Here is a look at recent tax-related happenings on the Hill, including an executive order aiming to strengthen U.S. customs enforcement.
Lately on the Hill
Secretary Bessent Testifies at Senate Finance Committee Hearing
On June 3, 2026, Sens. Ron Wyden (D-OR) and Mike Crapo (R-ID) delivered remarks at a hearing on President Donald Trump’s fiscal year 2027 U.S. Department of the Treasury’s budget with Treasury Secretary Scott Bessent. Crapo provided the following remarks praising the work performed in implementing the One Big Beautiful Bill Act (OB3): “Treasury’s initial guidance has also helped the business provisions of the Working Families Tax Cuts, like full expensing for equipment and factories, to drive domestic investment, higher productivity and higher wages for American workers.”1 In contrast, Wyden criticized the settlement of the president’s IRS lawsuit, calling on Bessent to provide an explanation while also criticizing the administration’s approach to affordability issues.
Trump Signs Executive Order Strengthening Customs Enforcement
Trump signed an executive order on June 3, 2026 in an effort to close loopholes and create efficiencies in U.S. customs enforcement.2 The order allows U.S. Customs and Border Protection to use new technology and data analytics to prevent and detect contraband as well as tariff evasion. This will impose additional burdens on foreign importers of record and will require customs brokers to perform vetting of importers and documentation.
Certain Metals Tariffs Reduced From 25% to 15%
The president signed a proclamation reducing tariffs on imported agricultural equipment from 25% to 15%.3 In addition, the proclamation expands the existing category of industrial equipment subject to a 15% tariff to include mobile industrial equipment, e.g., bulldozers, forklifts, etc. In an effort to encourage foreign use of U.S. steel and aluminum, the proclamation allows companies to qualify for a 10% duty rate, if their capital equipment includes at least 85% U.S. melted and poured or smelted and cast steel or aluminum by weight. These changes take effect June 8 and apply through the end of 2027.4
US Trade Representative Announced Proposed Action for Failures to Act Against Forced Labor Goods
The Office of the United States Trade Representative (USTR) announced proposed action against 60 economies under Section 301 of the Trade Act of 1974 relating to failures to enforce prohibitions on the importation of goods produced with forced labor. The proposed action against these trade partners consists of tariffs on all products, except specific products listed in Annex A of the report. The USTR stated, “For economies that impose a forced labor import prohibition; have taken on commitments related to forced labor import prohibitions through an Agreement on Reciprocal Trade; or have imposed a partial regime with the effect of preventing the importation of certain forced labor goods, the Trade Representative proposes 10% as the rate of additional duties. Countries potentially subject to the 10% additional tariff include, Canada, European Union, Mexico, and the United Kingdom. For all other economies, the Trade Representative proposes 12.5% as the rate of additional duties.” The USTR is seeking public comments on the proposed actions by July 6, 2026, and a hearing on the matter will be held on July 7, 2026. Moreover, the §122 tariffs are set to expire in July.5
Jamieson Greer of the USTR indicated that the new proposed tariffs on the above-referenced 60 economies can be enforced, even while the U.S. has existing bilateral agreements.6 Even though prior agreements capped tariffs with certain trade partners, Greer believes the U.S. can honor those agreements while addressing the unfair trade practices and forced-labor concerns.
Brazil & Vietnam Are Targets for §301 Action
The USTR proposes to impose a 25% retaliatory tariff on Brazil after conducting a §301 investigation into unfair trade practices. Public comments for the retaliatory tariff are due July 1, 2026, with a public hearing scheduled for July 6, 2026. In addition, the USTR announced an investigation into Vietnam’s intellectual property protection and enforcement. Public comments for whether Vietnam’s practices should be actionable under §301 are due by July 1, 2026.
From the Courts
US Supreme Court Will Not Decide on the Tax Dispute Between Florida & California (Florida v. California, U.S., No. 22o163, review denied June 1, 2026)
The U.S. Supreme Court decided not to hear the case between Florida and California in which Florida alleged that the California Franchise Tax Board rule excluding substantial sales of fixed assets or property from the apportionment formula violates the U.S. Constitution’s commerce and due process clauses.7 Justice Clarence Thomas and Justice Samuel A. Alito, Jr. dissented from the Supreme Court’s denial of Florida’s motion for leave to file a complaint, citing Nebraska v. Colorado8 in which the two dissented, arguing that the court should have heard the case because the court “shall” have jurisdiction over disputes between the states.
