Here is a look at recent tax-related happenings on the Hill, including talks continuing on a possible bipartisan tax package.
Lately on the Hill
JCT Releases “Blue Book” Explanation of 2025 Tax Law
The Joint Committee on Taxation (JCT) released its explanation of the 2025 tax law in its “blue book,” identifying provisions that may require technical corrections.1 The explanation suggests revisions may be needed for items including the state and local tax deduction cap, the temporary senior deduction, and the home energy deduction.2 The Blue Book also notes that a technical correction may be needed to clarify the enactment and termination of the credit for home energy audits under Section 25C.
Bipartisan Tax Package Talks Continue as Treasury Works on International Guidance
At a Federal Bar Association seminar, Capitol Hill tax staff said an end-of-year bipartisan tax package remains possible and could address retirement fixes and international issues.3 The House-passed Taiwan tax bill could be a legislative priority around which both parties could coalesce. At the same event, a U.S. Department of the Treasury attorney-advisor said the agency is actively working on guidance in the next few months regarding the §951B anti-abuse rule for foreign-owned U.S. companies.4 Further, Treasury is planning a revamp of regulations governing consolidated returns involving life and non-life insurance businesses.
USTR Issues Federal Register Notice on Tariff-Related Implementation With Taiwan
The U.S. Department of Commerce and Office of the U.S. Trade Representative (USTR) issued a Federal Register notice implementing certain tariff-related elements of the January 2026 Taiwan-U.S. investment memorandum of understanding. The notice amends the Harmonized Tariff Schedule of the United States to implement commitments related to certain automobile part products of Taiwan. The agencies said they are not implementing the broader reciprocal trade agreement at this time because it has not yet entered into force.
From the Courts
CBP Updates Court on CAPE Processing for IEEPA Duty Refunds (Euro-Notions Florida, Inc. v. United States)
In a May 26, 2026 declaration filed in Euro-Notions Florida, Inc. v. United States,5 U.S. Customs and Border Protection (CBP) reported that, as of May 22, 2026, more than 157,000 Consolidated Administration and Processing of Entries (CAPE) declarations had been submitted, with approximately 109,000 passing file validations.6 CBP indicated that roughly $85 billion in potential and certified International Emergency Economic Powers Act (IEEPA) refunds had been accepted for processing, and that about $20.6 billion in duties plus interest had been certified and transmitted to Treasury for disbursement. The declaration also disclosed that CBP’s earlier refund estimate was overstated by approximately $10 billion due to a data‑query error, and the court ordered the CBP commissioner to appear personally at a subsequent status conference.
U.S. to Appeal Court Broad IEEPA Refund Order (V.O.S. Selections, Inc. v. Trump)
In V.O.S. Selections, Inc. v. Trump,7 Judge Richard Eaton previously ordered CBP to liquidate unliquidated entries without IEEPA duties and to reliquidate entries for which liquidation was not final (or in certain situations final) without those duties. The U.S. Department of Justice filed notice that it will appeal Eaton’s authority to order broad refunds for importers beyond those that filed suit. The notice does not clearly indicate that the government will appeal the separate phased refund process already underway for unliquidated entries through CAPE. The dispute centers on whether the Court of International Trade may order refunds for all importers that paid the tariffs or only for importers that filed suit.8
Transportation Excise Tax Reversed on Appeal (Flight Options LLC v. United States)
The Sixth Circuit held in Flight Options LLC v. United States9 that a 7.5% excise tax on certain air transportation costs does not apply to fixed overhead and management fees and reversed a lower court ruling in a case involving an Ohio-based fractional aircraft ownership company.
Partnership Imputed Underpayment Calculation Rules Challenged (Mavericks in Education Florida LLC v. Commissioner)
A partnership is challenging a Treasury regulation that requires non-income adjustments to be included when computing partnership imputed underpayments, arguing in Mavericks in Education Florida LLC v. Commissioner10 that the rule is invalid and violates due process.11 The case involves application of rules under the centralized partnership audit regime and the methodology used to determine imputed underpayments at the partnership level.
Automatic Extension Treated as Valid Despite Zero Dollar Estimate (Karp v. United States)
In Karp v. United States,12 the Court of Federal Claims addressed whether a Form 4868 automatic extension can be treated as valid when the taxpayers reported an estimated tax liability of $0 while relying on payments and credits.13 The case arose in the context of a refund claim and addressed whether the extension filing satisfied procedural requirements relevant to the timeliness of the claim.
From Treasury & the IRS
IRS Releases Look-Back Interest Calculator for Long-Term Contracts
The IRS announced a new Excel-based Percentage-of-Completion Method (PCM) Look-Back Interest Calculator for businesses working on large multiyear construction or manufacturing projects. The calculator supports computations required for Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts, and is intended to assist with the interest computation portion of the look-back method. The IRS stated that the tool does not replace authoritative guidance and does not address all fact patterns or complexities associated with look-back interest calculations.
