The US Congress this week attempted — and failed — to pass competing stopgap measures to fund the federal government past the 30 September fiscal-year deadline — one Republican and one Democratic. The Senate defeated both continuing resolutions (CRs) on 19 September.

The House earlier on 19 September approved a Republican-sponsored CR to the fund the government until 21 November, which then moved to the Senate. The Republican CR would have also extended health extenders, including on telehealth, and some other provisions until that date. Senate Democratic leaders introduced an alternative CR to fund the government through the end of October, which would have made permanent enhanced Affordable Care Act (ACA) premium tax credits that expire at the end of 2025.

Now that both CRs have been defeated in the Senate, next steps remain uncertain. Congress is scheduled to be out of session next week. After the break, lawmakers will have only the 29 and 30 September to act to prevent a government shutdown.

A senior Treasury official said this week that the Trump Administration's first IRS Priority Guidance Plan will be issued at the end of September or early October. The official was quoted as saying the guidance plan would include "One Big Beautiful Bill" projects as well as a digital assets section and deregulation priorities.

The official indicated taxpayers can expect two additional notices on the corporate alternative minimum tax (CAMT) "to make things easier for taxpayers."

The Eighth Circuit Court of Appeals recently vacated the US Tax Court's order in the long-running Medtronic, Inc., et al. v. Commissioner (Medtronic US) transfer pricing case and remanded the case to the Tax Court for further proceedings.

The Eighth Circuit held that the Comparable Uncontrolled Transaction (CUT) method, advocated by Medtronic US, is not the best method for determining the arm's-length royalty rate when the uncontrolled transaction does not transfer comparable intangible rights and does not have similar profit potential. The appeals court also rejected the Tax Court's use of an unspecified method to determine the royalty rate. Instead, the Eighth Circuit agreed with the IRS that the Comparable Profits Method (CPM) is preferable but directed the Tax Court to conduct additional fact finding to determine whether reliable adjustments can be made. A Tax Alert provides details.

The Office of the United States Trade Representative on 16 September officially initiated the public process for the first six-year review of the United States-Mexico-Canada Agreement (USMCA). The USMCA, which replaced the North American Free Trade Agreement (NAFTA), entered into force on 1 July 2020 and governs nearly $1.3t in annual trade among the three North American nations. The first review of the USMCA will take place on 1 July 2026. The US, Canada and Mexico must submit recommendations for the Joint Review no later than 1 June 2026.

Companies and organizations that depend on North American supply chains, cross-border dataflows, or regulatory alignment should view this process as a chance to proactively shape the agreement's future. Failure to participate could result in missed opportunities or the advancement of policies that may not reflect the realities or needs of specific sectors.

The United States Customs and Border Protection on 16 September released updated guidance, "Implementing Certain Tariff-Related Elements of the United States-Japan Agreement," detailing modifications to duties on Japanese-originating imports. This guidance consolidates previous executive orders and proclamations, providing a comprehensive approach to handling imports from Japan.

The United States Trade Representative on the same day also opened a request for comments on the continuation of Section 301 tariff exclusions for certain Chinese-originating imports, presenting an opportunity for stakeholders to engage in shaping future trade policies. Comments are due by 16 October. A Global Tax Alert has details.

President Trump on 5 September signed an Executive Order (EO) titled "Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements." The EO states that it aims to address national security concerns and rectify trade practices contributing to the US trade deficit. The EO introduces 0% tariffs for certain imports from aligned partners, contingent on their commitments to remedy certain trade practices. Additionally, the EO revises Annex II, effective 8 September, and establishes a new "Potential Tariff Adjustments for Aligned Partners" (PTAAP) Annex. A Global Tax Alert provides details.

The OECD on 8 September released the report "Revised BEPS Action 5 Transparency Framework on Tax Rulings" on the spontaneous exchange of information on tax rulings. The report reflects the Inclusive Framework's completion of an effectiveness review as part of its ongoing peer review of the Action 5 minimum standard.

The changes agreed by the Inclusive Framework are intended to enhance the effectiveness of the transparency framework, including: modifications to the scope of rulings covered; revised terms of reference and an updated assessment methodology for peer reviews; and a revised Exchange on Tax Rulings (ETR) XML Schema and User Guide. A Global Tax Alert has details.