Here is a look at recent tax-related happenings on the Hill, including a hearing on proposed tariffs tied to foreign forced-labor import enforcement.
Lately on the Hill
Housing Bill Becomes Law Without President’s Signature
The 21st Century ROAD to Housing Act became law without President Donald Trump’s signature after the White House did not sign or veto the bill within the constitutional 10-day window.1 The bill previously passed Congress with broad bipartisan support and includes housing-affordability provisions related to regulatory streamlining, affordable housing development support, community bank investment, manufactured housing, and limits on certain large institutional investors’ purchases of single-family homes. For prior coverage of the bill and potential tax-related implications, see our FORsights™ article, “Housing Bill Passes, With President Trump for Signature.”
Forced-Labor Tariff Hearing
The U.S. Trade Representative (USTR) held a three-day hearing on proposed tariffs tied to foreign forced-labor import enforcement.2 The proceeding follows USTR’s Section 301 investigation into whether certain trading partners failed to impose and effectively enforce forced-labor import prohibitions. USTR proposed additional tariffs of 10% or 12.5% on imports from certain economies, and stakeholders presented arguments for and against the proposed duties during the July 7 to 9 hearing.
From the Courts
Court Invalidates GILTI Disqualified Basis Rule (Keysight Technologies Inc. & Subsidiaries v. United States)
In Keysight Technologies Inc. & Subsidiaries v. United States,3 the U.S. Court of Federal Claims concluded that Congress did not authorize the U.S. Department of the Treasury to issue Treasury Regulation Section 1.951A-2(c)(5).4 The regulation generally limited deductions attributable to “disqualified basis,” which refers to certain asset basis created during the Tax Cuts and Jobs Act (TCJA) transition period that Treasury sought to exclude from depreciation or amortization deductions related to global intangible low-taxed income (GILTI). The case arose from a TCJA effective-date mismatch involving fiscal-year and calendar-year controlled foreign corporations. The court concluded that neither Treasury’s general rulemaking authority under Internal Revenue Code §7805(a), nor the specific statutory provisions governing GILTI, permitted Treasury to redefine which deductions are properly allocable to GILTI.
CIT Order Provides Update on IEEPA Tariff Refund Processing (Euro-Notions Florida, Inc. v. U.S. CBP)
A recent Court of International Trade order in Euro-Notions Florida, Inc. v. U.S. Customs and Border Protection (CBP)5 addressed the status of CBP’s Consolidated Administration and Processing of Entries (CAPE) program for International Emergency Economic Powers Act (IEEPA) duty refunds. In a related CBP declaration, CBP reported that declarations accepted for CAPE processing represent approximately $104.29 billion in anticipated IEEPA refunds, with approximately $71.06 billion completed and sent to Treasury for disbursement. The order also notes that CBP launched CAPE Phase 2 for certain entries flagged for reconciliation and is developing Phase 3 for finally liquidated entries where reliquidation has been ordered in litigation. The order suggests CBP’s refund process is continuing to move in stages, with different entry categories addressed through separate CAPE phases while litigation-driven reliquidation issues remain open.
From Treasury & the IRS
TIGTA Flags IRS Filing Season Staffing Shortfalls
A Treasury Inspector General for Tax Administration (TIGTA) interim review found that the IRS missed certain hiring goals ahead of the 2026 filing season, contributing to staffing gaps in return processing and taxpayer-service functions.6 According to the review, the IRS relied on overtime and temporary employee reassignments, reduced certain service-performance expectations, and saw inventories increase in several return-processing programs. The findings add context to ongoing congressional and administrative scrutiny of IRS resourcing and filing-season performance.
White House Reviews IRS Investment Rule for Trump Accounts
The White House’s Office of Information and Regulatory Affairs began a review of Treasury and IRS proposed regulations (RIN 1545-BS14) addressing investment eligibility for Trump Accounts, the new tax-favored savings accounts for minors.7 The proposal is expected to provide additional guidance on the types of investments eligible to be held in the accounts. The review follows the July 4 launch of the program and comes as Treasury and the IRS continue issuing guidance on Trump Account implementation. For background on Trump Accounts, see our FORsights™ article, “What Is a Trump Account & Does It Deliver Value?”
IRS Announces Automatic Penalty Relief Process
The IRS announced a new Automatic Exemption from Penalty process for eligible taxpayers with a timely filing and payment history. The process is to begin this summer and will eventually replace First Time Abate for eligible returns with original due dates on or after January 1, 2027. Eligible taxpayers will not need to request relief; if the IRS determines the taxpayer qualifies, penalties may be automatically removed if the IRS determines the taxpayer qualifies during processing for certain failure-to-file, failure-to-pay, and failure-to-deposit penalties. The new process begins with 2025 tax year returns and 2026 quarterly returns. For more information, visit the IRS’ website about the administrative penalty relief.