IRS Adds Ability to View & Submit Trump Account Elections Through Individual Account
The IRS announced that taxpayers can now view and submit Trump Account elections through their IRS Individual Account. The update allows taxpayers to electronically submit Form 4547, Trump Account Election(s) and to check the status of previously submitted elections, including next steps in the process. The IRS stated that the new functionality is intended to improve accuracy and processing times by reducing reliance on paper submissions.
Biofuel Groups Urge Treasury & IRS to Update Model Used for §45Z Credit Calculations
Biofuel and farm groups urged Treasury and the IRS to update the model companies use to calculate eligibility for the clean fuel production credit under §45Z.14 Agency lawyers heard requests from more than 70 groups regarding proposed rules released in February, including requests to change how greenhouse gas emissions are calculated.
IRS Signals PTI Regulations Update Focused on Basis-Timing Issue
An IRS official indicated that Treasury and the IRS are considering revisions to proposed regulations related to previously taxed income (PTI).15 The revisions are expected to address the timing of basis adjustments in connection with sales of stock in foreign affiliates. The comments were made as part of ongoing regulatory considerations of PTI-related rules.
Released Guidance
Estate Tax Closing Letter User Fee Update: Proposed regulations (REG-103193-26) would increase the user fee for an estate tax closing letter to $76. Treasury and the IRS stated that the current $56 fee was established under final regulations published in December 2025. The agencies said the proposed increase reflects an updated cost model developed as part of the IRS’ 2025 biennial review of the fee.
2027 HSA and Expected Benefit HRA Inflation Adjustments: Revenue Procedure 2026-24 provides the 2027 inflation-adjusted amounts for health savings accounts (HSAs) under §223 and the maximum amount that may be made newly available for excepted benefit health reimbursement arrangements (HRAs) under Pension Excise Tax Regulations.
Section 892 Proposed Regs Provide Grandfathering and Transitional Relief: Proposed regulations address the applicability dates of recent proposed regulations under §892, which exempts foreign governments, including sovereign wealth funds, from tax on certain income derived from passive U.S. investments. The guidance provides grandfathering protection for certain existing foreign government interests and transitional relief before the proposed rules become final. Treasury and the IRS said the government did not intend for the 2025 proposed regulations, once finalized, to apply retroactively to foreign government holdings of debt and interests in entities. The proposed approach includes new applicability dates for existing interests and a transition period of at least 90 days after publication or until the start of the first taxable year after publication. For more information, see our FORsights™ alert, “IRS Issues Guidance on U.S. Investment Income of Foreign Governments.”
OECD Releases Consolidated Commentary to GloBE Model Rules: The Organisation for Economic Co-operation and Development (OECD) released a 2026 consolidated commentary to the Global Anti-Base Erosion (GloBE) Model Rules, incorporating agreed administrative guidance issued from March 2022 through January 2026. The commentary provides tax administrations and taxpayers with consolidated guidance on interpreting and applying the rules and is intended to promote a consistent application of the Pillar Two framework across jurisdictions.
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“‘Blue Book’ Proposes Technical Changes to Republicans’ Tax Law,” news.bloombergtax.com, May 28, 2026.
- 2“Technical Corrections Recommended for Some OBBBA Deductions,” taxnotes.com, May 29, 2026.
- 3“Hill Staff Say Year-End Bipartisan Tax Deal Could Still Happen,” news.bloombergtax.com, May 28, 2026.
- 4“Treasury Sees Guidance This Summer on Foreign-Owned Companies,” news.bloombergtax.com, May 28, 2026.
- 5Euro-Notions Florida, Inc. v. United States, Court No. 25-00595 (Ct. Int’l Trade).
- 6Declaration of Brandon Lord (filed May 26, 2026) in Euro-Notions Florida, Inc. v. United States, Court No. 25-00595 (Ct. Int’l Trade) (reporting CAPE submission and file-validation counts as of May 22, 2026).
- 7V.O.S. Selections, Inc. v. Trump, Court No. 25-00066 (Ct. Int’l Trade).
- 8“US to Appeal Judge’s Order for Broad Refund of Trump Tariffs (2), bloomberglaw.com, May 29, 2026.
- 9Flight Options LLC v. United States, 6th Cir., No. 25-3582, May 27, 2026.
- 10Mavericks in Education Florida LLC v. Commissioner.
- 11“Partnership Challenges Treasury Rule on Non-Income Adjustments,” taxnotes.com, May 22, 2026.
- 12Karp v. United States, No. 23-cv-00926 (Fed. Cl. May 21, 2026).
- 13“Zero Can Be a Reasonable Tax Estimate, Claims Court Holds,” taxnotes.com, May 26, 2026.
- 14“Biofuel Groups Push IRS for New Model to Calculate Tax Credit,” news.bloombergtax.com, May 27, 2026.
- 15“Revision of Previously Taxed Income Regs to Address Basis Issue,” news.bloombergtax.com, May 21, 2026.