Here is a look at recent tax-related happenings on the Hill, including continued funding negotiations for the U.S. Department of Homeland Security (DHS).
Lately on the Hill
Second Budget Reconciliation Bill Set in Motion
Senate Budget Committee Chair Sen. Lindsey Graham (R-SC) said the committee will move “expeditiously toward creating a second budget reconciliation bill,” describing its purpose as securing additional funding for homeland security and supporting the military. Reconciliation allows the Senate majority to advance certain budget-related legislation with 51 votes. However, Republicans are weighing whether a “Reconciliation 2.0” package is feasible this year amid skepticism about unifying the conference. Creating a second budget reconciliation bill could serve as a vehicle for potential “cleanup” or technical corrections related to last year’s One Big Beautiful Bill Act (OB3) implementation.
DHS Funding Negotiations Continue
Congress continues to consider interim funding measures for DHS, including legislation that would provide fiscal year 2026 appropriations for many DHS components while excluding funding for U.S. Immigration and Customs Enforcement (ICE) and certain border security operations. H.R. 7147 passed the Senate with an amendment by voice vote on March 27, 2026. The Senate approach mirrored the Democratic proposal to fund most of DHS while withholding ICE and certain U.S. Customs and Border Protection (CBP) operations.1 However, the House advanced a separate short-term measure to fund the full department for a limited period, leaving the two chambers at odds on the path forward. Both chambers have entered a two-week recess with no resolution in sight, though discussions are underway about cutting the break short or President Donald Trump potentially recalling Congress to negotiate a deal.
Senators Introduce Bipartisan Tax Bill Targeting Tax-Free Mergers
Sens. Sheldon Whitehouse (D-RI) and Josh Hawley (R-MO) introduced S. 4185, the Stop Subsidizing Giant Mergers Act, a bill that would end the tax-free treatment for certain reorganizations that involve large corporations. The legislation would remove the exception for certain types of mergers structured as stock-for-stock reorganizations, in which gain may be deferred and exempt. The proposal would apply to mergers and acquisitions involving firms with combined average annual gross receipts exceeding $500 million over the prior three years, while providing exceptions for small-business mergers and purely internal reorganizations. For additional details, read the press release from Whitehouse.
Senate Vote Fails to Advance Energy Credits Rule
The Senate rejected a motion to proceed (47 to 53) on S. J. Res. 107, a Congressional Review Act (CRA) resolution that would disapprove IRS Notice 2025‑42.2 The notice provides “beginning of construction” rules for Section 45Y, Clean Electricity Production Credit, and §48E, Clean Electricity Investment Credit, as applied to applicable wind and solar facilities, including the statutory deadlines that apply under the OB3 framework.
U.S.-China Summit Rescheduled Dates Confirmed
Trump and Chinese President Xi Jinping will meet in Beijing on May 14 to 15, with plans for Jinping visiting Washington this year at a later date.3 The summit marks the first face-to-face meeting with the two leaders since the U.S. Supreme Court ruled International Emergency Economic Powers Act (IEEPA) tariffs invalid. Trump has since sought to restore the tariff posture through other avenues and has already imposed a 10% tariff as a temporary measure set to expire in July. In addition, U.S. Trade Representative Jamieson Greer has launched §301 investigations to establish the case for tariffs on countries, including China, which may replace the 10% levy when it expires.
EU Lawmakers Approve U.S. Trade Deal After Delays
European Union (EU) lawmakers approved a long‑delayed trade agreement with the U.S., clearing a key legislative hurdle after months of uncertainty tied to U.S. tariff policy.4 Under the agreement, the EU would eliminate tariffs on most U.S. industrial goods, while the U.S. would apply a 15% tariff ceiling on most EU exports, replacing previously higher tariff levels. In addition, lawmakers added safeguard provisions allowing the EU to suspend the agreement if the U.S. imposes tariffs above the agreed 15% cap or otherwise fails to meet its commitments. The vote comes as the U.S. has launched new trade investigations involving major trading partners, including the EU and China, following a Supreme Court decision invalidating certain reciprocal tariffs. While the investigations could lead to additional duties, U.S. officials have indicated to EU counterparts that the U.S. intends to adhere to the terms of the new agreement as it moves toward implementation. For more information, read our FORsights™ alert, “Update on IEEPA Tariff Refund Process.”
