The US federal government shutdown, which began after midnight on 1 October, has reached its 10th day after repeated failed votes in the Senate. Republicans continue to insist that Congress must pass a "clean" continuing resolution (CR) to fund the government with no added provisions, while Democrats are requiring that the CR extend enhanced Affordable Care Act (ACA) premium tax credits that expire at the end of 2025.

At this time, there are no clear indications how the government impasse will end. House Republicans are expected to remain out of session next week and may stay away from Washington as long as the shutdown continues. The Senate will not be in this weekend but will forgo next week's scheduled recess, returning after the 13 October Columbus Day holiday.

There were several IRS developments this week, beginning with the IRS furloughing just under half its workforce as a result of the ongoing government shutdown. Beginning 8 October, the IRS workforce was reduced to 53.6% of current employees.

Also this week, Treasury Secretary Scott Bessent named Social Security Administration (SSA) Commissioner Frank Bisignano to the newly created role of IRS Chief Executive Officer (CEO). Bisignano will manage the organization and oversee the IRS's day-to-day operations while also continuing in his role as SSA Commissioner. The new IRS CEO will report directly to the Treasury Secretary.

The US and Brazil signed a Competent Authority Arrangement (CAA) on the spontaneous exchange of information under the 2007 US-Brazil tax information exchange agreement. The CAA was signed on 27 August and published on the IRS CAA website on 24 September.

In BEPS 2.0 news, the co-chair of the Inclusive Framework this week was quoted as saying OECD negotiators soon may reach agreement on the G-7 proposal for a side-by-side system that would exempt US multinationals from certain of the Pillar Two global minimum tax rules. The UK official said members of the Inclusive Framework are "open to finding a pragmatic path forward" and "recognize the pressure to get this result as soon as possible."

In addition to the fundamental question of how to ensure that a side-by-side system does not undermine the stability of Pillar Two, the Inclusive Framework is working out technical issues associated with the proposal. Among the issues under discussion are whether other jurisdictions in the future would be allowed to qualify as side-by-side regimes if their domestic rules change and how the proposed side-by-side system would interact with the expiring Pillar Two safe harbors. Both the transitional country-by-country reporting (CbCR) safe harbor and the transitional under-taxed profits rule (UTPR) safe harbor will expire at the end of 2025.

Work reportedly is progressing on a permanent safe harbor to replace the transitional CbCR safe harbor, with an OECD official saying the project for the design has been rolled into the current Inclusive Framework discussions on the side-by-side system.

OECD officials this week also provided updates on various tax projects.

The OECD in spring 2026 is planning to release a discussion draft with updates to Chapter Vll of the Transfer Pricing Guidelines. The head of the transfer pricing unit of the OECD Centre for Tax Policy and Administration was quoted as saying the updates will address certain aspects of the benefits test for intragroup services, the interaction of intangibles and internal services and the application of transfer pricing methods. The OECD also plans to discuss the interaction of transfer pricing and high-value-added services such as cloud computing and other IT applications.

In January 2026, the OECD also reportedly will release a consultation draft on updates to the Model Tax Treaty commentary on the definition of home office permanent establishment.

The OECD Forum on Tax Administration (FTA) is in the process of revising the manual on mutual agreement procedure (MAP) addressing arbitration for jurisdictions considering adopting it. The FTA plans to release the updated manual before the end of the year. The OECD also reportedly is looking at ways to improve tax arbitration more generally.

Finally, the OECD is looking at the use of artificial intelligence (AI) by tax administrations, with a senior OECD official saying there are several ongoing projects. The OECD on 18 September released Governing with Artificial Intelligence: The state of play and way forward in core government functions, with several sections applicable to tax administration.