Here’s a look at recent tax-related happenings on the Hill, including plans moving forward on another reconciliation bill.
Lately on the Hill
Congress Heads Home, Will Return to Full Agenda
The Senate begins its month-long late summer recess this week; the House started last week. This legislative session peaked in July, with the passing of landmark legislation including the mammoth One Big Beautiful Bill Act, the cryptocurrency-regulating GENIUS Act of 2025, and a $9 billion rescission bill.
Waiting on the other side of the recess are 12 appropriation bills. October 1 marks the beginning of the 2026 fiscal year, which means Congress will have less than one month to make a deal on funding the government or face a shutdown. The House has passed two of the bills, those for defense and for military construction and veterans affairs. The Senate has not passed any.
Plans are also moving forward with another reconciliation bill for the new fiscal year. The Republican Study Committee has formed a working group to start forming a plan, which has been dubbed “2 Big 2 Beautiful.”1
Speaker Mike Johnson (R-LA) is hoping to pass the bill in late fall. The bill would include redrafted provisions that were nixed by the Senate parliamentarian for violations of the Byrd Rule and may also include budgetary cost-reducing measures. It would be smaller in scope, with only a handful of congressional committees involved.2
Trade Deal Deadline Hits this Week
This Friday, August 1, 2025, expanded tariffs will become effective for a host of nations and possibly for the pharmaceutical, semiconductor, and copper industries. The impending duties have some of the U.S.’s largest trading partners scrambling to establish trade deals before they take effect. So far, China, Indonesia, the Philippines, the United Kingdom, and Vietnam have all agreed to trade deal terms.
Recently, the U.S. and Japan reached a trade deal last week in what the White House touted as the “single largest foreign investment commitment ever secured by any country,” according to a fact sheet released by the administration. A $550 billion investment from which the U.S. will retain 90% of the profits is the cornerstone of the deal, along with a 15% tariff on Japanese imports, a 75% increase in U.S. rice exports to Japan, and a commitment by Japan to purchase 100 Boeing aircraft. Japan was facing a threatened 25% tariff at the end of this week.
The European Union (EU) also agreed to a deal over the weekend, according to the White House. A fact sheet released by the administration states that the U.S. will impose a 15% tariff on most imports, including pharmaceuticals and semiconductors. However, tariffs on steel, aluminum, and copper will remain at 50%. The EU also agreed to remove tariffs on imports of industrial goods, purchase $750 billion in U.S. energy, invest $600 billion into the U.S., and purchase military assets. The EU had been facing a 30% duty threat if it did not make a deal.
Indian Commerce Minister Piyush Goyal expressed his confidence in striking a deal before the end of the week. The two sides are reportedly at an impasse as the U.S. would like more access to India’s agricultural and dairy sectors, while India seeks exemptions from pharmaceutical and automobile component tariffs.3
Likewise, South Korea is looking to consummate a deal before 25% tariffs are imposed by the Trump administration. Similar to Japan, the trading partners are working on a deal to create a U.S. investment fund of at least $100 billion and considering opportunities among the agriculture, energy, and defense sectors.4
From the Treasury & IRS
IRS’ Direct File
IRS Commissioner Billy Long informed attendees at the National Association of Enrolled Agents Tax Summit that Direct File has ended. The program provided a free tax return filing tool to certain taxpayers. Long stated that the agency would instead focus on tools to help businesses and individuals under audit see more details and track the process.5
IRS Appeals Leader to Resign
The head of the IRS Independent Office of Appeals, Elizabeth Askey, will resign September 1, 2025. John Hinding, director of Specialized Examination Programs and Referrals, will take over as acting head of the office.6
Released Guidance
Notice 2025-37 provides calendar year 2025 inflation-adjusted factors and applicable amounts for the Section 45U zero-emission nuclear power production credit, §45V credit for production of clean hydrogen, and §45Z clean fuel production credit.
Revenue Procedure 2025-26 provides indexing adjustments for the applicable dollar amounts used to calculate employer-shared responsibility payments.
FS-2025-04 reminds designated officials of Business Tax Accounts that they must revalidate their accounts by July 29, 2025 to maintain access. A W-2 or proof that a designated official can legally bind an entity for tax purposes must be provided to revalidate.
The Large Business and International Division of the IRS issued a memorandum with modifications to provide “effective and efficient examination resolutions.” According to the document, the modifications focus on three areas, including the elimination of the Acknowledgement of Facts Information Document Request, updates to Fast Track Settlements, and a clarification to the Accelerated Issue Resolution to Large Corporate Compliance cases. The changes will be implemented in 2025 and 2026.
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 GOP Begins Organized Effort for Second ‘Beautiful’ Bill,” taxnotes.com, July 28, 2025.
- 2“Johnson Kicks Off Next Tax Bill Work, Seeking Fall Passage,” bloomberg.com, July 23, 2025.
- 3“India’s Commerce Minister ‘Confident’ of US Trade Deal,” bloomberglaw.com, July 24, 2025.
- 4“US, Korea Reaffirm Pledge to Reach Trade Deal Before Deadline,” bloomberglaw.com, July 24, 2025.
- 5“IRS Chief Says Direct File Is ‘Gone,’ Other Audit Tech Is Coming,” bloomberglaw.com, July 28, 2025.
- 6“IRS Chief of Appeals to Exit Agency,” taxnotes.com, July 22, 2025.