Speculation continues over a continuing resolution (CR) to patch government funding that is longer than the current House-passed CR until November 21, which the Senate hasn't passed because of the partisan dispute over whether to attach an extension of enhanced Affordable Care Act (ACA) premium tax credits. Some conservative House Republicans are calling for a CR into 2026. And House Ways and Means Chairman Jason Smith (R-MO) said on Bloomberg TV that there has been discussion among some Republicans about a CR until December 2026, after the midterm elections. "We just need to make sure that the government is open and serving the American people," he said.

The government shutdown of the past three weeks-plus shows no signs of ending. The Senate is out until Monday. President Trump is traveling to Asia today, leading to lowered expectations for any government funding breakthroughs that he would undoubtedly need to be a part of. At the end of next week, there is another scheduled paycheck for active-duty military members, though the Administration covered a previous deadline with a separate funding source. After next week is the ACA health care open enrollment period beginning on November 1, as well as pressure on the Supplemental Nutrition Assistance Program (SNAP). Then, weeks after that, is the Thanksgiving holiday, when travel disruptions would be most pronounced.

On October 23, the Shutdown Fairness Act (S. 3012), Senator Ron Johnson's (R-WI) bill "to appropriate funds for pay and allowances of excepted Federal employees for periods of work performed during a lapse in appropriations," failed to clear a Senate procedural vote, 54-45, where 60 votes were required. Georgia Democrats Raphael Warnock (D-GA) and Jon Ossoff (D-GA) plus Senator John Fetterman (D-PA) voted with Republicans in favor of the bill, though others were reluctant over issues including that the bill would afford the Administration the ability to decide which federal workers get paid. Senator Chris Van Hollen (D-MD) failed to get unanimous consent (UC) for his bill, the True Shutdown Fairness Act (S. 3039), that would pay all federal employees — both those excepted and those furloughed — during the shutdown.

An October 22 Washington Examiner story, "Thune teases shutdown votes to pay troops and air traffic controllers," cited Majority Leader John Thune (R-SD) as suggesting more bills to fund specific government employees during the shutdown are likely. "They're kind of rifle shots. My preference, always, is just to open up the government, then all this stuff would not be an issue," Thune said. "I just think that at some point, we all want to pay them all. But you got people defending the country." These may include:

• S. 3002 by Senator Dan Sullivan (R-AK), to provide continuing appropriations for military pay for any period during which interim or full-year appropriations for FY2026 are not in effect (i.e., a government shutdown)
• S. 3031 by Senator Ted Cruz (R-TX) to pay air traffic controllers during the shutdown

Tax - Even with the government shutdown, there are signs that members still prioritize yearend bipartisan legislation on tax, health, and trade issues. Morning Tax reported October 23 that Senate Finance Committee Chairman Mike Crapo (R-ID) said he remains hopeful about a tax extenders package given that some provisions were omitted from the "One Big Beautiful Bill Act" (OBBBA). "Looking ahead, Crapo also said he wouldn't oppose reversing the megabill provision that prevents gamblers from deducting all of their losses," the report said. Tax extenders not included in the OBBBA include the Work Opportunity Tax Credit (WOTC), the IRC Section 181 100% deduction for film/TV production costs, and the seven-year recovery period for motorsports entertainment complexes. Members of both parties are interested in rolling back the OBBBA deduction for 90% of gambling losses that takes effect in 2026 and reinstating the prior 100% deduction.

President Trump was viewed as perhaps downplaying prospects for a second reconciliation bill during a meeting with Senate Republicans on Tuesday. "We don't need to pass any more bills," he said of the OBBBA. "We got everything in that bill." However, Punchbowl News reported that during a Wednesday meeting, some Senate Republicans pressed Majority Leader Thune about using a second budget reconciliation to address GOP priorities on health care policy. "The sentiment is a reflection of some Republicans' belief that Democrats will never actually negotiate with them over ways to address the threat of rising health care premiums due to the expiration of the Obamacare enhanced premium tax credits," the report said. "Using budget reconciliation would allow Republicans to address these issues without requiring Democratic votes."

There is also continued speculation about Republicans reviving the IRC Section 899 reciprocal tax proposal, which was dropped from the OBBBA.

IRS — In IR-2025-106 October 22, the Internal Revenue Service announced the issuance of frequently asked questions in Fact Sheet 2025-07 relating to the limitation on credits and refunds for Employee Retention Credits claimed for the third and fourth quarters of 2021 that were filed after Jan. 31, 2024, as enacted under the OBBBA. "The FAQs discuss the limitation generally, when a claim is considered to be timely filed, and what appeals rights are available if an ERC claimed on a return is disallowed," the release said.

The IRS held a relatively short hearing October 23 on proposed regulations on occupations that customarily and regularly receive tips (REG-110032-25). The American Hotel & Lodging Association requested that the IRS provide a simple standard reporting method for employers to report the estimated amount of qualified cash tips for 2025, as businesses need time to update payroll systems, and guidance on employees who transition between jobs and receive tips as part of their compensation. The Culinary Workers Union called for regulations to cover automatic gratuities for large parties, which some lawmakers have also called for.

An EY Alert, "IRS issues additional interim guidance that adds flexibility on relying on the corporate alternative minimum tax guidance," is available here.

Shutdown RIFs — In a rare break with the administration, in a letter led by Senate Finance Chairman Crapo and Rep. Young Kim (R-CA), more than 100 Republicans urged the Trump administration to reverse its shutdown-related layoffs of the entire staff of the Community Development Financial Institutions (CDFI) Fund. The signers said the layoffs of 80 CDFI Fund staff on October 10 — done as reductions-in-force (RIFs) carried out by Office of Management and Budget Director Russell Vought, as a way to punish Democrats for not voting to reopen the government — would shutter congressionally mandated operations and harm low- to moderate-income communities around the country, Bloomberg reported. "It is unclear how these programs will continue to operate if the CDFI Fund's obligations cease to function," the GOP letter said. The $324 million CDFI Fund provides grants to small banks, credit unions and loan funds in underserved communities, and supports the New Markets Tax Credit Program. The proposed layoffs are supposed to take effect in December, part of the administration's push to subject more than 4,000 federal workers to RIF orders during the shutdown, though a federal judge in California has temporarily blocked the RIFs.