This week (June 8-12)

Congress: The House and Senate are in session. The House may consider the ICE/CBP Reconciliation 2.0 bill.

Cryptocurrency: The House Ways and Means Committee has scheduled a hearing on "Digital Asset Taxation" for Tuesday, June 9 at 2 p.m. An advisory said the hearing is to discuss legislation relating to the taxation of digital assets, creating an expectation that specific draft bills would be examined. There have been indications that topics that could be addressed include mining and staking, charitable deductions, tax anti-abuse rules, reporting rules, etc.

Ways and Means: There is also a Joint Social Security and Work & Welfare Subcommittee Hearing with the Social Security Commissioner Frank Bisignano scheduled for Wednesday, June 10 at 10 a.m.

Tax administration: There have been suggestions that the Senate Finance Committee may in mid-June mark up the Taxpayer Assistance and Service Act (S. 3931) introduced in February by Chairman Crapo and Ranking Member Ron Wyden (D-OR), with provisions to digitize more tax returns, upgrade "where's my refund" functions and IRS online accounts, strengthen standards for paid tax preparers, and allow the U.S. Tax Court to hear cases relating to refunds.

Friday, June 12 (12:00 p.m. ET) is the EY Center for Tax Policy monthly update: Legislative, economic, regulatory and IRS developments. Register.

Last week (June 1-5)

Big picture: The Senate June 5 approved the Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) Reconciliation 2.0 bill, mostly along party lines, after dispensing with amendments addressing President Trump's proposed $1.8 billion "anti-weaponization" fund. The Administration stopped pushing the proposal prior to floor consideration, possibly as a necessity for the bill to advance. The White House backing away from the fund took pressure off Republicans to support amendments on the issue that were nonetheless brought up by Democrats and gained some GOP votes but not enough to pass. The House is expected to take up the bill next week. The ICE/CBP Reconciliation 2.0 bill was planned as a relatively fast exercise that could give way to a Reconciliation 3.0 bill this summer, though it remains to be seen if that will happen prior to the midterm elections. Meanwhile, Treasury Secretary Scott Bessent was before both congressional tax-writing committees this week for the annual hearings on the President's Fiscal Year 2027 Budget for the Department that are traditionally an opportunity for members to raise tax items of interest — in this case highlighted by global tax issues and cryptocurrency. Members litigated the health of the economy, with Republicans asserting there are positive signs and highlighting the benefits of the "One Big Beautiful Bill Act" (OBBBA), and Democrats describing affordability challenges unaided or even exacerbated by the OBBBA.

Reconciliation: The contours of a Reconciliation 3.0 bill have not been made known, at least not publicly, though some envision it to include affordability proposals possibly offset with provisions to combat waste, fraud and abuse in federal safety net programs. As House Budget Committee Chairman Jodey Arrington (R-TX) described in a May Punchbowl report, "I don't know of anything that will motivate and energize voters more right now than the affordability [provisions] paid for by the war on fraud." There have been reports of meetings between House GOP leaders and committee chairs on the issue recently but no clear readout on the bill's direction. Politico Inside Congress June 5 said House Republicans "started discussing options this week for tackling Centers for Medicare and Medicaid Services fraud, but it's unclear how much appetite there'd be for that in the GOP conference." The OBBBA omitted some proposed health program fraud provisions, and there is wide recognition that some Republicans in competitive races already blanched at spending cuts that were enacted in last year's law and don't want to support any more.

Politico Morning Tax June 2 reported Senate Finance Committee Chairman Mike Crapo (R-ID) as saying, similar to Arrington, that "he'd want a hypothetical third package to focus on tax policy and tamping down waste, fraud and abuse in entitlement programs." But he cautioned, "I don't want to create the impression that we are drafting or even putting together the pieces of the draft." The follow-on effort perhaps wasn't aided by pushing past the June 1 notional deadline for the Reconciliation 2.0 bill, complicating it with the anti-weaponization issue, and the President's anti-incumbent position in some GOP primaries, though the flip side of that argument is that the ability for the President and Republican leaders to shepherd legislation through Congress should not be underestimated. Senate Majority Leader John Thune (R-SD) projected confidence in having the support of Senate Republicans despite headwinds, at least in the context of the current reconciliation bill, saying Tuesday, "notwithstanding what's happened in some of the primaries around the country, our Senators, our members are very committed to ensuring that the Republican Senate succeeds." Still, skepticism surrounds a third reconciliation effort, even if for the reason that passing three reconciliation bills in any one Congress is unusual. And Senator John N. Kennedy (R-LA) noted in the Politico report that the trouble with Reconciliation 2.0 dims prospects for a follow-on bill.

