This Week (July 6-10)

Congress: The House and Senate are out of session.

This Week in Tax Policy won't be published until Congress returns the week of July 13, but other WCEY Alerts will be issued as events warrant.

Last Week (June 29-July 3)

Big picture: The insistence by some House conservatives that Congress pass the SAVE America Act voter ID bill before proceeding on other legislation continued this week despite efforts by Republican leaders to satisfy the members and make progress on the party's agenda. President Trump had earlier refused to sign a housing bill over the voter ID issue, but Speaker Mike Johnson (R-LA) began the week saying Republicans would act on the SAVE Act through budget reconciliation and citing the backing of the President in calling on conservative members not to block House floor activity. The Speaker tried to break a logjam on floor activity through a provision in the rule for consideration of multiple measures — the annual National Defense Authorization Act (NDAA), State Department appropriations, a bill reducing barriers to work for the disabled, and a resolution commemorating the one-year anniversary of the "One Big Beautiful Bill Act" (OBBBA/OB3) — to add the SAVE America Act to the NDAA bill upon passage. But the rule vote failed 198-224, with more than a dozen Republicans opposed, returning the chamber to gridlock over the voter ID bill. The House subsequently adjourned for the week and will be out next week for the July Fourth recess, leaving the agenda in limbo.

Rep. Anna Paulina Luna (R-FL), who led the voter ID push, and other members said voter ID and proof of citizenship requirements must be included in the base text of the NDAA bill to secure their support for the rule for floor consideration. (Rules for consideration of legislation in the House are up to the majority party to pass, with the minority traditionally voting "no." Rule votes were historically a perfunctory part of the House process, but in recent years they have been blocked by factions of the majority party to express displeasure with leadership.) Rep. Max Miller (R-OH), a Ways and Means Committee member, posted on social media, "Voter ID must be included in the base text to prevent the Senate from stripping it out!" Punchbowl News said this morning that the distinction may be inconsequential "because the Senate was never going to take up the House-passed NDAA. The House-passed Pentagon policy bill is typically melded with the Senate-passed version sometime before the end of the year."

In addition to the NDAA, Speaker Johnson had listed cited as unfinished business before the House:

• Appropriations bills
• the Foreign Intelligence Surveillance Act (FISA) surveillance authority reauthorization
• the surface transportation (highway) bill
• Reconciliation 3.0

Reconciliation: The President's ultimatum and House conservatives' intransigence focused additional attention on the reconciliation process, though there was little reported movement toward a 3.0 package this week. When Congress returns on July 13, the House will have only eight legislative days until the scheduled August recess (the Senate is in for an additional week). Several press stories have focused on the difficulty of moving forward on a reconciliation bill:

• A July 1 Politico story, "Congress is settling in for a do-nothing summer," cited House members as saying reconciliation progress would need to happen quickly after Congress returns July 13 or be in danger of languishing. "Key rank-and-file members and some House chairs huddled in Speaker Mike Johnson's office Wednesday to plot a way forward on a reconciliation package, but another meeting with Budget Committee Republicans was canceled after GOP leaders sent lawmakers home early," the report said.
• A story in the July 1 Washington Post, "GOP rebellion over Trump's elections overhaul leads House to recess for July Fourth early," said as the alternative to addressing the issue in the NDAA, "House Republicans are also considering using a fast-track process to bypass the filibuster and pass Trump's sought-after voting restrictions. The plan would establish a grant program to incentivize states to adopt stricter election rules outlined in the Save America Act." The story said, "it's not clear whether Trump would be on board with voting restrictions administered through a grant program," and many Senate Republicans are doubtful about the prospects for another reconciliation bill.
• A July 2 Bloomberg story, "GOP Infighting Dooms Budget Bill Deadline," said, "As GOP leaders try to regain control of their party, it's hard to see how Republicans can adopt a budget resolution to unlock the reconciliation process, write the bill, and send it to the Senate with so little time." Also in the report, "House Budget Committee Chairman Jodey Arrington acknowledged Republicans may not be able to meet the Pentagon's request or satisfy every GOP lawmaker, but argued Republicans have to try regardless."

Tax administration: Despite House floor gridlock, the Ways and Means Committee held a 4-hour hearing on Tuesday and a 4-hour tax administration markup on Wednesday. Rather than multiple tax administration bills, Senate Finance Committee Chairman Mike Crapo (R-ID) and Ranking Member Ron Wyden (D-OR) have introduced a comprehensive package, the "Taxpayer Assistance and Service Act," but some partisan consternation over the President's IRS immunity agreement has delayed a markup. The House and Senate may eventually negotiate a compromise package on tax administration issues. During the July 1 markup, the Ways and Means Committee approved bills including:

