This week (September 15-19)

Congress: The House and Senate are in session. While weeks remain until the September 30 government funding deadline, both the House and Senate are slated to be out of session the week of September 22, shortening the period for consideration of a stopgap funding measure. House Republican leaders are eyeing a continuing resolution until November 21 — the Friday before Thanksgiving — and both the House and Senate could act on the funding patch the week of September 15, Politico reported.

On September 16 at 2 p.m., the House Ways and Means Oversight Subcommittee will hold a hearing on "Virtue Signaling vs. Vital Services: Where Tax-Exempt Hospitals are Spending Your Tax Dollars."

Last week (September 8-12)

Big picture: Congress was in session this week and speculation continued about the agenda for the remainder of 2025, including whether there will be a second budget reconciliation bill and how a package of bipartisan tax and other priorities could advance. The focus remains on how lawmakers may act to extend government funding that expires after September 30, with the main question being whether a continuing resolution (CR) will last into later in 2025 or carry over into 2026. Government funding bills need at least some Democratic support because they require 60 votes in the Senate, and some Democrats want any bill to extend government funding beyond September 30 to also include an extension of enhanced Affordable Care Act (ACA) premium tax credits expiring at the end of 2025. Senate Republican leaders maintain that any CR must be clean, or devoid of any policy add-ons. There are differences of opinion among Republicans over whether to extend the enhanced credits generally, and some are calling for the cost to be reduced.

Second reconciliation bill: House Ways and Means Committee Chairman Jason Smith (R-MO) lent some new uncertainty to the outlook for an additional budget reconciliation bill with tax provisions this year. Asked on CNBC's "Squawk Box" September 9 whether there will be a "part two" to the "One Big Beautiful Bill Act" (OBBBA), Chairman Smith said, "I think that's a great question. I feel like we delivered everything that the President promised to the American people, and that he campaigned on, in this bill." Further asked whether a second reconciliation package would be too hard as the elections approach, Chairman Smith emphasized his initial preference for one bill because two partisan reconciliation bills have never been signed into law in the same year. House Speaker Mike Johnson (R-LA) said before the August recess that he wanted Congress to act on a second reconciliation bill this year to address provisions omitted from the OBBBA, but President Trump hasn't publicly asked for another bill and the contours of another bill aren't clear.

Bipartisan priorities: Some GOP members have suggested privately that the focus for now may be more toward a year-end bipartisan package that could address outstanding tax, trade and health care priorities. Tax extenders that expire at the end of 2025 include the Work Opportunity Tax Credit (WOTC), Empowerment Zone tax incentives, the seven-year recovery period for motor sports entertainment complexes, and expensing rules for film, television and theatrical productions under IRC Section 181. Recent press articles have focused on prospects for addressing these provisions. Tax Notes on September 8 reported on members and the business community supporting WOTC. Regarding the credit being omitted from the OBBBA — which addressed the CFC look-through rule, New Markets Tax Credit, and cover over of tax on distilled spirits — Rep. Lloyd Smucker (R-PA) said, "The WOTC bill is one that I was hoping to see in there." Smucker sponsors the Improve and Enhance the Work Opportunity Tax Credit Act (H.R. 1177) to update WOTC and encourage longer-service employment and increase the current credit percentage from 40% to 50% of qualified wages. On July 29, Ways and Means members Judy Chu (D-CA) and Nicole Malliotakis (R-NY) and Senate Finance Committee members Raphael Warnock (D-GA) and Marsha Blackburn (R-TN) introduced the Creative Relief and Expensing for Artistic Entertainment (CREATE) Act, to extend through 2030 the IRC Section 181 100% deduction for production costs of films, television, and sound recordings in the year paid or incurred. Senate Finance Committee members Todd Young (R-IN) and Mark Warner (D-VA) and House Ways and Means Committee members Claudia Tenney (R-NY), Mike Thompson (D-CA) and Terri Sewell (D-AL) sponsor the Motorsports Fairness and Permanency Act of 2025 (S. 1763/H.R. 2231), to make permanent the seven-year recovery period for motorsports entertainment complexes. There are also expiring health and trade items with bipartisan support.

CAMT: The corporate alternative minimum tax (CAMT) has remained in the news this week. During the Senate Finance Committee's September 10 hearing on the nomination of Donald Korb to be IRS Chief Counsel, Senator Elizabeth Warren (D-MA) suggested that "corporations are trying to wiggle out of" the CAMT by asking the Treasury Department and the IRS to write weaker rules. She told Korb to commit to not writing new rules to let "billionaire corporations" out of paying the tax.

