The Senate on September 30 cleared by unanimous consent the Taxpayer Assistance and Service (TAS) Act approved by the Finance Committee in July. Rather than the Senate bill as introduced (S. 5441), leaders used a House bill (H.R. 5349, the Tax Court Improvement Act) with the TAS Act as reported by Finance as the substitute amendment before passing the bill by unanimous consent. The House has approved narrower tax administration bills, as opposed to the single Senate bill, and the hope is for a compromise package to come together later this year. Finance Chairman Mike Crapo (R-ID) has cited waning confidence about a year-end tax package. Having a Senate-passed tax administration bill at the ready could boost prospects for a year-end package, but, conversely, addressing tax administration separately could sap momentum for a larger bill.

The TAS bill includes provisions intended to:

• Digitize more tax returns
• Expand online accounts
• Streamline Chief Counsel reviews of offers-in-compromise
• Allow the U.S. Tax Court to hear cases relating to refunds and otherwise clarify the court's authority
• Establish new tax preparer penalties
• Provide new authorization for the Office of Appeals

Additionally, the Senate on September 30 approved the nomination of Keith Sonderling to be Secretary of Labor, 47-41, as its last vote before recessing for the midterm elections.

Senate procedural votes on two measures failed September 30, with each requiring 60 votes:

• the Stop Insider Trading Act (H.R. 7008), which would ban stock trading by members of Congress and require photo ID to vote, failed on a 53-47 vote
• the Ratepayer Protection Act (H.R. 9340), addressing recovery of data center costs, failed on a 57-43 vote with Democrats Maggie Hassan (D-NH), Amy Klobuchar (D-MN), Jon Ossoff (D-GA) and Raphael Warnock (D-GA) joining Republicans in voting in favor.

In recent days, Republicans bemoaned the lack of requisite bipartisan support for the bills, which could have delivered some pre-election wins, while Democrats were critical of the data center bill — for including optional, not mandatory, requirements — and various aspects of the stock trading and voter ID measure.

There were several press reports suggesting Senate Republicans had wanted to accomplish more on affordability issues prior to the elections:

• An October 1 Semafor report, "GOP economy woes," said Republicans are fretting they have not demonstrated to voters that they are tackling high gas prices, inflation, and high interest rates that are perilous in the elections. "If you're not worried, you're living in a cave," Senator Jim Justice (R-WV) said in the report. "There's no question that there's people out there that are hurting."
• An October 1 New York Times story, "Congress Leaves With a Whimper, as the G.O.P. Braces for Midterm Pain," said, "Republicans in Congress this week spent their last hours in the Capitol before the midterm elections pushing a series of meant-to-fail votes that they hoped could signal to voters that they were at least trying to address widespread concerns about the high cost of living. It was a familiar pre-election exercise made more urgent this year because those Republicans are battling stiff headwinds, including economic concerns … "
• A story in the October 1 Wall Street Journal, "GOP's Affordability Push Falters in Senate," said, "Some Republican senators said they regretted not spending more time on pocketbook issues in the run-up to the election. Sen. Josh Hawley (R., Mo.) listed bills he said he wished the GOP-led Senate had put more effort behind, including measures to suspend the gas tax, allow taxpayers to deduct out-of-pocket medical expenses, and to cap insulin prices."
• A September 30 Washington Post story, "Senate leaves town until after the midterms as final bills founder," said, "Republicans are running on earlier achievements, including the tax and domestic policy bill that Trump signed into law last year, which cut taxes on tips and overtime. Still, some Senate Republicans have pushed for months for leadership to take up more legislation to address voters' concerns about the cost of living."

Senate Majority Leader John Thune (R-SD) has, this week, mentioned some items that could be considered during a post-election lame-duck session, including, potentially, budget reconciliation. While the ingredients of a reconciliation bill aren't clear, one item consistently brought up is a potential debt limit increase because the issue will likely need to be addressed in the first half of 2027. Bloomberg Government reported that Republicans are considering acting on the issue in the lame-duck session "to deny a [potential] newly elected Democratic congressional majority a powerful piece of leverage … " against the Administration.

Crypto Tax — Senate Finance Committee member Steve Daines (R-MT) officially introduced a cryptocurrency tax bill (S. 5616) that, similar to the Digital Asset Tax Certainty Act (H.R. 10357) approved by the House Ways and Means Committee September 16, provides a de minimis rule under which no gain or loss is recognized on a digital asset used to pay a digital asset transaction cost if the total value used is $10 or less; allows dealers and traders in covered digital assets to elect mark-to-market treatment; applies a safe harbor that foreign persons trading stocks, securities, or commodities through U.S. brokers or on their own are not engaged in a U.S. trade or business to trade digital assets; applies wash sale and constructive sale rules to digital assets; and adds digital assets to the appraisal exception for charitable contributions.