• by a 40-0 vote, H.R. 9496, the End Tax Penalties on American Hostages Act, by Rep. Claudia Tenney (R-NY), to postpone tax deadlines and reimburse paid late fees for United States nationals who are unlawfully or wrongfully detained or held hostage abroad
• by a 39-0 vote, H.R. 9500, the Tax Relief for Fraud Victims Act, by Rep. Max Miller (R-OH), to repeal the limitation on deductions for personal casualty losses and provide increased taxpayer relief for theft losses
• by a 39-0 vote, H.R. 9498, the Taxpayer Advocate Participation Act, by Rep. Greg Steube (R-FL), to authorize the National Taxpayer Advocate to appear as amicus curiae in Federal tax cases
• by a 40-0 vote, H.R. 9501, the AI Tax Integrity Act of 2026, by Rep. Vern Buchanan (R-FL), to require the Comptroller General to submit a report to the appropriate committees of Congress on the potential of artificial intelligence to assist the Internal Revenue Service in detecting tax fraud
• by a 40-0 vote, H.R. 9499, the Protecting Taxpayers from Ghost Preparers Act, by Rep. Nicole Malliotakis (R-NY), to apply tax return preparation penalties to improperly altered returns
• by a 24-16 vote, H.R. 7972, the Taxpayer Workforce Modernization Act, by Rep. Dave Schweikert (R-AZ), to establish a fellowship program within the Internal Revenue Service to recruit qualified data scientists to partner with tax law specialists and provide insights and identify emerging and complex issues in tax administration
• by a 25-15 vote, H.R. 9504, the Tax-Exempt Hospital Transparency Act, by Rep. Greg Murphy (R-NC), to establish reporting requirements for hospital organizations

Amendments to H.R. 7972 were:

• By Rep. Terri Sewell (D-AL), to prohibit data analysis on those earning less than $100,000 annually, which failed 16-23
• By Rep. Lloyd Doggett (D-TX), related to an audit of the President, which failed 16-23
• By Rep. Suzan DelBene (D-WA), to restore rescinded IRS funding, which was ruled nongermane

Amendments to H.R. 9504 were:

• By Rep. Don Beyer (D-VA), to address definitions under the bill relative to hospitals whose funding has been cut, which failed 16-21
• By Rep. Judy Chu (D-CA), addressing 340B and most favored nation prices, which failed 16-21
• By Rep. Mike Thompson (D-CA), addressing the White House ballroom, which was ruled nongermane
• By Rep. Lloyd Doggett (D-TX), to delay the effective date of the bill relative to the President's $1.8 billion "anti-weaponization" fund and immunity agreement, which was ruled not germane and tabled in a 22-15 vote
• By Rep. Doggett, to require more transparency into private equity's involvement in health care, which failed 15-24

H.R. 9504 would update the annual Form 990 Schedule H that all tax-exempt hospitals must complete. The bill would require tax-exempt hospitals to report additional data, including a description of how the organization is addressing the most recent community health needs assessment, audited financial statements, CMS certification number, the value of financial assistance provided during the taxable year, and the numbers of completed financial assistance applications received, granted, and denied.

Sports hearing: The June 30 House Ways and Means Committee hearing on tax policy in the sports industry included discussion of municipal bonds to finance stadium construction and renovation, executive compensation, and the tax treatment of name, image, and likeness (NIL) rights for college athletes.

There was discussion of scheduled changes to IRC Section 162(m) executive compensation rules to extend the $1 million deduction limit for executive compensation at public companies to more employees. Chairman Jason Smith (R-MO) asked whether 162(m) should apply to all sports teams, not just those that are publicly held, with three teams currently subject to the limitation. "Those teams have expressed concern that this provision puts them at an economic disadvantage to the teams they directly compete against, and so the Committee is considering how best to level the playing field," he said. "One approach would be to apply the 162(m) limitation to all sports teams, not just the publicly traded ones."

The Tax Cuts & Jobs Act (TCJA) eliminated the performance-based compensation and commissions exceptions to Section 162(m) and expanded the definition of "covered employee" to include the CFO. The 2021 American Rescue Plan Act (ARPA) included a provision to deny the deduction for compensation over $1 million for the eight highest-paid employees, plus the CEO and CFO, at publicly traded companies, effective beginning in 2027.

As Politico reported, "The law was aimed at corporate chieftains, but at sports organizations the mostly highly paid employees are often athletes. A handful of sports teams are owned by publicly traded companies … "

On June 30, Rep. Steube introduced the Helping Undergraduate Students Thrive with Long-Term Earnings (HUSTLE) Act (H.R. 9568), bipartisan legislation to create tax-advantaged investment accounts allowing college athletes to grow their name, image, and likeness (NIL) earnings without federal income tax liability. Senate Finance Committee members Marsha Blackburn (R-TN) and Maria Cantwell (D-WA) sponsor the Senate version of the bill.

Trump Accounts: Treasury and IRS June 29 issued Revenue Procedure 2026-25, providing a gift tax reporting safe harbor for certain contributions to Trump accounts. If requirements are met, contributions made by individual donors to Trump accounts in a given year will not be subject to gift tax reporting requirements for that year.

Bill introductions: On July 2, Ways and Means members Rep. Mike Carey (R-OH) introduced the Housing Opportunities and Preservation Enhancement (HOPE) Act (H.R. 9573) to create new tax incentives that encourage the renovation of older, existing rental properties to preserve them as affordable housing. A release said the bill is meant to encourage the purchase and major renovation of existing residential rental properties that are at least 15 years old, and, to qualify for the new tax incentives, a property must undergo significant rehabilitation of at least $20,000 per unit and be owned by partnerships involving non-profit, government, or tribal entities.