Senate Democratic leaders have introduced an alternative continuing resolution (CR) to fund the government through the end of October and make permanent enhanced Affordable Care Act (ACA) premium tax credits that expire at the end of 2025. The House is set to vote today (September 19) on the Republican CR (H.R. 5371) to fund the government until November 21 that also includes health extenders but not the premium tax credit extension, which has become the crux of a possible funding standoff.

While Democratic support may not be required in the House, government funding bills require 60 votes in the Senate. Democrats are demanding the premium tax credits issue be addressed, having been stung by criticism over backing a March CR without extracting any policy concessions and wary of health coverage cuts following the Medicaid changes enacted in July. Some Republicans back an extension of the credits, but Senate Majority Leader John Thune (R-SD) and Appropriations Chair Susan Collins (R-ME) don't want to consider the premium tax credits issue in the context of the CR. Punchbowl News reported September 18 that Thune said the White House will need to get involved in the extension effort at some point.

If the House vote is successful, the Senate plans to vote on the Democratic CR then the Republican CR, both of which may fail. If that is the case, next steps are unclear and may amount to a waiting game. Congress is scheduled to be out of session next week. After the break, lawmakers will have only September 29 and 30 to act to prevent a government shutdown. "The real votes on whether to shut the government down will be on the 29th and 30th," an unnamed GOP senator said in an Axios report.

Much of the news coverage has focused on Democrats' contention that Republicans are unwilling to engage in discussions ahead of the funding deadline, and their insinuation that President Trump's direction to GOP leaders not to negotiate amounts to advocating a government shutdown. But, as has been the subject of speculation for months, it isn't clear that enough Democrats are willing to shut down the government and face whatever consequences that may bring. Politico reported September 18 that while Democratic leaders see themselves on "firmer political ground" for a fight than they were in March, "it's still not clear just how comfortable Democrats … will feel as a possible Oct. 1 shutdown grows nearer — or after one comes to pass."

Ways and Means markup — During a September 17 Ways and Means markup of health, tax administration and Social Security bills, the Tax Court Improvement Act (H.R. 5349) introduced by Committee members Nathaniel Moran (R-TX) and Terri Sewell (D-AL), to expand the judicial review process, and the Fair and Accountable IRS Reviews Act (H.R. 5346), by Rep. Glenn Grothman (R-WI), to require that IRS proposed penalties be reviewed and approved by a supervisor, were approved unanimously.

H.R. 5349 would authorize the Tax Court "to sign subpoenas to produce books, papers, documents, electronically stored information, or tangible things for purposes of discovery or evidence, prior to a hearing," the Committee said. H.R. 5346 "clarifies that supervisory approval of a penalty is timely only if the person proposing such penalty obtains the approval in writing prior to any written communication to a taxpayer with respect to such penalty."

Several health bills were approved by the Committee:

• The Nancy Gardner Sewell Medicare Multi-Cancer Early Detection Screening Coverage Act (H.R. 842), to provide transitional Medicare coverage for FDA-approved early detection screening tests, was approved 43-0
• The Hospital Inpatient Services Modernization Act (H.R. 4313), to allow hospitals to provide inpatient level care to seniors in the comfort of their homes rather than in a hospital, was approved 44-0
• The Health Care Efficiency Through Flexibility Act (H.R. 5347), addressing Accountable Care Organization (ACO) quality reporting, was approved 43-0
• The Ensuring Patient Access to Critical Breakthrough Products Act (H.R. 5343), to provide an immediate four years of transitional Medicare coverage of breakthrough medical devices, was approved 38-3

Health care — On September 16, the House Ways and Means Oversight Subcommittee held a hearing on "Virtue Signaling vs. Vital Services: Where Tax-Exempt Hospitals are Spending Your Tax Dollars." During the hearing, members heard from a panel representing health care providers, economists, academics, and market researchers. Most witnesses and Republicans spoke critically of the amount of community benefits non-profit hospitals provide and the types of services considered community benefits, raising specific concerns about diversity, equity, and inclusion (DEI) initiatives, etc.

Democrats and the Democratic witness generally spoke critically of the projected impact of the "One Big Beautiful Bill Act" (OBBBA) on providers and patients, as well as the need to extend the ACA's enhanced subsidies. Policy solutions discussed during the hearing included reforming Schedule H (Form 990), clarifying the definition of a community benefit, increasing competition in health care, and more.

On September 17, the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing entitled, "Restoring Trust Through Radical Transparency: Reviewing Recent Events at the Centers for Disease Control and Prevention (CDC) and Implications for Children's Health." During the hearing, members of the committee heard testimony from Susan Monarez, former Director of the CDC who was recently fired following disagreements with Department of Health and Human Services (HHS) Secretary Kennedy, and Debra Houry, former Chief Medical Officer at the CDC, who resigned following Dr. Monarez's firing. Chairman Cassidy has invited Secretary Kennedy, who disputes the assertions of Monarez and Houry, to come before the committee at a future date.

Bill introductions — On September 16, Senator Lisa Murkowski (R-AK) introduced a bill (S. 2824) to extend the temporary enhanced premium credits.

Senate Democrats are reintroducing prior proposals to increase taxes on corporations with high relative executive compensation and wealthy individuals. On September 16, Senate HELP Committee Chairman Bernie Sanders (I-VT) introduced a bill (S. 2818) to impose a corporate tax rate increase on companies whose ratio of compensation of the CEO or other highest paid employee to median worker compensation is more than 50 to 1.

On September 17, Senate Finance Committee ranking Democrat Ron Wyden (D-OR) introduced the Billionaires Income Tax Act (S. 2845) to modify over 30 tax provisions "so that billionaires are required to pay taxes annually." Ways and Means member Don Beyer (D-VA) sponsors the House version (H.R. 5427).

IRS — Treasury and IRS September 19 issued proposed regulations (REG-110032-25) on the OBBBA "no tax on tips" provision, identifying occupations customarily and regularly receive tips and define "qualified tips" eligible taxpayers may claim as a deduction. "The proposed regulations list nearly 70 separate occupations of tipped workers, from bartenders to water taxi operators," said a news release. Comments on the proposed regulations are due by October 23, 2025.

Global tax — The US and UK September 18 published a "Technology Prosperity Deal" to "to enable collaboration towards joint opportunities of mutual interest in strategic science and technology disciplines, including artificial intelligence (AI), civil nuclear, fusion, and quantum technologies." Morning Tax reported Liz Kendall, the U.K. technology secretary, as saying the nation's digital services tax (DST) "wasn't included in this partnership at all."

The deal was announced in conjunction with President Trump's visit to the United Kingdom. Prior to the visit, Republican Ways and Means Committee members urged the President to seek removal of the DST as soon as possible. "The UK's DST collected $1 billion in 2024 alone, and an estimated $3.1 billion between 2021 and 2024, almost entirely from American companies," members said in a September 15 letter led by Rep. Ron Estes (R-KS). "The UK itself has stated that 90% of the DST is paid by five companies, which the U.S. Trade Representative believes to all be American owned companies. This discriminatory action undermines American innovation and captures the U.S. tax base."

With Congress scheduled to be out of session next week, What to Expect in Washington won't be published on its regular schedule, but WCEY Alerts will be issued as events warrant.