From the Courts
Tariff Refund Litigation Expands to Downstream Purchasers
Following the Supreme Court’s February 20 decision that tariffs imposed under IEEPA were not authorized, downstream purchasers, including consumers, have begun filing suits against companies that separately charged tariff‑related fees or passed through tariff costs, including suits involving FedEx, UPS, and Costco.5 While the U.S. Court of International Trade ordered CBP to issue refunds, CBP has indicated it needs time to update its system and, as a procedural matter, refunds would generally be paid to the importer of record rather than downstream purchasers. As these cases develop, a key threshold question is whether downstream purchasers can establish a right to recovery when duties paid to the government by the importer of record, are refunded and whether claims can be evaluated on a classwide basis given transaction‑specific pricing and pass‑through considerations.
Treasury’s Real Estate Reporting Rule Struck Down in Court (Flowers Title Cos. LLC v. Bessent)
A federal judge in the Eastern District of Texas vacated6 Treasury’s 2024 Financial Crimes Enforcement Network (FinCEN) rule requiring reporting for certain non-financed residential real estate transfers in the U.S. and its territories when ownership is transferred to an entity or trust, subject to limited exceptions.7 The court held the rule exceeded FinCEN’s statutory authority under the Bank Secrecy Act, reasoning that FinCEN did not adequately show the covered transactions are categorically “suspicious.” The court also rejected FinCEN’s reliance on cited statistics from prior geographic targeting orders, which were limited by price and geography, finding that those figures do not justify a nationwide reporting mandate for this broader set of transactions.
From Treasury & the IRS
IRS Announces Special Saturday Hours at Select Taxpayer Assistance Centers
The IRS announced special Saturday hours at select Taxpayer Assistance Centers to provide in-person assistance during the filing season; the Saturday openings run from 9 a.m. to 4 p.m. on select dates through the end of June. During the Saturday hours, taxpayers can receive the same services usually offered by Taxpayer Assistance Centers, except for making payments with cash.
IRS Rules for Electronic Payments Pass Review
The White House Office of Information and Regulatory Affairs (OIRA) reviewed a proposed rule titled “Increase in Threshold for Requiring Information Reporting with Respect to Certain Payees” (RIN 1545‑BR73).8 The proposed rules would increase the reporting threshold for individuals using e-commerce platforms for business. The review occurs as information reporting requirements under the OB3 have continued to evolve, including the IRS’ published guidance that third‑party settlement organizations are not required to file Form 1099‑K unless payments exceed $20,000 and 200 transactions.
Released Guidance
2026–2027 Priority Guidance Plan: Notice 2026‑23 requests the public’s input on guidance projects that should be included for the 2026–2027 Priority Guidance Plan (covering July 1, 2026 through June 30, 2027). Treasury and the IRS use the Priority Guidance Plan each year to identify and prioritize tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance.
From the States
Georgia: Governor Signs State Tax Bill to Align With Federal Tax Code
Gov. Brian Kemp signed H.B. 1199, updating the state’s Internal Revenue Code (IRC) conformity reference for taxable years beginning on or after January 1, 2025 to the federal IRC “as amended” by federal law enacted on or before January 1, 2026, subject to specified exceptions.9 The legislation also establishes an aggregate annual cap on Georgia tax credits for qualified low‑income buildings of $100 million for taxable years 2026 through 2028, and temporarily suspends state motor fuel excise tax collection for 60 days beginning on the act’s effective date. The conformity update retains Georgia’s nonconformity to several federal provisions, including bonus depreciation and the domestic research and experimental expenditure rules under IRC §§168(k), 174, and 174A.
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“Senate agrees to end shutdown for most of DHS,” politico.com, March 27, 2026.
- 2“IRS Energy Tax Credit Rule Withstands Challenge from Democrats,” news.bloombergtax.com, March 25, 2026.
- 3“Trump to Travel to China on May 14-15 for Summit with Xi (2),” news.bloombergtax.com, March 26, 2026.
- 4“EU Lawmakers Approve US Trade Deal After Several Delays (1),” bloomberglaw.com, March 26, 2026.
- 5“Downstream Tariff Refund Suits Face Hurdles From Antitrust Law,” news.bloombergtax.com, March 25, 2026.
- 6Flowers Title Cos. LLC v. Bessent, E.D. Tex., No. 6:25-cv-00127, Mar. 19, 2026.
- 7“Treasury’s Real Estate Reporting Rule Struck Down in Court (1),” bloomberglaw.com, March 20, 2026.
- 8“IRS Rules for Venmo, CashApp Users Clear White House Review,” news.bloombergtax.com, March 26, 2026
- 9“Georgia Governor Signs Law Conforming to Internal Revenue Code,” bloomberglaw.com, March 23, 2026