Global tax: During the June 4 Ways and Means Committee hearing with Secretary Bessent, Chairman Jason Smith (R-MO) and Rep. Ron Estes (R-KS) both inquired about global tax issues, similar to their comments during a subcommittee hearing with the United States Trade Representative (USTR) in April. Chairman Smith called the OECD side-by-side agreement a major win for US tax sovereignty and asked how the US can ensure that the agreement is respected and fully implemented. "I believe that we have the tools necessary that, if our sovereignty is not respected, to counteract any failures to enact this," Sec. Bessent said. Chairman Smith added that, working hand-in-glove as allies, Congress can move legislation to make sure the other nations honor the agreement, "and we're willing to do that if they do not honor your commitment." He asked about monitoring compliance, especially for EU nations. Sec. Bessent said there is active engagement, including with the OECD. Rep. Estes said there was discussion at last year's hearing of how Congress and the Administration could work together on the global tax agreement, and we are in a "much better spot" now. Estes further asked how other nations are implementing the side-by-side agreement, and Sec. Bessent repeated that there is cooperation with the OECD. The congressman repeated his intention to trust but verify that other nations are abiding by the agreement. Rep. Estes also mentioned digital services taxes (DSTs) and the desire to protect the US tax base from foreign efforts to infringe upon it, and said Congress is prepared to use available tools, including those "we may have put on the shelf," to do so.

DST resolution: On a related note, Reps. Estes and Ways and Means member Suzan DelBene (D-WA) June 4 introduced a resolution expressing opposition to DSTs and other extraterritorial tax measures that target US companies. It highlights that several countries - including France, Italy, Spain, Turkey, Austria, and the United Kingdom, have already implemented DSTs, while others such as Poland and Belgium are actively considering them, according to a news release. "These taxes deviate from established international income tax systems by targeting a company's gross revenue rather than its net income, regardless of whether the business has a physical presence in that country," the release said. Cosponsors of the resolution include Reps. Darin LaHood (R-IL), Jimmy Panetta (D-CA), Nathaniel Moran (R-TX), and Brad Schneider (D-IL).

Cryptocurrency: The June 3 Finance Committee hearing included some notable inquiries on cryptocurrency tax issues, with Chairman Crapo saying the Committee is working on a bipartisan approach for "establishing clear and durable tax rules for digital assets." During Q&A, Chairman Crapo said: "The Senate Finance Committee is engaged in productive bipartisan discussions on the taxation of digital assets. As the digital asset industry continues to grow and evolve, there's an increasing need for durable, common-sense rules of the road that provide certainty for taxpayers, support innovation and help ensure that the United States remains competitive in the global digital markets." He asked whether Treasury supports congressional efforts to develop comprehensive digital asset taxation rules and considers continued inaction a risk for taxpayer compliance and US competitiveness. Sec. Bessent said that since President Trump issued his January 2025 executive order on "Strengthening American Leadership in Digital Financial Technology," Treasury has been "working tirelessly to implement the action on digital assets." Senator Steve Daines (R-MT) also raised the prospects of crypto tax legislation, saying, "we've been developing now a framework that could give us clearer rules for digital asset taxation," and asked Bessent for Treasury's cooperation. "I will commit to that, and tax certainty, as we've seen with every other industry, is the key to innovation," the Secretary said. Some Senators have expressed interest in cryptocurrency tax proposals, Daines in particular, but until now the issue has been more actively pursued by House Ways and Means Committee members. During the Committee's hearing, Rep. Max Miller (R-OH), who has a proposal on the issue, did say, "We are no longer debating whether digital assets are here to stay any longer, but rather how we define the rules of the road. And we believe that this is necessary now at this time in our history."

OBBBA uptake: As Administration officials have done throughout the spring, Secretary Bessent during the hearings highlighted OBBBA uptake by taxpayers, including the no tax on tips and overtime provisions. "Over 62 million tax returns claimed at least one of President Trump's signature new tax cuts — No Tax on Tips, No Tax on Overtime, deductibility of American car loan interest, and an enhanced deduction for low- and middle-income seniors," the Secretary said. "All told, the average refund increased by over 11%, with total refunds increasing by 18%." Treasury on June 2 cited data further showing that tax relief under the bill was concentrated among American families and workers earning under $200,000.

Trump Accounts: Sec. Bessent said nearly 6 million Trump Accounts have been opened, with 1.4 million being eligible for the $1,000 seed contribution. An IRS public hearing on the March 9 notice of proposed rulemaking (REG-117270-25) providing guidance on making an election to open a Trump account, with additional sections for further guidance reserved, has been set for July 16.