This week (September 28-October 2)

Congress: The Senate is in for the last scheduled session week prior to the November 3 elections. A vote on final passage of the college sports bill has been set for Monday, September 28 at 5:30 p.m. There are continued bipartisan negotiations on energy permitting reform, but the agenda for next week isn't yet clear. Senate Majority Leader John Thune (R-SD) is reportedly considering holding a vote on the House-passed congressional stock trading ban and voter ID requirement bill (H.R. 7008).

Last week (September 21-25)

Big picture: Only the Senate was in session this week for floor consideration of a college sports bill. Some members have been eager to act on legislation to address voter affordability concerns, though it is unclear whether there still could be consideration of energy permitting reform, the House-passed Ratepayer Protection Act (H.R. 9340) — Senator Jon Husted's (R-OH) bill addressing the recovery of costs related to data centers — or a plan to address diesel fuel prices. At the committee level, and on the floor, there is still consideration of nominations, including Finance Committee approval of James Gadwood to be IRS Chief Counsel and Andrew De Mello to be a U.S. Tax Court judge, both by a party-line 14-13 vote September 24. With the House planning to be out of session until after the elections and the Senate planning to recess after next week, there is plenty of unfinished business before Congress that awaits a lame-duck session slated to begin after the elections — and that will certainly be influenced by their outcome. One major question is how the Senate Finance Committee may respond to the cryptocurrency tax bill approved by the House Ways and Means Committee September 16 on a bipartisan 38-5 vote. Some Ways and Means Democrats said cryptocurrency shouldn't be the focus of the Committee, but others said it was an important starting point on the issue, and the bipartisanship was notable. Adding another potential ingredient of a possible year-end package on outstanding tax and other issues, a bipartisan group of members in Congress on Thursday (September 24) unveiled a bill to provide a new 20% tax credit on labor costs for domestic film and television productions, following an August 31 social media post from President Trump calling for "Federal Tax Incentives in order to Make our Movie and Television Production Business GREAT AGAIN … " As Politico Morning Tax said September 25, "A variety of issues with bipartisan support could be in the mix for a year-end package, including tax administration, cryptocurrency, a fix for the current limits on gambling deductions, various short-term incentives and now the film credit." There is also the separate bill (H.R. 4840, S. 2530) to extend the Section 181 expensing rules for film, TV, and theater productions.

Cryptocurrency tax issues: The Digital Asset Tax Certainty Act (H.R. 10357) approved by the House Ways and Means Committee September 16 didn't take on the controversial topic of the potential deferral of tax on mining and staking income addressed by prior proposals, but did address issues including:

• a de minimis rule allowing no gain or loss to be recognized on smaller cryptocurrency transactions
• application of mark-to-market accounting rules to digital asset brokers and dealers
• allowing crypto to qualify for safe harbors to facilitate foreign investment in US markets
• streamlining rules on charitable contributions of digital assets, and
• applying wash sale rules and constructive sale rules to digital assets.

A September 24 Politico story, "Crapo: We may want to make changes to House crypto tax bill," cited Senate Finance Committee Chairman Mike Crapo (R-ID) as saying, "We're going to give it a thorough review," "We may want to tune it up," and "I'm not telling you whether we will revise it or not — I don't know." The story further cited Chairman Crapo as saying it's too soon to say whether lawmakers will be able to advance any tax legislation later this year. The Chairman reiterated comments from last week that his confidence that a year-end tax bill is inevitable has waned. "I hope there will be one," he said. "I just can't predict how the politics are going to play out between now and late December."

Film/TV credit: Senators Tim Scott (R-SC) and Adam Schiff (D-CA) introduced the Motion Picture, Television, and Entertainment Revitalization Act (S. 5552), to provide a 20% base tax credit on qualified compensation for qualified film and television productions. House Ways and Means Committee member Rep. Nathaniel Moran (R-TX) sponsors the House version (H.R. 10582), with cosponsors including Trade Subcommittee Ranking Member Linda Sánchez (D-CA) and Committee members David Kustoff (R-TN), Judy Chu (D-CA), Mike Carey (R-OH) and Tom Suozzi (D-NY), plus Reps. Brian Jack (R-GA) and Laura Friedman (D-CA), who represents Hollywood. A "qualified film or television production" for purpose of the credit is defined as a feature film, television pilot, or television season produced for commercial purposes, with a total cost exceeding $1 million and where 75% of the principal photography days occur within the United States. News, live sports, talk shows, daytime dramas, social media content, advertising and corporate videos are ineligible for the credit. There are 5% bonus credits provided, to increase the credit to a maximum of 30%, for circumstances such as filming in a rural Opportunity Zone or a federally declared disaster area, independent productions, multi-state producers, or an increase in domestic productions relative to a historical foreign base amount. The credit is transferable, similar to the energy credits in the Inflation Reduction Act (IRA). The credit would be effective for productions after December 31, 2026.

Other bill introductions this week:

• On September 22, Senator Martin Heinrich (D-NM) introduced the Grid Resiliency Tax Credit Act (S. 5453) to establish a tax credit for installation of regionally significant electric power transmission lines.
• On September 23, Senator Peter Welch (D-VT) introduced the Supporting Small Affordable Housing Developers Act (S. 5472) to exclude from gross income grants and the proceeds of transferrable tax credits supporting the development of affordable housing.
• On September 24, Senator Mark Kelly (D-AZ) introduced the Make AI Work for Americans Act (S. 5518), to make sure companies benefiting the most from Artificial Intelligence (AI) pay their fair share and invest in American workers.
• On September 24, Senator Elizabeth Warren (D-MA) reintroduced the Stop Wall Street Looting Act (S. 5512), a private equity-focused bill addressing, among other things, carried interest.

International tax: An EY Alert, "Proposed regulations implement OBBBA's favorable expense apportionment changes to NCTI and FDDEI," is available here.

Finance Committee: The Committee posted questions for the record (QFRs) including on the following topics for IRS Chief Counsel nominee Gadwood:

• Senators Bill Cassidy (R-LA) and Roger Marshall (R-KS) asked about their bill to ensure that bond insurance qualifies for the current insurance exception under the passive foreign investment company (PFIC) rules;
• Senator Steve Daines (R-MT) expressed concern about outdated IRS fuel excise tax regulations improperly taxing fuel used by commercial vehicles that operate auxiliary equipment through modern power take-off (PTO) systems, as well as third-party litigation financing arrangements; and
• Senator Marsha Blackburn (R-TN) asked for a review of legal positions and guidance governing the R&D credit as it applies to manufacturers, including concerns about IRS positions on whether research conducted on the shop floor qualifies for the R&D credit and whether supplies constitute qualified research expenses.

IRS: Notice 2026-55 released on September 22 requested comments on issues arising regarding investments in businesses located in qualified opportunity zones (QOZs), including with respect to changes under the One, Big, Beautiful Bill Act (OBBBA). These include whether additional guidance is needed to address issues relating to qualifying investments of amounts of eligible gains made by taxpayers in qualified opportunity funds (QOFs) and investments of such funds made by QOFs in qualified opportunity zone businesses (QOZBs).