Here is a look at recent tax-related happenings on the Hill, including the Trump administration planning to complete multiple trade investigations within five months.
Lately on the Hill
GOP Leaders to Pursue Another Reconciliation Bill
House Republican leaders plan to pursue a second reconciliation bill before the November elections, a move championed by Speaker Mike Johnson (R-LA) despite skepticism among Republicans in both the House and the Senate. Party leaders agreed at a recent retreat to attempt another filibuster-exempt package even though they have not settled on its contents or how to offset its costs.1 For a list of potential items that may be included in such a bill, read the Republican Study Committee’s “Reconciliation 2.0 Framework” released in January.
Tariffs Continue While Administration Confirms Interest Due With Refunds
U.S. Trade Representative Jamieson Greer said the Trump administration plans to complete multiple trade investigations within five months, clearing the way for new tariffs after the U.S. Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA).2 Greer said the probes will be conducted primarily under Section 301 of the Trade Act of 1974 to address what the administration views as unfair foreign trade practices and to protect U.S. economic security. While those investigations move forward, the administration is relying on short‑term tariff authority to maintain pressure on trading partners.
Treasury Secretary Scott Bessent said the Trump administration will raise temporary global tariffs from 10% to 15% during the first week of March under §122 of the Trade Act. However, at the time of publication, no official order has been made. The tariffs can remain in place for only 150 days and will expire in late July.3 The Supreme Court’s decision has also created major financial consequences tied to the potential for refunds due and interest related thereto.
Senators Push for Cap Gains Inflation Indexing
A pair of Republican senators is renewing pressure on the U.S. Department of the Treasury to use executive authority to index capital gains taxes for inflation. Sens. Ted Cruz (R-TX) and Tim Scott (R-SC) argued in a letter to Bessent that inflation-adjusting capital gains would prevent what they call an “inflation tax” on investors and encourage savings, investment, and job creation. The request revives a decades-old debate over whether Treasury has the legal authority to make such a change without Congress.4
2027 Appropriations Kickoff Expected Late March, Early April
The White House plans to submit its annual budget request to Congress by the end of March or early April. The budget will launch the fiscal 2027 appropriations process, as House appropriators prepare to begin marking up spending bills in April, starting with less controversial measures. The administration missed the legal February deadline amid delays in finishing current-year funding and an ongoing U.S. Department of Homeland Security (DHS) shutdown.5
IRS CEO Appears Before House W&M Committee
Democratic lawmakers questioned IRS CEO Frank Bisignano during a House Ways and Means (W&M) Committee hearing over the agency’s data-sharing agreement with the DHS and the IRS’ termination of its collective bargaining agreement with the National Treasury Employees Union. Bisignano said no IRS employees were fired or disciplined after mistakenly sharing taxpayer data with the DHS, an error a federal judge said resulted in tens of thousands of privacy law violations. Republicans focused on implementation of the One Big Beautiful Bill Act (OB3) and refund processing, which Bisignano said is yielding larger and faster refunds this filing season.6
From the Courts
Tariff Refunds Delay Rejected (V.O.S. Selections Inc. v. Trump)
The U.S. Court of Appeals for the Federal Circuit rejected10 the Trump administration’s request to delay proceedings over refunds of tariffs that the Supreme Court recently ruled unlawful. Following the Supreme Court’s decision, the Federal Circuit moved to reopen the paused cases and send them back to the CIT, clearing the way for importers to pursue refunds. The ruling may accelerate resolution of more than 2,000 pending tariff lawsuits.11
Court Order on Tariff Refunds Placed on Hold, CBP Proposes New Plan (Atmus Filtration v. United States)
Judge Richard K. Eaton of the U.S. Court of International Trade (CIT) ordered U.S. Customs and Border Protection (CBP) to issue immediate tariff refunds imposed under the IEEPA. However, the court has put a hold on the order following CBP’s response with a proposal to develop new functionality to handle refunds and interest due.7
In his declaration, Brandon Lord, executive director of CBP’s Trade Policy and Programs directorate, explained that the agency is facing an unprecedented challenge following the CIT’s order directing CBP to liquidate and reliquidate entries without regard to unlawful IEEPA tariffs. According to Lord, CBP has collected roughly $166 billion in IEEPA tariffs derived from more than 53 million entries, with more than 20 million entries still unliquidated as of early March 2026, and its existing systems were not designed to refund those duties at such scale. Lord detailed how CBP’s Automated Commercial Environment (ACE) automatically liquidates hundreds of thousands of entries each week and cannot easily separate entries subject to IEEPA tariffs from others, raising the risk of erroneous liquidation.
To address the problem, CBP proposes developing new functionality within ACE to streamline the process by consolidating refunds and interest at the importer level rather than processing tens of millions of entry‑specific refunds manually. Under the proposal, importers would file a declaration listing affected entries, ACE would automatically validate the data, recalculate duties without IEEPA tariffs, and add interest, after which CBP would certify the amounts and Treasury would issue electronic payments. Lord estimates this approach would save more than 4 million labor hours compared with existing manual processes, and CBP aims to have the new system operational within 45 days. The government may still choose to appeal the order.
