Here is a look at recent tax-related happenings on the Hill, including President Donald Trump threatening China with a 100% tariff and export controls on critical software.
Lately on the Hill
Federal Workers Start Feeling Effects of Government Shutdown
The government shutdown is about to enter its third week, with no end in sight. House leadership has kept its members at home, saying that they did their job after passing a clean continuing resolution (CR) and pressuring Senate Democrats to pass the bill as is.
“The message was very simple,” said House Majority Whip Tom Emmer (R-MN), “the House has done its work. House Republicans are ready to get back to work and finish the people’s business as soon as Chuck Schumer and Democrats in the Senate reopen the government.”1
Republicans need Democrats in the Senate to support the CR to reach the 60-vote threshold to advance legislation. Democrats are digging in, fighting to make enhanced tax credits for health insurance permanent and restore Medicaid cuts implemented in the One Big Beautiful Bill Act (OB3). Without these provisions, Democrats are withholding their votes.
“Why are they all on vacation in the middle of a government shutdown?” said House Minority Leader Hakeem Jeffries (D-NY) of the House’s absence. “We are willing to sit down and evaluate in good faith anything that could advance the ball here for working class Americans, middle class Americans, and everyday Americans.”2
All along the president has said some federal workers would need to be let go and furloughed workers may not receive back pay when the shutdown ends.3 The former began last week; the latter was rebuffed by members of both sides of the aisle.
“Congress settled that issue in the 2019 law,” Sen. Susan Collins (R-ME) said, referring to the Government Employee Fair Treatment Act of 2019 requiring back pay for furloughed federal employees after a lapse in appropriations.4 “That bill was signed into law by Donald Trump. Workers will be paid,” said Sen. Elizabeth Warren (D-MA).5
Furloughs at the IRS on October 8 left a skeleton crew of just 39,870 employees, or roughly half its current workforce, to maintain essential functions, according to an updated plan from the agency. Taxpayer services employees make up the bulk of the retained workforce, prioritizing systems testing for the next filing season, updating tax forms, and processing remittances. Large reductions affect enforcement divisions.6
100% Tariff Threat on China & November Tariffs on Heavy Trucks
In response to China’s maneuver to control exports of critical minerals, Trump threatened a 100% tariff and export controls on critical software on social media.7 Chinese Foreign Ministry spokesperson Lin Jian responded, “Instead of reflecting on its own mistakes, the U.S. has threatened high tariffs, which is not the right way to engage with China.” 8
Trump later wrote, “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!”
Trump also said that as of November 1, 2025, there will be a 25% tariff on medium and heavy-duty trucks. The announcement follows a U.S. Department of Commerce investigation into the importation of trucks exceeding 10,000 pounds and their impact on national security under Section 232 of the Trade Expansion Act.9 Official executive action to implement the duties has not yet been released by the White House.
The administration also announced a second deal has been made with a pharmaceutical company to reduce drug prices for Americans to the most-favored-nation prices paid by other developed nations. The agreement with AstraZeneca promises to reduce costs for 9 million Americans that take its medicines. The company also announced that it will invest $50 billion into U.S. manufacturing and research and is building a new facility in Charlottesville, Virginia.
CBO Releases Numbers on 2025 Fiscal Year, Debt-to-GDP Ratio Improves
According to a report released by the Congressional Budget Office (CBO), the federal budget deficit for the fiscal year ending September 30, 2025 was $1.8 trillion. This is a mere $8 billion less than last fiscal year’s shortfall, despite a 6% increase in revenues from individual income taxes and tariffs. Collections on corporate taxes decreased, partially due to OB3 retroactive tax benefits.
Outlays increased by 4% from increases in benefit programs and interest paid, which the CBO notes surpassed $1 trillion for the first time.
Although the deficit remains close to the $2 trillion mark, as a percentage of gross domestic product (GDP), the figure has decreased, according to Treasury Secretary Scott Bessent. “The deficit-to-GDP now has a five in front of it,” said Bessent at a recent conference. The deficit ratio now sits at 5.9% compared to 6.4% for the 2024 fiscal year.10
From Treasury & the IRS
Treasury & the IRS Fill New CEO, Chief Compliance Officer, & Deputy Secretary Positions
The IRS is filling its new CEO role with Frank Bisignano, current commissioner of the Social Security Administration (SSA). Bisignano will continue his duties with the SSA while reporting directly to Bessent overseeing day-to-day operations in his new position with the IRS.11
Treasury provided reassurances that the administration still plans to nominate a new IRS commissioner despite the new CEO position. Bessent is currently serving as acting commissioner.12
Jarod Koopman has been selected to serve as acting chief tax compliance officer, an IRS division in charge of all enforcement activities. The position has been held by Edward Killen, who will return to his previous position as the commissioner of the Tax-Exempt and Government Entities Division. Koopman has been with the Criminal Investigation Division.13
Bessent has tapped Derek Theurer as his new deputy Treasury secretary, a role previously held by Michael Faulkender who left in August. Theurer was recently confirmed by the Senate Finance Committee as deputy Treasury undersecretary for legislative affairs.14
Released Guidance
Revenue Procedure (Rev. Proc.) 2025-32 modifies Rev. Proc. 2024-40 to reflect amendments made by OB3, setting forth inflation-adjusted tax items for 2026 across a wide range of provisions. It makes permanent several temporary provisions, including individual and estate tax rate tables, the child tax credit, and standard deduction increases, while also introducing new thresholds and limits for deductions, credits, penalties, and exclusions.
