Here is a look at recent tax-related happenings on the Hill, including Senate Republicans rejecting a Democratic-led effort to reverse corporate alternative minimum tax (CAMT) guidance.
Lately on the Hill
Congress Votes to Keep OB3 in D.C.
The Senate narrowly voted along party lines to overturn a Washington, D.C., tax law that decoupled the city’s tax code from key provisions, like deductions for tip or overtime income, of the One Big Beautiful Bill Act (OB3), sending the measure to President Donald Trump for an expected signature.1
“The DC city council has decided to deny the people of DC the benefits we passed in President Trump’s working families tax cuts,” said Sen. Rick Scott (R-FL). “That is absolutely absurd.”
Before passage, Sen. Angela Alsobrooks (D-MD) warned, “This resolution would literally change the rules in the middle of the game while taxpayers have already started filing returns. It would create confusion for families, businesses, and tax professionals.”
Senate Republicans Rebuff Effort to Reverse CAMT Guidance
With a 47-to-51 vote, the Senate rejected a Democratic-led effort to overturn IRS Notice 2025-28, which provides guidance that expands how corporations calculate income from partnerships for purposes of the CAMT. Supporters of the resolution argued the guidance weakens the CAMT and is projected by the Joint Committee on Taxation to reduce federal revenue by $10.3 billion over 10 years, while Republicans said it provides necessary simplification for a complex tax.2
CBO Releases 10-Year Budget & Economic Outlook
The Congressional Budget Office (CBO) has released its Budget and Economic Outlook for fiscal year (FY) 2026 to 2036.
The annual deficit is expected to continue to rise from $1.9 trillion (5.8% of gross domestic product (GDP)) in FY 2026 to $3.1 trillion (6.7% of GDP) in FY 2036. For context, over the last 50 years the deficit has averaged 3.8% of GDP.
This is despite increasing revenues totaling 17.8% of GDP by the end of the budgetary estimate. This percentage exceeds the current 17.5% in 2026 and the 50-year average of 17.3%. The CBO attributes the increase to individual income tax receipts; however, the increase is weighed down by declining customs duties as imports shrink in response to tariffs.
The economy is expected to continually strengthen in 2026 due to OB3 provisions and renewed economic activity after the lengthy government shutdown in 2025, according to the report. Inflation is expected to return to the Federal Reserve’s goal of around 2% in 2030 while interest rates are expected to further decline this year.
Republicans Join Dems on Canadian Tariff Rebuke
The House passed legislation to end tariffs on Canada, reflecting growing concern within both parties about the economic impact of the tariffs ahead of the midterm elections. Although the measure is unlikely to become law due to the president’s veto power and the need for Senate approval, defections by several Republicans highlight political pressure on swing‑district lawmakers.3
U.S. Finalizes Trade Agreements With Bangladesh & Taiwan
The U.S. and Bangladesh have come to terms on reciprocal trade. The agreement provides that the U.S. will have preferential market access for industrial and agricultural goods while maintaining a 19% tariff on imports of Bangladesh, excepting certain products identified in Annex III of Executive Order 14346 as exempt from tariffs.
The U.S. and Taiwan have also come to an agreement on trade. In addition to eliminating tariff barriers and providing preferential market access to the U.S., Taiwan has also agreed to purchase $44.4 billion worth of liquified natural gas and oil, $15.2 billion worth of aircraft and engines, and $25.2 billion in equipment purchases. The U.S. in return will reduce tariffs to the higher of the most-favored-nation tariff rate or 15% with certain identified goods as also found in Annex III of EO 14346 not subject to tariffs.
From the Courts
Potential Tariff Decision From Supreme Court This Week
The U.S. Supreme Court has scheduled its next round of opinions for February 20, potentially releasing an opinion on the legality of Trump’s tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
Limited Partner Definition Debate Continues
In light of the Fifth Circuit’s ruling in Sirius v. Commissioner,4 which reversed the U.S. Tax Court’s passive investor definition for purposes of the exemption from self-employment taxes, notices have been filed in the Tax Court by Point72 Asset Management, LP and the IRS.5 This is another high-profile case dealing with similar issues.
