The US Senate continued to press forward with a limited budget reconciliation 2.0 bill this week that addresses Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP), with various committees approving their respective portions of the legislation.

House Ways & Means Committee members Max L. Miller (R-OH) and Steven Horsford (D-NV) introduced an updated version of their cryptocurrency tax bill on 19 May. According to a press release, the bipartisan Digital Asset Protection, Accountability, Regulation, Innovation, Taxation and Yields (PARITY) Act would create "a durable framework to address outdated and inconsistent tax rules surrounding digital assets, while ensuring innovation can continue responsibly."

Among other measures, the proposed bill would establish a deemed-basis rule for dollar-pegged payment stablecoins that would enable digital dollars that are used as cash to be treated as cash. This, the drafters believe, will reduce IRS administrative burdens and allow for consumer use of stablecoins in regular transactions. In contrast to other legislative proposals, the PARITY Act would not provide a de minimis tax threshold for digital asset transactions.

No markup of the bill has been scheduled in the Ways & Means Committee, but Chairman Jason Smith (R-MO) earlier indicated he wanted to pass bipartisan digital tax legislation this year. Enactment of a bipartisan digital asset tax bill may have to wait until after the midterm elections in November, however.

The OECD's Pillar One digital tax proposal is "dead," according to US Treasury Assistant Secretary for Tax Policy Kenneth Kies, and the US government reportedly is not particularly interested in returning to the proposal. Speaking at a recent conference on the US West Coast, Kies was quoted as saying that although there is ongoing "constructive dialog" among the US and its partners on how digital companies should be taxed, work is still needed to better understand the business landscape.

He further reportedly said multilateral discussions on digital tax issues at the OECD are not likely to come to agreement by the end of the year. The US government does not consider there is a deadline to reach consensus on digital taxation.

Addressing the enactment of digital services taxes (DSTs) by various jurisdictions, the Treasury official warned that the US Office of the Trade Representative (USTR) is considering USTR implications for countries that impose them.

The Treasury Assistant Secretary affirmed the US government's strong support for the Pillar Two side-by-side (SbS) agreement exempting US companies from key elements of the Pillar Two global minimum tax rules. He also indicated the SbS deal needs to be locked in "so that there's never even a thought of reversing what was done."

He described the agreement's reference to plans for a "stock-take" of the SbS agreement in 2029 as "merely a statement of what is obvious" in that there will be ongoing monitoring of the SbS agreement.

A communiqué released at the conclusion of a G-7 and Central Bank Governors meeting in Paris on 18-19 May welcomed the SbS agreement and stressed the importance of its implementation. It also addressed the taxation of the digital economy, noting the engagement in a constructive dialogue and looking forward to an OECD report by year-end.

The report is expected to address the Inclusive Framework's work identifying a common understanding of any challenges posed to the existing international tax system by the digital economy with the aim of enabling Inclusive Framework countries to "assess how to an ensure an effective and durable solution to those challenges."