Notice 2025-49 provides interim guidance on the Corporate Alternative Minimum Tax (CAMT) under §55, §56A, and §59, addressing adjustments to adjusted financial statement income (AFSI) for regulated operations, fair value items, tonnage tax regime entities, depreciation deductions tied to net operating losses (NOLs), nonlife insurance company NOL carrybacks, and goodwill amortization under §197. It introduces simplified methods for accounting principle changes and restatements, clarifies reliance rules for taxpayers before final regulations are published, and outlines anticipated changes to proposed regulations.
Notice 2025-53 grants tax relief under §7508A to individuals and entities affected by terroristic actions in the State of Israel throughout 2024 and 2025, as determined by the Secretary on September 30, 2025. Affected taxpayers—including residents, businesses, relief workers, and those with tax preparers or records in Israel, the West Bank, or Gaza—have until September 30, 2026 to perform time-sensitive, tax-related acts originally due between September 30, 2025 and September 30, 2026, such as filing returns, making payments, and initiating legal actions. The IRS will also delay government actions like assessments and collections for the same period. This notice builds on prior relief provided in Notice 2023-71 and Notice 2024-72, extending deadlines for those eligible under multiple notices. Taxpayers not automatically identified must contact the IRS disaster hotline to request relief.
Notice 2025-55 provides relief from penalties under §6656 for remittance transfer providers who fail to timely deposit the new 1% excise tax on certain remittance transfers imposed by §4475, effective January 1, 2026. This relief applies to deposits due in the first, second, and third calendar quarters of 2026, provided providers make timely deposits—even if miscalculated—and pay any underpayment in full by the Form 720 filing deadline for each quarter. The notice also ensures that providers’ eligibility to use the deposit safe harbor under §40.6302(c)-1(b)(2) will not be affected during this transition period. The first deposit is due by January 29, 2026, and the safe harbor becomes usable starting in the third quarter of 2026, using the first quarter as the look-back period. This transitional relief aims to support providers as they adapt to the new tax and its procedural requirements.
A draft revised Form W-9 Request for Taxpayer Identification Number and Certification has been released by the IRS. Changes include a requirement to furnish the Social Security Number of a sole proprietor and the owner’s taxpayer identification number of a single-member limited liability company disregarded for tax purposes. In addition, a new category of exempt recipient has been added for certain brokers of digital assets.
From the States
Massachusetts is the latest state to modify its corporate nexus regulations to include certain internet activities by corporations as unprotected under Public Law 86-272. This federal law traditionally protects businesses from state income tax if their in-state activities are limited to the solicitation of orders for tangible personal property. The modified regulations state that certain activities, such as the placement of cookies on in-state customers’ devices, may not be ancillary to the solicitation of orders of tangible personal property as protected from the state’s tax jurisdiction under the law. Businesses relying on P.L. 86-272 protections must now reassess their online operations in each state, particularly those involving customer interaction, data collection, or post-sale services.
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“House Republicans Plan to Stay Away from DC During Shutdown,” bloomberglaw.com, October 4, 2025.
- 2“Trump Renews Threat With Congress Mired in a Shutdown Brawl,” bloomberglaw.com, October 9, 2025.
- 3“IRS Casts Doubt on Back Pay for Furloughed Staff,” taxnotes.com, October 10, 2025.
- 4“Trump’s Shutdown Back Pay Threat Irks Republican Lawmakers,” bloomberglaw.com, October 7, 2025.
- 5“Congress Rebuffs OMB’s Stance on Back Pay for Furloughed Workers,” taxnotes.com, October 8, 2025.
- 6“IRS Furloughs Half of Workforce, With Deep Enforcement Cuts,” taxnotes.com, October 9, 2025.
- 7Donald J. Trump, truthsocial.com, October 10, 2025.
- 8“China calls on Trump to withdraw latest tariff threat,” thehill.com, October 13, 2025.
- 9“Trump Says US Tariffs on Heavy Truck Imports to Begin Nov. 1,” bloomberglaw.com, October 6, 2025.
- 10“Bessent Touts Drop in Deficit-to-GDP Ratio, Sees Tax-Refund Wave,” bloomberglaw.com, October 9, 2025.
- 11“Social Security Chief Named CEO of IRS in Latest Exec Shift,” bloomberglaw.com, October 6, 2025.
- 12“Trump Will Still Nominate an IRS Commissioner, Senate Office Says,” taxnotes.com, October 8, 2025.
- 13“IRS Selects Criminal Unit Leader to Oversee Enforcement,” bloomberglaw.com, October 6, 2025.
- 14“Bessent Taps Theurer for Deputy Secretary Duties at Treasury,” bloomberglaw.com, October 7, 2025.