Taxpayers Cryptocurrency “Staking” Activity Ruled Clear Accession to Wealth
In Paschall v. Commissioner,9 taxpayers participated in cryptocurrency staking activity and received bonus cryptocurrency rewards. The cryptocurrency rewards were not reported as taxable income on the taxpayers’ income tax return. The issue before the court was whether the cryptocurrency staking rewards were considered taxable income when received. Agreeing with the IRS, the U.S. Tax Court determined that the cryptocurrency staking rewards were clear accession to wealth realized, over which the taxpayer had dominion and control. Accordingly, the taxable income arose when the taxpayer received the cryptocurrency rewards rather than later upon the disposition of the asset.
From Treasury & the IRS
Pass-Through Guidance Anticipated for This Summer
Proposed regulations on the newly permanent pass-through deduction are anticipated to be released this summer.10 According to the Deputy Assistant Secretary for Tax Policy & Principal Deputy Chief Counsel Kevin Salinger, the oncoming guidance will address “some lingering issues regarding the manner in which UBIA — unadjusted basis immediately after acquisition — is shared among partners. The existing [section 199A] regs perhaps could do a better job in that regard.”
Released Guidance
Guidance on Excise Tax on Excess Tax-Exempt Executive Compensation: Treasury and IRS announced their intention to issue proposed regulations related to the tax on excess tax-exempt organization executive compensation under Internal Revenue Code (IRC) §4960 in Notice 2026-36. The proposed regulations will address the expanded definition of covered employees made by the OB3 and provide transition relief until further guidance is issued.
Final Regulations on Federal Independent Dispute Resolution: Final Regulations related to the operational requirements for the federal independent dispute resolution process have been released by the IRS.11 The rules enhance disclosure requirements, provide standardized communication requirements related to payment decisions, change several procedural elements, provide rules on how to group multiple claims, and allow extensions due to extenuating circumstances.
State Tax Updates
New York Budget Bill Signed
The New York budget bill S.9009‑C / A.10009‑C was signed by the governor on May 28, 2026. New York is a rolling conformity state, meaning it generally conforms to the current IRC. The provisions enacted by the new legislation decouple New York and New York City from federal tax treatment of certain provisions enacted under the OB3. For both New York and New York City purposes, the bill decouples from the special depreciation treatment for qualified production property under IRC §168(n).
Specifically, for New York purposes, the bill decouples from the immediate deduction of research and experimental (R&E) expenditures provided under IRC §174A and requires amortization for foreign and domestic R&E over a period of five years. For New York City only, the five-year amortization only applies to domestic R&E, while foreign R&E is still subject to a 15-year amortization period. In addition, for New York City purposes, the bill decouples from IRC §179 full federal expensing, and limits the IRC §179 deduction to pre-2025 amounts. Furthermore, for New York City only, the bill provides an addback modification for the increase in interest deduction allowable under IRC §163(j) starting in 2026 attributed to depreciation, amortization, and depletion in the calculation of adjusted taxable income.
Minnesota’s Tax Bill Signed on May 27, 2026
House File 2438 was signed into law on May 27, 2026. Notable provisions within the bill include updating Minnesota’s IRC conformity date to May 1, 2026, updates on conformity to certain changes in the OB3, and extending the pass-through entity tax election date. Under the framework, for corporate income tax purposes, Minnesota decouples from the immediate expensing of domestic R&E provided under IRC §174A and requires an addback of 80% of the amount of deduction claimed. The legislation does not have a correlating provision for pass-through entities; therefore, those entities should conform with the immediate expensing under IRC §174A. In addition, the new bill provides a specific calculation for determining net controlled foreign corporation income.
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“OBBBA Aids Families and Businesses, Boosts Economy, Crapo Says,” taxnotes.com, June 3, 2026.
- 2“Trump Order Directs Customs to Crack Down on Tariff Cheats (1),” news.bloombergtax.com, June 3, 2026.
- 3“Trump Cuts Tariffs on Agricultural Equipment to 15% From 25%,” news.bloombergtax.com, June 1, 2026.
- 4“US Lowers Tariffs on Farm, Industrial Equipment as Costs Soar,” news.bloombergtax.com, June 2, 2026.
- 5“Trump Begins Rebuilding His Tariff Wall, Citing Forced Labor (3),” news.bloombergtax.com, June 3, 2026.
- 6“Greer Says ‘Deal’s a Deal’ for Those With Capped US Tariffs (1),” news.bloombergtax.com, June 4, 2026.
- 7Florida v. California, U.S., No. 22o163, review denied June 1, 2026.
- 8Nebraska v. Colorado, 577 U.S. 1211(2016).
- 9Paschall v. Commissioner, T.C., No. 007382-24, June 4, 2026.
- 10“Summer Release Eyed for Guidance on Passthrough Deduction,” taxnotes.com, June 5, 2026.
- 11“IRS Issues Final Rule Revising Federal Independent Dispute Resolution Operations,” news.bloombergtax.com, June 3, 2026.