This week (December 22-26)

Congress: The House and Senate are out of session for the holidays.

This Week in Tax Policy won't be published while Congress is away, but other Alerts will be issued as events warrant.

Last week (December 15-19)

Big picture: The House and Senate are now out of session for a recess that is planned to last through the holidays and into the new year, meaning enhanced Affordable Care Act (ACA) premium tax credits (PTCs) are likely to expire at the end of the month. Lawmakers also did not make significant measurable progress on appropriations bills prior to the break, and, upon returning to session, they will face a January 30 deadline for nine of 12 annual appropriations bills (with the other three having received full-year funding with the November continuing resolution). Both the ACA credits issue and appropriations deadline could possibly provide a vehicle for a bipartisan tax/trade/health package. It is unclear what tax items could be pursued, but they may include tax extenders and rolling back the "One Big Beautiful Bill Act" deduction limit of 90% for gambling losses that takes effect in 2026, to restore the 100% deduction.

IRS: On December 19, IRS released guidance for taxpayers claiming the tax credit for carbon capture and sequestration. Notice 2026-1 provides a safe harbor for taxpayers that wish to claim the credit for qualified carbon oxide captured and disposed of in secure geological storage occurring during calendar year 2025.

On December 17, IRS issued final regulations regarding the base erosion and anti-abuse tax (BEAT), related to how qualified derivative payments with respect to securities lending transactions are determined and reported.

Nominations: The Senate approved December 18 en bloc nominations provided for under the provisions of S. Res. 532, which included Derek Theurer to be Deputy Under Secretary of the Treasury for Legislative Affairs.

Global tax: Estonia, Poland, and the Czech Republic have reportedly dropped their objections to a potential international agreement on a side-by-side system that would exempt US multinationals from most Pillar 2 global minimum tax rules. Information about a potential agreement has been awaited since at least last week. "The EU seems ready to move forward with the OECD's pillar 2 plan after its three most resistant member states" lifted their reservations to the side-by-side package system, Tax Notes said in a December 18 report that cited Estonia and a Czech official as confirming their objections have been dropped.

Treasury Secretary Scott Bessent is encouraging other nations to advance Pillar 2 of the OECD-led global tax deal. "The path forward on Pillar 2 is clear, and I would urge all remaining holdouts to join the consensus on the path forward for this critical issue," Secretary Bessent posted on social media after meeting with EU ambassadors to the US.