This week (April 27-May 1)

Congress: The House and Senate are in session this week before a scheduled recess the following week. The House may vote on the Senate-passed budget resolution next week, though timing could slip if member pushback on the bill continues.

On Tuesday, April 28, the House Ways and Means Committee is scheduled to hold a hearing with health system CEOs.

Last week (April 20-24)

Reconciliation: The Senate April 23 approved the Republican-authored FY2026 budget resolution paving the way for a narrow budget reconciliation bill to provide multi-year funding for the Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) agencies of the Department of Homeland Security. The vote-a-rama process of unlimited amendment votes that preceded the overnight final vote focused on affordability and didn't directly address tax issues, though some tax amendments were filed. Republican leaders, who want to keep the ICE/CBP package narrow and meet President Trump's goal of completing consideration of the bill by June 1, have been talking about the prospect of a third reconciliation bill to follow the ICE/CBP measure and last year's "One Big Beautiful Bill Act" (OBBBA) that may be comprised of provisions related to the SAVE America Act voter ID bill, war funding, and other GOP priorities, possibly including tax items. Keeping the near-term bill narrow likely depends on member confidence that a follow-on third bill will materialize. Asked on Tuesday what he is willing to add to the bill, Senate Majority Leader John Thune (R-SD) said, "We think the narrower and the tighter we keep the conversation around this, the more likely it is that we have success in passing it in the House and in the Senate and putting it on the President's desk." Some GOP Senators, like John N. Kennedy (R-LA), have suggested the measure must be broadened to address affordability issues because of skepticism about a third bill. Senator Thune said, "We have other members who would like to do other things through reconciliation, but this particular exercise has a specific purpose in mind, and we intend to stay focused on it."

Skepticism about a third bill in the Senate is also surfacing in the House, where the Senate-passed budget resolution could be considered as soon as next week. An April 22 Politico story, "Arrington says House GOP's appetite for Senate reconciliation path no sure bet," cited House Budget Committee Chairman Jodey Arrington (R-TX) as saying, "The question will be for our conference … [do] they believe that we can do another reconciliation for fraud and defense and maybe some affordability issues? … If they believe we can do a third one, then people will support this quick and skinny reconciliation." House Ways and Means Committee Chairman Jason Smith (R-MO) previously said ICE and CBP funding may not be popular enough to move on their own without addressing affordability issues and has also insisted tax be part of a reconciliation bill. Semafor April 23 reported Rep. Chip Roy (R-TX) as saying of the near-term bill, "I think it needs to be broader." Rep. Warren Davidson (R-OH), a conservative like Rep. Roy, said, "I'm not going to support a skinny budget."

DSTs: The April 22 House Ways and Means Committee hearing, "The Trump Administration's 2026 Trade Policy Agenda," with U.S. Trade Representative (USTR) Jamieson Greer included discussion of digital services taxes (DSTs). Chairman Jason Smith (R-MO) said that as Canada, the EU, and France continue to impose DSTs and other digital measures, Congress will not tolerate the use of such taxes to target US companies and may enact legislation in response if necessary. He asked when potential Section 301 investigations related to digital issues may occur and whether they will focus on particular economies and cover country-specific measures like DSTs. Greer said that while the government has Section 301 actions readied in draft, USTR wants to see outcomes rather than simply imposing tariffs for the sake of doing so. He said he would discuss the issue of DSTs with the European Union trade commissioner today. "We do have these tools in our toolkit," he said of the investigations. Rep. Ron Estes (R-KS) lauded USTR's work to achieve agreements to prevent DSTs and said he expects the Administration will be active as more countries pursue these taxes and related approaches like Canada's Online Streaming Act. Greer said he recently spoke with the Trade Minister of Poland about a proposed DST, and the increased tariffs on France were a cautionary tale. "With Canada, they implemented it, and immediately we worked with them to get it down and they just repealed that a few weeks ago," he said. "So, we are seeing progress on this front. We're working with our European partners right now on this."

Separately, President Trump April 23 said that the US could put tariffs on UK goods if the current UK DST is not eliminated.

A WCEY Alert has details.

Bessent hearing: The April 22 Senate Appropriations Financial Services and General Government Subcommittee hearing, "A Review of the President's Fiscal Year 2027 Budget Request for the Department of the Treasury," with Treasury Secretary Scott Bessent had a similar dynamic to other recent tax hearings: Republicans celebrated tax cuts under the OBBBA, while Democrats expressed concern about IRS workforce reductions. Chairman Bill Hagerty (R-TN) said recent IRS data shows that tax refunds this year are "substantially higher than years prior, putting more money back into the pockets of hardworking Americans." Sec. Bessent testified that "over 60 million returns claimed at least one of President Trump's signature new tax cuts this filing season." Ranking Member Jack Reed (D-RI) lamented that the Treasury budget request calls for additional cuts in funding for the inspector general, grants for community development, and enforcement. "The IRS has pushed out more than 28,000 employees since the start of the Trump administration, and this proposal would shrink the workforce by another 4,000. This is simply irresponsible," he said. "You come from the business world, and no successful company would underinvest in its revenue collection mechanism." In response to questioning from Senator Chris Van Hollen (D-MD) about reductions in the IRS workforce, Sec. Bessent said, "the Democrats said that the filing system is going to be a disaster — It's been a home run." Senator Jon Husted (R-OH) asked about the mechanics of the OBBBA's scholarship granting organizations provision, which Bessent said he would need to follow up on. Senator John Boozman (R-AR) spoke about the need for cryptocurrency legislation.

Partnerships: In an April 22 letter to Sec. Bessent and Assistant Secretary for Tax Policy Kenneth Kies, Senator Elizabeth Warren (D-MA) and Senate Finance Committee Ranking Member Ron Wyden (D-OR) took issue with Treasury's March 5 announcement, "Removal of Final Regulations Identifying Certain Partnership Related-Party Basis Adjustment Transactions as Transactions of Interest." They said that while IRS rules allow (and in certain cases require) partners or partnerships to adjust the tax basis of property resulting from certain partnership transactions, complex partnership structures can apply basis shifting rules to avoid tax without real costs or changes in economic position. "Removing this reporting requirement will enable tax dodging by some of the wealthiest Americans, further tilting our tax code in favor of the rich and powerful," they said.

Bill introductions: On April 22, Ways and Means members David Kustoff (R-TN), Greg Steube (R-FL), Claudia Tenney (R-NY), Mike Carey (R-OH), Carol Miller (R-WV), Michelle Fischbach (R-MN), and Blake Moore (R-UT) introduced the Small Business Tax Cut Act (H.R. 8415) to increase the IRC Section 199A deduction for qualified business income from 20% to 23%.

On April 23, Ways and Means members Brian Fitzpatrick (R-PA), Max Miller (R-OH), and Carey, plus Rep. Mike Lawler (R-NY) introduced the American Energy Dominance Act (H.R. 8477), which would:

• Restore the 179D Energy Efficient Commercial Buildings Deduction without a scheduled expiration
• Extend the 45L New Energy Efficient Home Credit through December 31, 2032
• Extend the 45V Clean Hydrogen Production Credit construction deadline from January 1, 2028, to January 1, 2033
• Preserve long-term certainty for the 45Y Clean Electricity Production Credit and 48E Clean Electricity Investment Credit "to help bring more affordable power online, support job creation, and strengthen domestic energy supply"

IRS: Treasury announced April 23 that IRS plans to revise the Form 990 to "improve transparency, strengthen tax administration, and provide clearer reporting on certain activities" of IRC Section 501(c)(3) tax-exempt, "including government contracts, government grants, and fiscal sponsorship arrangements."