Here is a look at recent tax-related happenings on the Hill, including a Senate Finance Committee hearing with IRS CEO Frank J. Bisignano.
Lately on the Hill
FY 27 Appropriations Season Opens With IRS Funding in Focus
According to a schedule released by the House Appropriations Committee, appropriators plan to draft all 12 fiscal year (FY) 2027 spending bills by the end of June, compressing much of the early appropriations work into a roughly two-month window.1 The markup schedule begins with the Military Construction–Veterans Affairs and Financial Services subcommittees and culminates with full committee consideration of the defense bill.
Early FY 2027 activity also signals that U.S. Department of the Treasury and tax administration funding will remain central to the cycle.2 The Senate Committee on Appropriations has scheduled a hearing on Treasury oversight, with Treasury Secretary Scott Bessent slated to testify as appropriators begin formal FY 2027 review of Treasury priorities and agency operations. In the House, FY 2027 Financial Services and General Government (FSGG) materials released ahead of subcommittee markup highlight several policy additions relevant to tax and financial services stakeholders, including provisions tied to IRS operations and related restrictions described in committee materials.
IRS funding levels are emerging as a key pressure point within this appropriations posture. House Republicans have advanced FY 2027 proposals that would reduce IRS funding and scale back certain enforcement and operations accounts, keeping IRS resourcing in play as the FSGG package moves through committee consideration.3
Senate Finance Committee Hearing With IRS CEO
At a Senate Finance Committee hearing on the 2026 filing season and IRS operations, Bisignano discussed filing season volumes and refund activity, while committee leadership framed the conversation around taxpayer service, enforcement priorities, and how the agency plans to operate amid staffing reductions and increased reliance on technology. Chair Mike Crapo (R-ID) also highlighted refund trends and referenced several “Working Families Tax Cuts” provisions, including deductions related to tips, overtime, car-loan interest, and an enhanced deduction for seniors.
Tariff Outlook After Supreme Court Decision
Bessent said the administration is exploring the use of Section 301 studies as a pathway for restoring tariffs by early July to levels in place before the U.S. Supreme Court struck down many levies. In the interim, a temporary 10% tariff covering many imports is set to expire on July 24 unless extended.
CBP Launches CAPE for IEEPA Duty Refund Claims
U.S. Customs and Border Protection (CBP) has activated Phase 1 of its Consolidated Administration and Processing of Entries (CAPE) tool in the Automated Commercial Environment Secure Data Portal (ACE Portal), allowing importers and authorized customs brokers to file CAPE Declarations through their ACE Portal accounts. CBP describes CAPE as a mechanism to consolidate refunds of International Emergency Economic Powers Act (IEEPA) duties (including interest) rather than processing refunds on an entry‑by‑entry basis, with Phase 1 limited to certain unliquidated entries and certain entries within 80 days of liquidation. CBP has directed filers to the CAPE Information Notice and the ACE Portal CAPE Declarations Quick Reference Guide for additional details and will maintain updates on its IEEPA Duty Refunds webpage. For a deeper dive into the CAPE refund process and what importers should expect next, see our FORsights™ article, “IEEPA Tariff Refund System (CAPE) Now Available.”
From the Courts
Micro-Captive Disclosure Rule Partially Struck Down (Drake Plastics Ltd. Co. v. IRS)
In Drake Plastics Ltd. Co. v. Internal Revenue Service,4 the U.S. District Court for the Southern District of Texas held the IRS may continue treating micro-captive arrangements as “transactions of interest,” but vacated the “listed transaction” designation.5 The court concluded the IRS could not justify the “listed transaction” designation on the administrative record before it. The decision narrows a key enforcement tool used to require heightened disclosure obligations for micro-captive arrangements.
From Treasury & the IRS
Nominee Named for Undersecretary Position in Treasury
President Donald Trump expects to nominate Erin Browne to fill the position of undersecretary for international affairs in the Treasury Department.6 Browne currently works as a managing director and portfolio manager for Pacific Investment Management Co. (PIMCO), where she runs asset allocation strategies. Browne will need to go through Senate confirmation to secure the position.
