused, until 9 July, 50% tariffs against the European Union that were scheduled to go into effect on 1 June, to enable further negotiations with the bloc.

A Treasury official this week confirmed that the government will not release final corporate alternative minimum tax (CAMT) rules anytime soon. Proposed CAMT rules were issued in September 2024; technical corrections to the proposed CAMT regulations were issued on 26 December 2024. The official was quoted as saying Treasury and IRS officials are now in the process of briefing Administration appointees on the CAMT rules, as well as regarding stakeholder comments.