Here’s a look at recent tax-related happenings on the Hill, including a budget resolution vote looming in the House.
Lately on the Hill
Last week, the Senate passed its budget resolution, which focuses on defense, border security, and energy production. This action was taken despite President Donald Trump’s endorsement of the House budget resolution, which encompass tax policy in addition to the Senate budget resolutions.1 The House is set to vote on its budget resolution this week. For the budget reconciliation process to proceed, an identical budget resolution must be adopted by both the House and the Senate.
In an executive order titled “Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Deregulatory Initiative,” the Trump administration has called for a comprehensive review of regulations across all agencies to ensure their consistency with law and the administration’s policy. The order directs agency heads to identify regulations that may exceed the constitutionally assigned power of the federal government, are not based on a plain reading of the underlying statutory authority, impose significant disproportionate costs upon private parties not outweighed by public benefits, or impose undue burdens on small businesses and impede private enterprise, among other classes of regulations that may not align with the administration’s position.
In addition, under the executive order “Implementing the President’s ‘Department of Government Efficiency’ Workforce Optimization Initiative,” the IRS has terminated several thousand probationary employees, including approximately 3,500 in its Small Business/Self-Employed division.2 Probationary employees are those who have been employed with the agency for less than one year, but in some cases two years. With funding from the Inflation Reduction Act (IRA), the IRS had hired more than 6,000 revenue agents and 1,400 revenue officers in fiscal year 2024, according to the National Taxpayer Advocate’s annual report. According to an IRS Budget & Workforce report, the IRS employed approximately 83,000 full-time employees as of fiscal year 2023.
In a letter to the U.S. Department of the Treasury, certain Democratic senators have urged the department to avoid mass layoffs and lift the IRS hiring freeze to mitigate adverse impacts on the 2025 filing season. Some federal employee unions have taken independent action against the layoffs, as evidenced by the case of National Treasury Employees Union, et al., v. Donald J. Trump, et al.3 In this case, the U.S. District Court for the District of Columbia denied a motion for a preliminary injunction filed by federal employee unions seeking to halt mass firings, ruling that the Federal Labor Relations Authority held exclusive jurisdiction over such disputes.4
Approximately 75,000 federal employees have accepted the Deferred Resignation Program (DRP) from the U.S. Office of Personnel Management5 as part of the agency’s reduction in force initiative. Treasury Secretary Scott Bessent has granted an exemption from the DRP for IRS employees in the taxpayer services and information technology divisions until May 15 to facilitate a smooth tax filing season.6
On February 21, the Trump administration issued an executive order titled “Defending American Companies and Innovators from Overseas Extortion and Unfair Fines and Penalties.” This order seeks to identify tools to secure a permanent moratorium on digital services taxes (DSTs) through a review of taxes, regulations, and policies imposed on U.S. companies by foreign governments. DSTs target revenue generated from the delivery of digital services and approximately 30 countries have adopted them in some form.7 Accordingly, the order specifically references France, Austria, Italy, Spain, Turkey, the United Kingdom, and Canada as countries of interest.
Judicial Report
Issuing a decision in Smith, et al. v. U.S. Department of the Treasury, et. al., the U.S. District Court for the Eastern District of Texas has lifted the nationwide injunction against the Corporate Transparency Act.
As a result, most corporations, limited liability companies, and similar entities are now required to file beneficial ownership information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN) by March 21, 2025. Failure to comply with the filing requirement may lead to civil and criminal penalties. FinCEN has indicated its intent to explore further options to modify deadlines in alignment with Treasury’s commitment to alleviate regulatory burdens on small businesses.
In addition, the House of Representatives has unanimously passed the Protect Small Businesses from Excessive Paperwork Act with a 408–0 vote. This legislation would delay BOI reporting requirements until January 1, 2026 for entities that were in existence prior to January 1, 2024.
For the latest updates on this topic, please visit the FinCEN BOI website.
From the Treasury & IRS
The IRS has issued Revenue Ruling 2025-6, which provides the short-term, mid-term, and long-term applicable federal rates (AFR) for March 2025. These rates are essential for determining the issue price of certain debt instruments under various sections of the Internal Revenue Code.
In IR-2025-23, the IRS reminded taxpayers of important updates and changes for the 2024 tax year that should be considered during this filing season.
This newsletter features developing content that is subject to change at any time. It does not constitute legal or tax advice. Consult your professional advisors prior to acting on the information set forth herein.
- 1“Trump Rebuffs Senate G.O.P. and Backs House Budget Plan,” nytimes.com, February 19, 2025.
- 2“Thousands of IRS Firings Foreshadow Delays, Enforcement Drop,” bloomberglaw.com, February 21, 2025.
- 3https://www.nteu.org/~/media/Files/nteu/docs/public/2025/Mass%20Firing%20TRO%20Denied.
- 4“Court Rejects Challenge to Mass Firings by Federal Employee Unions,” taxnotes.com, February 20, 2025.
- 5“Judge Removes Key Legal Hurdle for Trump’s Plan to Trim Federal workforce with deferred resignations,” apnews.com, February 12, 2025.
- 6“IRS Confirms Filing Season, Taxpayer Advocate staff Exempted from Buyout,” tax.thomsonreuters.com, February 7, 2025.
- 7“The Global Landscape of Digital Services Taxes,” ccianet.org, January 24, 2025.