Here is a look at recent tax-related happenings on the Hill, including the Organisation for Economic Co-operation and Development (OECD) agreeing to a U.S. global minimum tax exemption.
Lately on the Hill
Congress Returns as Government Shutdown Again Dominates Agenda
The second session of the 119th Congress began this week as lawmakers returned from the winter recess. This January will prove to be busy as government funding runs out on January 30 and Republicans seek consensus on healthcare reform in light of rising marketplace health insurance premiums following the expiration of the enhanced premium tax credit on New Year’s Day.
The continuing resolution passed last November included three appropriations bills, leaving nine (including IRS funding directives) to still be passed. Current versions from the Senate and the House of the Financial Services and General Government Bill would either cut IRS appropriations by 4% or 23% as compared to 2025 funding levels.1
The House is expected to vote soon on the Democratic-drafted bill to extend the premium tax credit after several Republicans signed on to a discharge petition forcing a vote. While the measure may pass the House, its success is uncertain in the Senate. The House already passed Republican-drafted legislation in December, but it has yet to receive a vote in the Senate.
Meanwhile, the countdown to the mid-term elections has begun with the primaries beginning in the spring. The Republicans’ House majority took another hit as Rep. Marjorie Taylor Greene’s (R-GA) retirement took effect on January 5, leaving the party with a 219-to-213 slim advantage. In addition to Greene’s now vacant seat, deceased Rep. Sylvester Turner’s (D-TX) and newly elected New Jersey Gov. Mikie Sherrill’s (D-NJ) seats remain open.
Congress will also be looking for a U.S. Supreme Court ruling on tariffs imposed under the International Emergency Economic Powers Act (IEEPA). If found unlawful, the GOP may look to legislation to support what has been the administration’s primary economic policy tool.
All these legislative avenues may provide opportunities to tack on other tax-related legislation to address other expired provisions like the work opportunity credit or other bipartisan proposals such as an increase to the capital gains exclusion on the sale of a principal residence.2
Stay tuned for a busy January.
OECD Agrees to U.S. Global Minimum Tax Exemption
On January 5, 2026, a formal document released by the OECD detailed the contents of a simplification to the global minimum tax (GMT) procured by the Global Anti-Base Erosion (GloBE) rules (also referred to as Pillar 2), which affect in-scope multinational enterprise (MNE) groups (the January 2026 AG). Key measures include:
- Introduction of a side-by-side (SbS) system safe harbor test for MNE groups in jurisdictions with eligible tax regimes, exempting them from certain GMT rules if a minimum taxation criterion is met, while still requiring compliance with qualified domestic minimum top-up taxes (QDMTTs). In so doing, the January 2026 AG notes some jurisdictions already have qualifying tax regimes but allows for other jurisdictions to request assessment of their regimes’ eligibility by mid-2026 or later.
- Introduction of a permanent simplified effective tax rate (ETR) safe harbor, which allows MNE groups to use a simple ETR calculation with minimal GloBE adjustments, significantly reducing compliance burdens. This safe harbor becomes available in all jurisdictions beginning in 2027, or 2026 in certain cases.
- Introduction of a criteria that allows MNE groups to benefit from substance-based tax incentives, which are limited by clear caps related to payroll or asset values.
- Extending the transitional country-by-country reporting (CbCR) safe harbor for an additional year to give taxpayers the choice to decide between the new and transitional options during the transition period.
- Creation of a work program to clarify and simplify the GloBE rules, including finalizing a routine profits test and a de minimis test by mid-2026 with ongoing engagement from businesses and other stakeholders.
The January 2026 AG marks a significant change in how the GloBE rules apply to MNE groups in the U.S. and other countries. Specifically, some provisions of the January 2026 AG were developed in direct response to an agreement with the U.S.—represented by Treasury Secretary Scott Bessent—and other G7 nations. This agreement led to the removal of the controversial “revenge tax” under Section 899 from the One Big Beautiful Bill Act.
Look for coming FORsights™ from Forvis Mazars for more details.
Tariff Increases Delayed on Certain Wood Products
President Donald Trump is delaying increased tariffs on wood products such as upholstered furniture, cabinetry, and vanities until January 1, 2027. While the increases to 30% for upholstered furniture and 50% for cabinetry and vanities are delayed, the 25% tariff already in place will remain.
The related fact sheet released by the White House attributes the delay to “productive negotiations with trade partners to address trade reciprocity and national security concerns with respect to imports of wood products.”
From Treasury & the IRS
Released Guidance
Proposed regulations (REG-113515-25) implement a temporary federal income tax deduction for up to $10,000 of interest paid on loans used to purchase new U.S.-assembled passenger vehicles for personal use, applicable to taxable years 2025 through 2028. They define eligibility criteria for the deduction, including what constitutes a qualified passenger vehicle loan, personal use standards, and reporting requirements, while clarifying that the deduction is available to both itemizers and standard deduction filers. In addition, the regulations establish mandatory information reporting for businesses receiving $600 or more in annual interest on such loans, prescribe electronic filing rules, and outline penalties for noncompliance.
Proposed regulations (REG-103430-24) update the Branded Prescription Drug Fee rules to reflect statutory changes from the Bipartisan Budget Act of 2018 and the Inflation Reduction Act of 2022. These changes help ensure that discounts, rebates, and other price concessions used to calculate branded prescription drug sales for fee purposes align with current law and apply to sales years beginning in 2025.
Revenue Procedure (Rev. Proc.) 2026-1 outlines procedures for taxpayers to request IRS written advice, including letter rulings, determination letters, information letters, and closing agreements, and specifies submission requirements and user fees. The procedure supersedes Rev. Proc. 2025-1 and applies to requests received on or after December 29, 2025.
Revenue Procedure 2026-2 explains when and how the IRS associate chief counsel offices provide technical advice to field offices through Technical Advice Memoranda (TAMs) during examinations, refund claims, or appeals proceedings.
Revenue Procedure 2026-3 updates the IRS list of issues under the jurisdiction of various associate chief counsel offices for which the Service will not issue letter rulings or determination letters. The procedure supersedes Rev. Proc. 2025-3 and includes new no-rule areas related to energy credits, employment tax provisions, and certain trust and transfer tax issues.
Revenue Procedure 2026-4 provides updated procedures for requesting IRS determination letters and private letter rulings on qualified retirement plans, including pension, profit-sharing, stock bonus, annuity, employee stock ownership plans, and related provisions. This revenue procedure supersedes Rev. Proc. 2025-4 and incorporates changes to streamline electronic submissions, clarify pre-submission conference requirements, and update guidance for plan amendments and compliance programs.
Revenue Procedure 2026-5 sets forth procedures for issuing IRS determination letters on matters under the jurisdiction of the Director, Exempt Organizations Rulings and Agreements. It covers applications for recognition of exemption from federal income tax under §§501 and 521, private foundation status, and other determinations related to tax-exempt organizations, as well as procedures for revocation or modification of such letters. The revenue procedure also provides guidance on exhausting administrative remedies for declaratory judgment under §7428 and specifies applicable user fees for these requests, superseding Rev. Proc. 2025-5.
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.