Here is a look at recent tax-related happenings on the Hill, including congressional committees considering IRS funding cuts.
Lately on the Hill
Lawmakers Return From Thanksgiving Recess
Congress returned to session this week after last week’s Thanksgiving recess. The Republican majority is looking to pass healthcare legislation to lessen the effects of expiring health insurance tax credits with President Donald Trump specifying he’d like a solution by January 30, 2026.1
Congressional Committees Consider Cuts to IRS Funding
The Senate Appropriations Committee has released draft legislation for the fiscal year (FY) 2026 Financial Services and General Government bill. The measure is one of nine remaining appropriations bills due by January 30, 2026 and contains cuts to IRS funding, albeit pared back from the House committee’s version.
The Senate version provides $11.8 billion to the agency (4% cut from FY 2025) compared to $9.5 billion from the House’s proposal (23% cut from FY 2025). The Senate would maintain $5.4 billion for enforcement with cuts focused on technology and operations support from $4.1 billion to $3.2 billion. Meanwhile, taxpayer services would see a 15% increase from $2.78 billion to $3.2 billion.2
The House version would maintain taxpayer services at $2.78 billion while cutting enforcement and operations support to $3 billion and $3.75 billion respectively.
Republicans Urge Action Against Digital Service Taxes
Sixteen Republican members of the House are urging Trump to respond to the French National Assembly’s current legislation doubling France’s digital services tax (DST) from 3% to 6%. “This proposal would impose hundreds of millions of euros in new costs on American firms that participate in the French market, to an estimated total of at least $1.7 billion annually,” the lawmakers wrote to the president.3
The group suggests that Trump reopen Section 301 investigations into discriminatory trade practices, not only of France, but also other countries that impose DSTs, including Austria, Italy, Spain, Turkey, and the United Kingdom.
EU Adopts Mandates to Implement U.S. Trade Deal
The European Council adopted negotiating mandates on two regulations to implement the United States-European Union (EU) trade framework. The first eliminates customs duties on U.S. industrial goods and grants preferential market access for certain U.S. seafood and agricultural products. The second provides continued non-application of customs duties on imports of certain types of live and frozen lobster.
From Treasury & the IRS
Car Loan Interest Deduction Regulation Under OIRA Review
According to the Office of Information and Regulatory Affairs (OIRA), it has received for review proposed regulations related to the implementation of the new tax deduction for interest paid on qualifying car loans as introduced by the One Big Beautiful Bill Act.
Released Guidance
Notice 2025-70 announces plans to issue regulations implementing a new §25F tax credit for individuals who make qualified cash contributions to scholarship granting organizations (SGOs) that fund elementary and secondary education scholarships. It explains the credit rules, including eligibility, limits, carryforward provisions, and detailed requirements for SGOs and state participation.
Notice 2025-72 announces the intention to issue proposed regulations to address the repeal of §898(c)(2) and modify §987 rules. For additional information, read our FORsights™ article, “IRS Guidance on One-Month Deferral Election for Specified Foreign Corps.”
Notice 2025-73 sets forth the October (issued late due to the government shutdown) corporate bond monthly yield curve and corresponding spot segment rates, the 24-month average corporate bond segment rates, and the 30-year Treasury securities interest rates and weighted average rates.
Notice 2025-74 sets forth the November corporate bond monthly yield curve and corresponding spot segment rates, the 24-month average corporate bond segment rates, and the 30-year Treasury securities interest rates and weighted average rates.
Final regulations (TD 10038) reduce the user fee for requesting an IRS estate tax closing letter (Letter 627) from $67 to $56 and adopt the interim final rule without changes.
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.