This followed a September 9 letter to Treasury Secretary Scott Bessent from Senators Warren, Angus King (I-ME), John Hickenlooper (D-CO), Sheldon Whitehouse (D-RI), Ed Markey (D-MA) and Rep. Don Beyer (D-VA) raised concerns with two new interim guidance notices "intended to erode" the CAMT. The letter addressed: Notice 2025-27, which revised the safe harbor for determining applicable corporation status for purposes of the CAMT; and Notice 2025-28, regarding the application of the CAMT to applicable corporations with financial statement income (FSI) attributable to investments in partnerships. In the letter, the members said Notice 2025-27 allows companies to avoid the CAMT if their income, under a simplified accounting method, is below $800 million, which is significantly higher than the Biden administration's threshold of $500 million. "Further, this notice also indicates future potential erosion of the CAMT tax base by stating that Treasury and the IRS will reconsider the treatment of unrealized capital gains," the letter said. Additionally, Notice 2025-28 "creates additional complexity for tax administrators and risks enabling gaming and inconsistent outcomes across similarly situated taxpayers," the letter said.

Additionally, a September 11 Politico story said more companies may become subject to the CAMT because of tax benefits in the One Big Beautiful Bill Act (OBBBA), including making the R&D expensing provision permanent (as IRC Section 174A) and providing the option to elect to retroactively deduct domestic research or experimental expenditures. "The new law not only revives it, but, to make up for lost time, Republicans allowed companies to accelerate R&D deductions they couldn't use in those years," the story said. "But that can create an unusually large, one-time deduction that can push businesses' tax rates below 15 percent — subjecting them to [the] tax. Many companies are now deliberating internally about how to proceed. Some could choose not to take advantage of the provision in order to avoid CAMT."

An EY Tax Alert has details and is available here.

Other issues: Also, during the Korb hearing, Senator Warren criticized the OBBBA tax benefit for "research that's already been done" as a "windfall for corporate America." (She previously criticized the temporary R&D-expensing provision and other TCJA pre-cliffs as masking the cost of the 2017 TCJA.) Senators Chuck Grassley (R-IA) and Roger Marshall (R-KS) both asked about 45Z Clean Fuel Production Credit guidance. "The reconciliation bill made several modifications to the Clean Fuels Production Credit under 45Z that will take effect at the start of next year … " Senator Grassley said, adding that the Office of Management and Budget regulatory agenda suggestion that regulations won't be implemented until May 2026 is unacceptable. "The 45Z [credit] is really important to our farmers, and we need to get that one rolling," Senator Marshall said. "It's going to allow us to turn corn into jet fuel, something great for the economy as well as ecology." As he did during a May IRS nomination hearing, Senator James Lankford (R-OK) noted the reintroduction of Office of Information and Regulatory Affairs (OIRA) review of tax regulations during the second Trump administration. "Every other agency out there has to be able to follow a set of rules to say if you're going to make a new regulation, OIRA needs to be able to check it, make sure you're following the Administrative Procedures Act before you release it," he said. "With respect to OIRA, I'm very well-versed in the entire APA process," Korb responded. "And I am committed to the executive order that the President put out requiring OIRA review of most regulations."

Global tax: House Ways and Means Committee Republicans met September 9 with Treasury Assistant Secretary for Tax Policy Ken Kies regarding the Administration's implementation of tax provisions included in the OBBBA. According to the Daily Tax Report, Kies suggested Treasury would likely support member efforts to revive the IRC Section 899 retaliatory tax regime dropped from the OBBBA if other nations don't abide by the G7 statement calling for a side-by-side system to fully exclude US-parented groups from the Undertaxed Profits Rule (UTPR) and the Income Inclusion Rule (IIR) for domestic and foreign profits. Chairman Smith has said members could return to the proposal if countries don't comply or impose taxes deemed too punitive, and Rep. Ron Estes (R-KS) said in July that the US must verify nations are complying. Recent press articles have checked in on the status of Pillar Two following the G7 statement. A September 8 Bloomberg Daily Tax Report story said, "Negotiators at the OECD are racing to rewrite large parts of the global minimum tax framework by year-end to placate the US, a goal that appears elusive as dozens of countries raise concerns about being put at a competitive disadvantage," after Treasury gave other nations a December 31 deadline to agree on a plan that would exempt US companies from the UTPR and IIR. The story cited previous reporting on concerns by some nations that exempting US companies would be unfair and impinge on their sovereign right to tax corporations doing business within their borders. Politico Morning Tax on September 9 said, "It's far from clear how quickly that agreement within the G7 can be turned into something durable and workable" even in light of the year-end deadline Treasury has set. "It's one thing to come to a general agreement among the G7, quite another to hash something out that can get consensus among the 140 countries taking part in global tax negotiations through the Organization for Economic Cooperation and Development," the story said.