This week (October 13-17)

Congress: The Senate is in session, giving up a scheduled recess, and discussions on ending the government shutdown may continue. The chamber next convenes at 3 p.m. on Tuesday, October 14. House Leadership may again designate this week as a "district work period" with no floor votes. It has already been announced that votes are not expected in the House on Tuesday, October 14.

The EY Center for Tax Policy's "Tax in a time of transition" webcast series continues on Friday, October 17, at 12 p.m. ET. Register .

Last week (October 6-10)

Big picture: A second week of the federal government shutdown closes with no clearer indications of how it will end. Democrats continue to demand an extension of enhanced Affordable Care Act (ACA) premium tax credits that expire at the end of 2025 as part of a continuing resolution (CR) to extend government funding and end the shutdown. While that issue has gained steam among Republicans, the party maintains that the government must reopen before a deal is cut. Attention has turned back to what moderate Democrats like Senator Jeanne Shaheen (D-NH) suggested before the shutdown began: that a promise by Republican leaders to hold a vote on extending ACA subsidies later this year could be enough for some Democratic members to vote in favor of the GOP CR. Semafor on October 9 reported Senate Majority Leader John Thune (R-SD) as saying, of a promise to vote on the enhanced premium tax credits, "that might be an off-ramp" to reopen the government. Senate Majority Whip John Barrasso (R-WY) said that senators "are in discussions" about making the offer for such a vote. The House has already passed a Republican CR (H.R. 5371) to patch funding until November 21, but House Democratic Leader Hakeem Jeffries (D-NY) is reportedly opposed to Democrats' agreeing to end the shutdown based on a verbal agreement for a vote on ACA enhanced credits. Senate Democratic Leader Chuck Schumer (D-NY) is viewed as not having drawn a red line against such an agreement as a way out of the shutdown, though he also believes Democrats' footing in the shutdown is only improving and they correctly made health care the focal point in the government funding debate. Schumer has said an ACA credits deal can come together fast, in "a day or two," and end the shutdown, but that belies the complexity of the issue, with some Republicans insisting on income restrictions and other guardrails and House Democratic leaders also ruling out supporting a one-year patch that some Republicans proposed. House Speaker Mike Johnson (R-LA) told members October 10 that "it will take a lot of work to build consensus" on an enhanced ACA credits agreement and that is "if there is even any version of a reform that could find consensus and pass," according to Politico.

Legislative outlook: There has long been speculation about a potential year-end package addressing expiring tax, health and trade items, though it would likely require a bipartisan appropriations bill as the vehicle, and those prospects remain up in the air with the shutdown. There were press stories this week checking in on congressional interest in each of those areas, including: for trade, momentum behind extending the African Growth and Opportunity Act (AGOA) and the HOPE/HELP trade programs with Haiti, both of which expired September 30; and, for health care, pharmacy benefit manager (PBM) reform. On tax, there remains bipartisan interest in cryptocurrency tax reforms, which were the subject of an October 1 Senate Finance Committee hearing and a House Ways and Means Oversight Subcommittee hearing in July. Republicans in the Senate considered adding some of these provisions to the "One Big Beautiful Bill Act" (OBBBA) but more time was needed to settle policy and technical questions. Punchbowl News reported October 10 that a driver of that effort was Senator Cynthia Lummis (R-WY), who sponsors a bill on the issue (S. 2207) and who met with House Ways and Means Chairman Jason Smith (R-MO) in the run-up to the OBBBA. "Republicans want the final product to be bipartisan, which would make it easier to get through Congress. There's been outreach from House GOP members to their Democratic counterparts about the possibility … " the report said. "Democrats have shown interest in working across the aisle on crypto tax before, which is stoking optimism from supporters of the effort."

Nominations: The Senate Finance Committee on October 8 approved, mostly along party lines, the nominations of:

• Donald Korb to be IRS Chief Counsel 15-12, with Democrat Sheldon Whitehouse (D-RI) voting in favor;
• Derek Theurer to be Deputy Under Secretary of the Treasury for Legislative Affairs, 14-13; and
• Jonathan Greenstein to be a Deputy Under Secretary of the Treasury, 14-13.

Treasury Secretary Scott Bessent announced October 7 that Derek Theurer will perform the duties of Deputy Secretary of the Treasury given "his ongoing commitment to serving the American people, deep policy acumen and legislative expertise, as well as years of operational experience."

Secretary Bessent also announced October 6 that Social Security Commissioner Frank Bisignano will serve as Chief Executive Officer (CEO) of the IRS, reporting directly to Acting Commissioner Bessent, managing the organization and overseeing all day-to-day IRS operations while also continuing to serve in his role as Commissioner of the Social Security Administration. The Wall Street Journal reported, "Bisignano will help implement the administration's vision for the IRS, which emphasizes upgraded technology and retreats from the heavier enforcement initiatives" in effect during the Biden administration. "On paper, Bisignano is the kind of executive that presidents of both parties have picked to run the tax agency in the past 30 years. He's the former chief executive of Fiserv, the payments processing company, which means he has experience in running a large organization that manages sensitive data and complex information-technology projects," the report said. Secretary Bessent took over the IRS in August after President Trump removed Billy Long from the post two months after his confirmation. The President is still expected to nominate a new IRS commissioner.

Budget: On October 8, the Congressional Budget Office (CBO) released its regular report on the budget deficit, which found that the government ran a $1.8 trillion deficit for the 2025 fiscal year. That figure is similar to the 2024 deficit despite a surge in tariff revenues, CBO said, with the shortfall for the year ending September 30 just $8 billion less than the 2024 deficit. "Receipts from corporate income taxes decreased 15% compared to 2024, in part due to [President] Trump's signature tax and spending plan passed by Congress this summer," Bloomberg reported, noting that the "One, Big Beautiful Bill Act" allows corporations to take larger deductions for certain investments in 2025, which reduced some estimated payments. "A deferral of some revenue from 2023 to 2024 also accounted for some of the relative drop in corporate receipts for 2025, CBO said."

IRS: The IRS October 9 announced the tax year 2026 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. These include marginal rates, alternative minimum tax exemption amounts, estate tax credits, the dollar limitation for voluntary employee salary reductions for contributions to health flexible spending arrangements, and the deductible threshold for medical savings accounts.

In Notice 2025-55, IRS provided relief from failure to deposit penalties under Section 6656 of the tax code in connection with the new excise tax imposed on certain remittance transfers under Section 4475.

Global tax: As EY's International Tax and Transaction Services (ITTS) group reported, 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 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 a side-by-side regime 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 undertaxed profits (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.