IRS Issues Whistleblower Alert to Expand Efforts to Uncover Fraud
The IRS issued a whistleblower alert aimed at expanding efforts to uncover tax fraud and to encourage reporting through its whistleblower channels. The alert signals continued emphasis on information-driven enforcement, particularly as the agency works to prioritize actionable leads and improve detection tools.
IRS Launches New Taxpayer Debt Tool
The IRS announced the launch of a new online tool, Tax Debt Help, designed to help individuals and businesses identify available options for resolving outstanding federal tax liabilities.
New Working Guidance on Anti-Abuse Rule
The IRS is developing guidance on how the new anti-abuse rule in the One Big Beautiful Bill Act (OB3) will apply to rules governing income from U.S.-owned foreign subsidiaries.7 At a Practising Law Institute event in San Francisco, Mallory Mendrala, a senior technical reviewer in the IRS Office of Chief Counsel, described the project as a “very high priority” and said the IRS hopes to issue guidance this year. She noted the guidance is expected to address how Section 951B interacts with Subpart F and how the new §951B definitions may be substituted for “CFC” references across the Code, including potential knock-on effects for provisions such as §§245A and 1248.
Released Guidance
Update to Wagering Losses and Gambling Rules: Proposed regulations (REG-113229-25) would increase certain information-reporting thresholds and modify the wagering-loss limitation rules. The proposal generally reflects implementation and technical updates tied to statutory changes enacted in the OB3, rather than a new policy direction in the reporting regime.
May 2026 AFR: Revenue Ruling 2026-09 provides the May 2026 applicable federal rates (AFR), adjusted AFR, adjusted federal long‑term rate and long‑term exempt rate, percentages for determining the low‑income housing credit, and the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or reversionary interest.
Update to Rates and Yield Curves: Notice 2026-26 provides the corporate bond monthly yield curve and corresponding spot segment rates derived from March 2026 data, the 24‑month average corporate bond segment rates applicable for April 2026, and the 30‑year Treasury securities interest rates and weighted average rates.
Foreign Insurer Inputs: Revenue Procedure 2026-19 provides the domestic asset and liability percentages and domestic investment yields needed by foreign insurers to compute minimum effectively connected net investment income under §842(b).
From the States
Maine: Supplemental Budget Includes Tax Conformity Materials & a High-Income Surcharge
Maine enacted a supplemental budget that includes tax-related materials addressing state conformity and related changes, with additional detail provided in the governor’s tax conformity summary and fiscal materials.8 The enacted package also includes a 2% income tax surcharge applicable to taxpayers with more than $1 million in income.9
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 Appropriators Plan Aggressive Fiscal 2027 Markup Schedule,” news.bloombergtax.com, April 13, 2026.
- 2“House GOP Proposes $1B Cut to IRS Funding by Slashing Enforcement,” taxnotes.com, April 17, 2026.
- 3“House Panel Advances Partisan IRS Funding Bill to Full Committee,” taxnotes.com, April 20, 2026.
- 4Drake Plastics Ltd. Co. v. Internal Revenue Service; No. H-25-2570 (S.D. Tex. Apr. 15, 2026).
- 5“IRS Microcaptive Disclosure Rule Tossed by Federal Judge (2),” news.bloombergtax.com, April 16, 2026.
- 6“Trump Taps Pimco’s Browne for Treasury International Affairs Job,” news.bloombergtax.com, April 13, 2026.
- 7“IRS Prioritizing Guidance on Anti-Abuse Rule for Foreign Income,” news.bloombergtax.com, April 16, 2026.
- 8“Maine Governor Signs 2026 Supplemental Budget,” taxnotes.com, April 10, 2026.
- 9“Maine Budget Adopts Millionaire’s Tax,” taxnotes.com, April 15, 2026.