With the income tax filing deadline around the corner, attention on Capitol Hill is turning to tax administration issues. Senate Finance Committee Chairman Mike Crapo (R-ID) and Ranking Member Ron Wyden (D-OR) on February 26 introduced the "Taxpayer Assistance and Service Act," with provisions to:

• Digitize more tax returns to support faster refunds
• Upgrade the "where's my refund" tools so taxpayers know when to expect their refunds
• Upgrade IRS online accounts so taxpayers and representatives can review and respond online
• Strengthen standards for paid tax preparers
• Expand IRS call-back options
• Allow the U.S. Tax Court to hear cases relating to refunds
• Increase the independence of the National Taxpayer Advocate and IRS Independent Office of Appeals
• Protect victims of fraud from indefinite IRS scrutiny

Senators Crapo and Wyden released a discussion draft on the topic in January 2025, and the Finance Committee has a long history of producing bipartisan tax administration bills. The House Ways and Means Committee has passed some narrower bills on taxpayer rights, the Tax Court, etc. "Taxpayer advocates inside and outside government have been eagerly awaiting the legislation from Crapo and Wyden, which includes tweaks to a number of provisions from last year's draft (and drops some portions altogether) … " Morning Tax said. "There's interest in both parties and chambers in passing further bipartisan tax administration measures this year. But it remains to be seen whether the House and the Senate have the bandwidth to pass something at the scale of Crapo and Wyden's measure."

Additionally, the House Ways and Means Committee has scheduled a hearing for Wednesday, March 4 at 10 a.m. with IRS Chief Executive Officer Frank Bisignano to discuss the 2026 filing season, implementation of the One Big Beautiful Bill Act (OBBBA), and the Trump Administration's priorities for the IRS.

Outlook — President Trump's State of the Union address February 24 didn't necessarily provide Congress with a road map on tax or other policy issues. "From a legislative perspective, Trump's State of the Union address was notable for what it didn't include. He gave Republicans a pass on trying to revive his global tariff campaign after a major Supreme Court setback. He didn't demand another party-line domestic policy bill before November … " Politico reported in a story, "Trump doesn't give Congress much to do before the midterms," on February 25. "Instead, Trump used the bulk of the speech to lean into red-meat issues like illegal immigration … while encouraging lawmakers to tackle a few relatively minor topics — many of which have already been churning behind the scenes for months."

In the State of the Union address, President Trump called for, beginning next year, "access to the same type of retirement plan offered to every federal worker" with annual $1,000 matching contributions for individuals who do not have access to a retirement plan. "The White House provided few details of how the Trump plan would work, including whether any workers could be automatically enrolled or how the administration would encourage people to sign up. Participation rates in 401(k) plans without automatic enrollment are significantly lower," the Wall Street Journal reported in a story, "What to Know About Trump's New Retirement Plan Idea," February 25. "The administration said it is constructing a mechanism for people to save and use the new government match without additional legislation from Congress."

On Fox News February 25, White House economic adviser Kevin Hassett said, "the Saver's Match program applies to low-income families, and that's really step one, and that's the thing that we're going to start right away because it's already in law, doesn't require legislation." Then, Congress may want to raise the income threshold. Saver's Match changes under the SECURE 2.0 Act of 2022 established a federal matching contribution that must be deposited into a taxpayer's IRA or retirement plan.

Some Republicans have cast doubt on a second party-line bill like last year's OBBBA, but there is some recognition that it may offer the only opportunity to pass the party's additional priorities in the narrowly controlled House. The SCOTUS tariff decision has been refocusing attention on the possibility of a second reconciliation bill, with health care provisions long expected to feature prominently. Senator Bernie Moreno (R-OH) is pushing for legislation to codify President Trump's tariffs, which not all Republicans support, complicating the potential path for a second GOP-only bill. The debate over whether to pursue a reconciliation bill has simmered for months, with congressional Budget Committee chairmen in favor, GOP leaders largely neutral, and tax-writing committee leaders focused on bipartisan legislation.

Asked on Fox News February 25 whether Republicans are working on another reconciliation package this year ahead of the midterm elections, Senate Majority Leader John Thune (R-SD) said: "We are soliciting ideas from the relevant committees here in the Senate to see if there is an issue set that we could put up for a reconciliation bill that would get 50 votes. And obviously allowing people to save for retirement and allow everybody across this country to have access to the same sorts of retirement accounts that federal employees do, I think is a great idea. Obviously, you know, there's a lot of work that has to happen in the House and the Senate in order to make something like that become a reality."

Bloomberg Government reported February 25 that, when asked by a reporter whether the Trump administration is considering a second reconciliation bill with new tax cuts, Hassett said it is still being discussed.