House Ways and Means Committee Chairman Jason Smith (R-MO) posted on social media that he commended Senator Daines for introducing the bill, which "has much in common with the Digital Asset Tax Certainty Act." He continued, "There is also clear momentum building to deliver tax certainty to digital asset owners and ensure America remains the crypto capital of the world."

But Sen. Cynthia Lummis (R-WY) isn't so sure. Punchbowl October 1 reported her as saying, "It will surprise me if anything tax-related on digital assets gets done this year," for reasons including the uncertainty surrounding a year-end tax package. She noted that the House bill provides a de minimis exemption from taxes for network and transaction fees but no such relief for other payments. "I think it's missing an important component, but I think that's all [Smith] could get passed on a bipartisan basis," Lummis said. Bloomberg Tax cited Senator Lummis — who, like Senator Daines, is retiring — as saying she has a few concerns about what the bill does not address and speculating that year-end chances are dimmed by the pitfalls of opening a bill to tax changes. "Because then the tax code becomes fair game for all kinds of ideas that differ from the Working Families Tax Cut bill," Lummis said, referring to the One Big Beautiful Bill Act. "So it will surprise me if anything tax-related on digital assets gets done this year."

Finance Chairman Crapo has been noncommittal about whether the Committee plans to revise the House Ways and Means-passed crypto tax bill, and Ranking Member Ron Wyden (D-OR) said that the involvement of President Trump and his family in cryptocurrency may be an impediment to action on the bill.

Tax — Adding even another potential tax item to the conversation for a year-end bill is a bill (S. 5661) by Senators Raphael Warnock (D-GA) and Katie Britt (R-AL) to exclude athletic personnel of publicly traded professional sports teams from the expansion in the limitation on the deduction for certain employee renumeration under IRC Section 162(m) set to take effect in 2027. The House bill (H.R. 10682) was introduced by Rep. Nicole Malliotakis (R-NY), Tom Suozzi (D-NY), Brian Jack (R-GA) and Lucy McBath (D-GA).

The Tax Cuts & Jobs Act (TCJA) eliminated the performance-based compensation and commissions exceptions to IRC 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 (regardless of officer status), plus the CEO and CFO, at publicly traded companies, effective beginning in 2027.

Trade — United States Trade Representative Jamieson Greer delivered opening remarks at the G20 Trade Ministerial conference September 30 as the United States prepares to host the G20 Leaders' Summit (in Miami in December) for the first time since 2009. Ambassador Greer also laid out the four workstreams for the G20 Trade Ministerial and underscored the importance of reaching a consensus.

"Starting last year, the United States took action, using a combination of tariffs and bilateral deals to reduce our trade deficit, make our supply chains more resilient, and bring fairness, reciprocity, and balance to the global economy. This week, we gather to discuss these pressing issues for the trading system," Greer said. "There are four workstreams the U.S. Presidency has focused on over the course of the year: the weaponization of food, structural excess capacity and production, the Most-Favored-Nation principle, and forced labor in global supply chains. Over the next two days, we will discuss these issues in depth and it is my intent that we leave Milwaukee with a clearer sense of urgency and a recognition of the need for action."

Health care — On September 30, CMS's Center for Medicare and Medicaid Innovation finalized the Global Benchmark for Efficient Drug Pricing (GLOBE) Model, a mandatory payment model that will incorporate international pricing benchmarks into the Medicare Part B Drug Inflation Rebate calculation, requiring impacted drug manufacturers to pay revised rebates when prices for certain physician-administered drugs exceed the lowest prices charged for the same drugs in a market basket of non-U.S. OECD countries.

Bill introductions — On September 30, Senate Finance Committee member Sheldon Whitehouse (D-RI) introduced The Affordable Housing Construction Act (S. 5625), to:

• Make the temporary 12.5% increase to the Low-Income Housing Tax Credit (LIHTC) permanent;
• Triple the LIHTC state allocation to $9.79 per capita and triple the small state minimum to $11.34 million;
• Set aside one-third of each state allocation for boosts to projects that meet special requirements (prevailing wage, renewable energy sources, proximity to public transportation, etc.);
• Lower the private activity bond threshold for the rehabilitation credit from 50% to 15%; and
• Extend the required affordability period for LIHTC buildings from 30 to 50 years.

What to Expect in Washington won't be published on a regular basis while Congress is away, but other WCEY Alerts will be published as events warrant.