Point72’s notice requests summary judgment considering, “In Sirius, the Court of Appeals held that ‘limited partner’ for purposes of Section 1402(a)(13) means ‘a partner in a limited partnership with limited liability.’ Moreover, the Court of Appeals explicitly rejected the interpretation of ‘limited partner, as such’ found in Soroban and relied upon by Respondent.”
The IRS notice upholds its argument in this statement: The Tax Court should not follow the Fifth Circuit's opinion in Sirius Solutions, because it is inconsistent with the language and purpose of section 1402(a)(13). The majority held that under section 1402(a)(13), “a ‘limited partner’ is a partner in a limited partnership that has limited liability.” However, the opinion fails to reflect how changes in state law have obscured the state-law distinction between general and limited partners that existed when Congress enacted the provision in 1977.
From Treasury & the IRS
IRS Has Finished Processing ERC Claims According to GAO
In a report released last week, the U.S. Government Accountability Office (GAO) provided that about $283 billion was paid out through reduced tax liabilities or credits for the COVID-19 era Employee Retention Credit (ERC), an amount more than triple the original cost estimates.6
The report states that IRS officials told the GAO all ERC claims were closed as of December 31, 2025, except for those under examination or appeal.
“IRS did not provide documentation of this milestone, or provide a definition of what it considers to be a ‘closed’ claim,” wrote the GAO. This development may come as a surprise for taxpayers with outstanding claims that have not heard from the IRS.
The GAO suggested that the IRS “provid[e] updates to the public about the status of ERC claims remaining to be processed and estimates for completion would help employers anticipate possible refunds, which can help with business planning.”
OIRA Reviews Proposed Rules for Trump Accounts
Two newly drafted regulations concerning new Trump accounts and the election into the contribution pilot program have reached the Office of Information and Regulatory Affairs (OIRA). This is generally the final step before proposed regulations are released to the public. The accounts will be made available this summer for children under age 18 with certain tax benefits to encourage savings.
Released Guidance
Energy Tax Credits & Prohibited Foreign Entities: Notice 2026‑15 provides interim guidance on restrictions affecting certain energy tax credits under the Internal Revenue Code when a qualified facility, energy storage technology, or eligible component involves material assistance from a prohibited foreign entity, as enacted by the OB3. It explains how taxpayers should determine whether material assistance from a prohibited foreign entity exists, including rules for calculating material assistance cost ratios and describing interim safe harbors and certification methods the U.S. Department of the Treasury and the IRS intend to incorporate into forthcoming proposed regulations. Comments are requested by March 30, 2026.
2025 Accident-Year Discount Factors: Revenue Procedure 2026-13 publishes the 2025 accident‑year discount factors for insurance companies to use when computing discounted unpaid losses under §846 and discounted estimated salvage recoverable under §832.
Form 6765 Revised Instructions for R&D Credit: A new draft of instructions for completing Form 6765 “Credit for Increasing Research Activities” has been released by the IRS. The instructions add considerations for newly created §174A by the OB3, allowing for the immediate deduction of domestic research and experimental expenditures.
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“Congress Votes to Make Washington, DC Adopt Trump’s Tax Cuts,” bloomberglaw.com, February 12, 2026.
- 2“Corporate AMT Guidance Survives Senate Bid to Tighten Rules,” taxnotes.com, February 11, 2026.
- 3“US House Defies Trump and Votes to End His Canada Tariffs,” bloombergtax.com, February 11, 2026.
- 4Sirius Solutions, LLLP v. Commissioner, 5th Cir., No. 24-60240.
- 5Point72 Asset Management, LP v. Commissioner, No. 12752-23.
- 6“IRS Closes Out $283 Billion in Employee Retention Credit Claims,” bloombergtax.com, February 10, 2026.