Congress returns to session in the same situation as when members exited for a two-week recess: with plans for the House to clear a Senate-passed bill to fund the Department of Homeland Security (DHS) except for Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP), which would be addressed in a Republican-only budget reconciliation bill. That plan came back into focus as President Trump April 1 called on Congress to complete a reconciliation bill to fund ICE and CBP by June 1 and then endorsed a narrow bill to do so following a Friday meeting with GOP Senators.

Republicans are planning a budget reconciliation bill to fund DHS for the next three years. Senate Budget Committee Chairman Lindsey Graham (R-SC) said there would be two bills: (1) ICE and CBP funding, and (2) the SAVE America Act voter ID bill. House Speaker Mike Johnson (R-LA) also told members on an April 2 call that leaders were eyeing two reconciliation bills.

Axios reported April 2 that swift action is expected on the first reconciliation bill, as Speaker "Johnson promised he won't hold a vote on a Department of Homeland Security funding bill until the Senate makes significant progress on funding for ICE and CBP," and leaders want to keep the first reconciliation package narrowly focused on these issues. Success of that approach may depend on GOP members trusting that other issues will get picked up in a subsequent reconciliation bill. A budget resolution with reconciliation instructions for the first bill could reach the Senate floor by the end of April, possibly as soon as next week.

Punchbowl News reported this morning, "This week will be crucial as Senate GOP leaders meet with rank-and-file Republican senators about the plan. There's widespread frustration within the Senate GOP leadership about House Republicans delaying re-opening DHS and conditioning it on the Senate's reconciliation progress."

A Washington Post story, "Trump endorses Republican plan to end DHS shutdown," said, "If successful, Republicans' plan would mark a novel, partisan approach to Congress's most fundamental role — appropriating full-year funding for federal agencies." The story also said: "Using the reconciliation process to fund DHS could create a political incentive for Republicans to unify behind new legislation. But it won't be simple. Multiple factions in the party would probably seek to attach their preferred policies to the package. Some lawmakers could feel pressure to cut popular programs to balance additional spending."

Tax — Press stories have focused on add-ons for Reconciliation 2.0 and 3.0, including the potential for revenue offsets, which could be more likely in a third bill because the ICE and CBP bill is slated to take the place of regular appropriations measures that typically aren't offset. House Budget Committee Chairman Jodey Arrington (R-TX), who has long advocated for a second reconciliation bill, has raised the issue of improper Earned Income Tax Credit (EITC) payments to offset the cost, and wants to target waste, fraud and abuse in federal programs generally.

On Fox Business News April 7, Chairman Arrington suggested Republicans could help pay for a reconciliation bill and "we can make a down payment on future investments as well, and we can do it and underwrite it with all the tremendous waste and fraud across the federal government." He said the Low Income Housing Tax Credit (LIHTC) is a means-tested program, but "we don't have safeguards to prevent illegal immigrants from availing themselves of that tax-funded social welfare program. We've got others, like the Earned Income Tax Credit. It's another cash welfare program, because it's a refundable tax credit."

House Ways and Means Committee Chairman Jason Smith (R-MO), who previously was one of the members most outspoken in expressing skepticism that a second bill could get the requisite votes in the House, said prior to the two-week recess that, should a reconciliation package materialize, it will include tax provisions. There has long been a menu of outstanding tax issues like the Work Opportunity Tax Credit, rolling back the 90% gambling loss deduction limitation from the "One Big Beautiful Bill Act" (OBBBA), and US-Taiwan tax relief from the last Congress, but much of it could also potentially move on a bipartisan basis if a vehicle presented itself, including perhaps in a lame-duck session after the midterm elections.

An April 7 Politico story, "5 tax debates to watch for in the new reconciliation process," mentioned the potential of acting on the gambling loss deduction, for the stock buyback excise tax to be increased, as some expected before the OBBBA, and nonprofit tax issues. "House Republicans were very unhappy last year when the Senate ratcheted back their plans for a stiff increase in a tax on some universities' endowment investment earnings … " the story said. "Likewise, the House proposed a big tax increase on private foundations that was summarily dropped … and that too could potentially be revived."

An April 9 Tax Notes story, "Taxwriters Eye Wish List for Possible Reconciliation 2.0," cited Ways and Means member Kevin Hern (R-OK), who has been active on international tax and other issues, as saying, "I think there will be some tax fixes, if you will, some things that we missed."

Schedule — At 5:30 p.m. today (Monday, April 13), the Senate is expected to vote on the motion to invoke cloture on a judicial nomination.

The House returns to session on Tuesday, April 14, with votes beginning at 6:30 p.m. on suspension bills including the Emergency Conservation Program Improvement Act (H.R. 1011), to remove barriers to agricultural producers for purposes of the emergency conservation program; the ALERT Act (H.R. 7613), addressing aircraft safety; and several bills to name post offices. Later in the week, the House is planning to vote on Energy and Commerce Committee bills addressing Clean Air Act issues, and on H. Res. 1156 by Ways and Means member Mike Kelly (R-PA), expressing support for tax policies to support working families.

On Wednesday, April 15, the Senate Finance Committee will hold a hearing, "The President's Fiscal Year 2027 IRS Budget and the IRS 2026 Filing Season," with Internal Revenue Service Chief Executive Officer Frank Bisignano. Bisignano testified before the House Ways and Means Committee on March 4. A WCEY Alert has details.

A House Small Business Committee hearing, "Lower Taxes, Stronger Main Street: The Benefits of the Working Families Tax Cuts," is scheduled for April 15 at 10:30 a.m.

On April 16, the House Appropriations Subcommittee on Commerce, Justice, and Science will hold a hearing on the President's budget request for $95 million in funding for the Office of the U.S. Trade Representative. Ambassador Jamieson Greer will be the sole witness.

There are two health hearings at the Ways and Means Committee this week:

• April 14 (9 a.m.) Health Subcommittee Field Hearing on "Modernized Health Care in Practice: Empowering Americans to Live Healthier Lives" in Florida
• April 16 (9 a.m.) Full Committee Hearing with Health and Human Services Secretary Robert F. Kennedy, Jr.

Budget — The President's FY2027 Budget released on April 3 requests a 10%, or $73 billion, cut to non-defense spending and a $445 billion increase in defense spending from FY 2026. It doesn't offer much in the way of new tax proposals, as Treasury officials foreshadowed earlier, but outlines the Administration's plans for the federal budget, including several health care agencies. A WCEY Alert, "Health care items in President Trump's FY 2027 budget request discussed," is available here.

IRS — Notice 2026-25 released April 7 provides for adjustments for 2026 to the limitation on deductible housing expenses for purposes of IRC Section 911, which allows a qualified individual to elect to exclude from gross income foreign earned income and to exclude or deduct the housing cost amount of such individual.

Revenue Procedure 2026-12, also released on April 7, provides guidance to the Chief Executive Officer (CEO) of any State, of any territory of the United States, and of the District of Columbia regarding the procedure for nominating population census tracts to be designated as qualified opportunity zones.

On April 10, IRS released final regulations (TD 10044) that identify occupations that customarily and regularly received tips on or before December 31, 2024, and provide a definition of qualified tips for purposes of the income tax deduction for qualified tips.

Also on April 10, IRS released proposed regulations (REG-114499-25) that would provide rules and definitions related to the excise tax imposed on certain remittance transfers after December 31, 2025.