Retroactive “Check-the-Box Election” Results in Zero Basis Contribution (Continental Grand Limited Partnership v. Commissioner)
The U.S. Tax Court held8 that a foreign entity’s retroactive “check-the-box” election to be treated as a disregarded entity resulted in a zero-tax basis for a $610 million promissory note contributed to a partnership. The court agreed with the IRS that because the note was effectively the taxpayer’s own obligation after the disregarded-entity election, it had no cost basis under §§1012 and 722 and, therefore, provided no basis to either the contributing partner or the partnership. The ruling is significant because it clarifies how entity classification rules interact with partnership basis principles, confirming that a taxpayer cannot create basis by contributing their own note in a nonrecognition transaction.9
From Treasury & the IRS
OIRA Reviewing Job List for No Tax On Tips Deduction
According to the website for the Office of Information and Regulatory Affairs (OIRA), the organization has received for review the “List of Occupations Traditionally and Customarily Receiving Tips” related to the OB3 deduction on tip income. This is generally the last step before issuing the guidance to the public.
Released Guidance
Partnership Basis-Shifting Transactions: Proposed regulations (REG-108921-25) released by the IRS would remove Treasury Regulation §1.6011‑18, which currently designates certain partnership related‑party basis adjustment transactions, and substantially similar transactions, as “transactions of interest” subject to special disclosure requirements. Consistent with Notice 2025‑23, the proposal would eliminate the associated reporting obligations for both transaction participants and material advisors.
Trump Accounts: Proposed regulations (REG-117270-25) provide rules for who may elect to open an account and how that election must be made. The regulations would apply to taxable years beginning on or after January 1, 2026 and reserve additional regulatory sections for future guidance.
Proposed regulations (REG-117002-25) implement the Trump Accounts Contribution Pilot Program, which would provide a one‑time $1,000 contribution to the Trump account of an eligible child who was born between 2025 and 2028. The proposed regulations would apply beginning January 1, 2026.
Digital Asset Tax Statements: Proposed regulations (REG-105064-25) would allow digital asset brokers to furnish Form 1099‑DA payee statements electronically without offering a paper delivery option, subject to specific customer consent and delivery requirements.
Electronic Payee Statements: Notice 2026‑4 requests public comments on whether existing rules governing the electronic furnishing of payee statements by brokers and other persons should be modified to reduce compliance burdens while ensuring recipients can access their tax information. Comments are due by May 23, 2026.
New Schedule 1-A for OB3 Deductions: IR-2026-28 announced the IRS has published a new Schedule 1‑A for tax year 2025 along with updated Form 1040 instructions explaining how taxpayers can claim several new deductions tied to the OB3, including deductions for qualified tips, qualified overtime compensation, qualified passenger vehicle loan interest, and an enhanced deduction for seniors. The guidance outlines eligibility rules, income phaseouts, and required filing conditions and provides examples and worksheets to help taxpayers calculate deductible amounts.
Automobile Depreciation and Lease Inclusion Limits: Revenue Procedure 2026‑15 provides the IRS’ annual inflation‑adjusted limits under §280F for depreciation deductions on passenger automobiles placed in service during calendar year 2026, as well as the income inclusion amounts required for leased vehicles with lease terms beginning in 2026.
Relief for Adverse Foreign Conditions: Revenue Procedure 2026‑16 identifies the foreign countries for which the IRS will waive certain residency and physical‑presence requirements under §911(d)(4) for tax year 2025 due to war, civil unrest, or similar adverse conditions that required individuals to leave those countries. Specifically, the procedure lists Haiti, Ukraine, the Democratic Republic of the Congo, South Sudan, Iraq, Lebanon, and Mali.
The Dirty Dozen: IR-2026-30 provides the IRS’ 2026 Dirty Dozen, highlighting the most common and dangerous tax scams taxpayers, businesses, and tax professionals should watch for during filing season and throughout the year. In summary, the Dirty Dozen include:
- IRS impersonation via email and text designed to obtain taxpayer credentials or financial data.
- Phone scams using spoofed caller IDs and AI voice technology to pressure taxpayers into immediate payment.
- Fraudulent charities created to solicit donations and personal information.
- Misinformation on social media promoting improper credits or false tax positions.
- Identity theft targeting IRS Online Accounts to gain unauthorized access.
- Abusive undistributed capital gains claims involving overstated or fabricated Form 2439 filings.
- False self‑employment tax credit schemes encouraging ineligible refund claims.
- Ghost preparers who prepare returns without signing or providing a PTIN.
- Inflated non‑cash charitable contribution deductions based on improper valuations.
- Overstated withholding schemes using fabricated income or withholding data to generate refunds.
- Targeted phishing and malware attacks on tax professionals to compromise client data.
- Misleading Offer in Compromise marketing that overpromises relief to taxpayers who do not qualify.
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 will try to pursue a second reconciliation bill,” punchbowl.news, March 6, 2026.
- 2“US Trade Probes Will Conclude Within Five Months, Greer Says,” news.bloombergtax.com, March 3, 2026.
- 3“Bessent Claims 15 Percent Tariffs Are Coming Soon,” taxnotes.com, March 5, 2026.
- 4“GOP Duo Renews Call for Treasury to Index Capital Gains,” taxnotes.com, March 4, 2026.
- 5“White House Plans to Release Annual Budget by Early April,” news.bloombergtax.com, March 4, 2026.
- 6“IRS CEO, Democratic Lawmakers Spar Over Privacy, Union,” news.bloombergtax.com, March 4, 2026.
- 7Atmus Filtration, Inc., v. United States, CIT, No. 26-01259.
- 8Continental Grand Limited Partnership v. Commissioner, 166 T.C. No. 3.
- 9“Tax Court Rules on Basis Consequences of Check-the-Box Election,” taxnotes.com, March 3, 2026.
- 10V.O.S. Selections Inc. v. Trump, 25-1812, U.S. Court of Appeals, Federal Circuit.
- 11“Trump Administration Loses Push to Delay Tariff Refund Fight,” news.bloombergtax.com, March 2, 2026.