Tax — The Joint Economic Committee has scheduled a hearing for Wednesday, March 4, 2026, at 10:30 a.m., "Evaluating the U.S. Competitiveness and Investment Advantages of a Destination-Based Cash Flow Tax (DBCFT)." Witnesses:

• Alan Auerbach, Professor of Economics, University of California, Berkeley
• Andrew Lyon, Economist
• Douglas Holtz-Eakin, President, American Action Forum
• John Arensmeyer, Founder and CEO, Small Business Majority

IRS — Notice 2026-17, released February 25, announces the Department of Treasury and the IRS's intent to issue proposed regulations under IRC Section 987 regarding the determination of taxable income or loss and foreign currency gain or loss with respect to a qualified business unit. Notice 2026-17 announces forthcoming proposed regulations that would permit taxpayers to elect the equity and basis pool method for the computation of unrecognized section 987 gain or loss using a method that is substantially similar to the method provided in regulations proposed in 1991. It also announces that forthcoming proposed regulations would provide an election under which controlled foreign corporations would not compute or recognize foreign currency gain or loss under section 987(3), except in connection with certain inbound transactions.

The IRC Section 987 rules address determining the taxable income or loss and currency gain or loss for a qualified business unit (QBU) whose functional currency differs from that of its tax owner. At the D.C. Bar conference in January, Kevin Salinger, Deputy Assistant Secretary for Tax Policy at the Treasury Department, said that while final rules issued at the end of 2024 have sound policy reasoning behind them, it has been very difficult for taxpayers to deal with the rules. He previewed the forthcoming guidance under which Treasury planned to give taxpayers the option of following a modified version of the 1991 rules' method to calculate 987 gain or loss. Under the 1991 regulations, taxpayers would determine section 987 gain or loss by maintaining an equity pool in the QBU's functional currency and a basis pool in the taxpayer's functional currency. The equity and basis pools would be adjusted for taxable income or loss of the QBU as well as for contributions and remittances.

Separately, an EY Alert, "Additional interim CAMT guidance allows new AFSI adjustments and expands the scope of AFSI adjustments provided in prior interim guidance," is available here.

Trade — On February 24, a group of more than 20 Senate Democrats including Finance Committee Ranking Member Wyden introduced their bill (S. 3905) to provide for the refund of duties imposed under the International Emergency Economic Powers Act (IEEPA), following the February 20 Supreme Court ruling that IEEPA does not provide authority to impose tariffs. "The Tariff Refund Act of 2026 would ensure that U.S. Customs and Border Protection (CBP) completes the payment of refunds quickly and prioritizes the interests of small businesses in that process," according to a news release.

The February 20 SCOTUS decision does not address next steps in terms of how companies who have paid the tariffs might recoup them. Justice Kavanaugh, in his dissenting opinion, criticized the majority on this point: "[t]he Court's decision is likely to generate other serious practical consequences in the near term. One issue will be refunds. Refunds of billions of dollars would have significant consequences for the U. S. Treasury. The Court says nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers. But that process is likely to be a 'mess,' as was acknowledged at oral argument."

An editorial in the February 26 Washington Post, "Tariff Refunds are the Only Way," referenced Justice Kavanaugh's comments and said, "The government doesn't need to make the process more complex than it needs to be. Forcing every harmed business to sue to get its money back, which appears to be the plan at this point, is legally unnecessary."

Housing — The Senate took the first step toward consideration of a bipartisan housing bill Thursday, as Majority Leader Thune filed cloture on the House-passed housing bill, the Housing for the 21st Century Act (HR 6644), with a vote set for Monday (March 2). The Senate has its own bill, the ROAD to Housing Act (S. 2651), which passed the Banking Committee unanimously in July and later was added to the Senate's version of the annual defense authorization bill (NDAA) by unanimous consent. House Republicans, however, rejected including the bill in the final NDAA agreement in December, as Financial Services Committee Chairman French Hill (R-AR) said he wanted the House to pass its own version first and then enter into a bicameral negotiation. The House later passed its housing bill on February 9 by an overwhelming vote of 390-9.

The fact that Senate leaders are using the House-passed version as a shell indicates that leadership will try to address differences in the two bills by incorporating some of the House's provisions in a manager's amendment on the Senate floor, pre-empting the need for a House-Senate conference or some other process for reconciling them. That approach likely means whatever the Senate is able to pass will be the final product. The two bills are similar in approach, with a focus on streamlining regulations, modernizing federal housing programs and providing new tools and incentives to help communities build more homes. But House Republicans included a package of changes to community banking regulations — such as raising the public welfare investment cap from 15% to 20% for banks regulated by the Fed and the Office of the Comptroller of the Currency, and doubling the asset threshold for banks to qualify for a longer exam cycle — that have drawn objections from Banking Committee Ranking Member Elizabeth Warren (D-MA). In turn, House Republicans have criticized a number of provisions that Warren included in the Senate bill, such as money for housing-related Community Development Block Grants (CDBGs).

The White House has pressed Congress to pass a housing bill as part of its focus on improving affordability. President Trump has highlighted his priority of including language banning large institutional investors from acquiring single-family homes, which was the subject of a January 20 executive order and was mentioned in his State of the Union address. Exactly how such investors would be defined in legislation has been uncertain. The House Financial Services Committee had planned to take up a bill codifying the ban on institutional investors at its markup set for next week, but Politico reported that the committee removed it from the schedule on Thursday when it became clear the final housing negotiation between the House, Senate and White House would take place on the Senate floor.