IRS & Security Summit Launch Tax Professional Identity Theft Series
The IRS and Security Summit partners launched the 2026 “Protect Your Clients; Protect Yourself” summer campaign, a five-week series focused on helping tax professionals protect client data and respond to evolving identity theft threats. The campaign will address emerging scams aimed at tax professionals, core security safeguards, and steps to take if a data theft occurs. The campaign coincides with the 2026 IRS Nationwide Tax Forums.
Digital Asset Industry Urges Changes to Broker Reporting Rules
Industry representatives urged Treasury and the IRS to revise proposed rules for electronic delivery of digital asset tax forms after a July 8 hearing on proposed broker reporting regulations (REG-105064-25).8 The comments focused on implementation options, including requests for flexible notice channels when brokers furnish statements electronically, a safe harbor for inadvertent deficiencies in customer consent, and delayed basis reporting while brokers continue building systems to capture and report digital asset basis information.
Officials Address Pillar Two Filing Challenges & Side-by-Side Safe Harbor
Organisation for Economic Co-operation and Development (OECD) and Treasury officials discussed Pillar Two implementation at a July 9 conference in Munich hosted by the International Chamber of Commerce, Business at OECD, and Business Europe. The discussion covered the side-by-side safe harbor, which U.S. officials described as a mechanism to reduce tax friction and establish parity rather than preferential treatment for the United States.9 OECD officials also acknowledged difficulties during the first global minimum tax filing period and said they will work with stakeholders to make compliance less burdensome as implementation continues across jurisdictions.10
Tax Policy Chief Ken Kies Set to Depart
Ken Kies, who has served as Treasury’s assistant secretary for tax policy since his Senate confirmation in 2025 and concurrently as acting IRS chief counsel, is departing both positions. During his tenure, he helped lead implementation of the One Big Beautiful Bill Act and oversaw significant tax guidance projects.11
Released Guidance
Qualified domestic trust rules: Final regulations (T.D. 10050) amend federal estate tax rules for qualified domestic trusts involving property passing to, or for the benefit of, a noncitizen spouse. The final regulations adopt the proposed August 2024 regulations with two revisions and became effective July 10. Treasury and the IRS issued final rules for a special type of trust applicable to estates of decedents passing property to or for the benefit of non-U.S. spouses.
Certain CRAT transactions listed: Final regulations (T.D. 10051) identify certain charitable remainder annuity trust (CRAT) transactions, and substantially similar arrangements, as listed transactions. The rules trigger disclosure obligations for material advisers and certain participants, while carving out limited roles such as charitable remaindermen.
Treasury and the IRS describe the structure as involving a taxpayer transferring appreciated property to a “purported” CRAT. The CRAT sells the property, and the trustee uses the sale proceeds to buy a single premium immediate annuity. The beneficiary of the trust reports payments in accordance with the annuity exclusion rules instead of the CRAT tier system. Thus, a significant amount of the gain realized when the appreciated asset is sold may avoid taxation.
Life insurance contract transfer rules: Final regulations (T.D. 10052) address transfer-for-value and reporting rules for reportable policy sales and certain transfers of interests in life insurance contracts, including transactions involving §1035 exchanges and corporate reorganizations. Effective July 9, the final regs adopt, with modifications, proposed regs (REG-108054-21) issued in May 2023.
Energy production credit inflation adjustments: Notice 2026-41 provides the 2026 inflation adjustment factors used to determine credit amounts for the §45U zero-emission nuclear power production credit, §45V clean hydrogen production credit, and §45Z clean fuel production credit.
Marginal well production credit reference price: Notice 2026-42 provides the applicable reference price for qualified natural gas production from qualified marginal wells for tax years beginning in calendar year 2026. The notice also provides the credit amount used to determine the marginal well production credit under §45I.
Taxable substances list additions: Notice 2026-43 adds two chemicals to the list of taxable substances for purposes of the Superfund chemical substance tax.
Optional standard mileage rates: Announcement 2026-11 adjusts the optional standard mileage rates for the second half of 2026 in response to rising fuel costs. The rates are used to compute deductible automobile operating costs for business, medical, and moving expense purposes and to determine substantiated reimbursement amounts.
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“Trump will let bipartisan housing bill become law without signing in protest over GOP voter ID law,” apnews.com, July 10, 2026.
- 2“Forced-Labor Hearing Begins, Paving Way for More Trump Tariffs,” bloombergtax.com, July 7, 2026.
- 3Keysight Technologies Inc. & Subsidiaries v. United States, No. 25-137 (Fed. Cl. July 2, 2026).
- 4“U.S. Court Invalidates GILTI Disqualified Basis Rule,” taxnotes.com, July 7, 2026.
- 5Euro-Notions Florida, Inc. v. U.S. Customs and Border Protection, Court No. 25-00595, ECF No. 40 (Ct. Int’l Trade July 2, 2026).
- 6“IRS Missed Staffing Goals for 2026 Filing Season,” taxnotes.com, July 7, 2026.
- 7“White House Reviews Trump Account Investments Rule (Correct),” news.bloombergtax.com, July 8, 2026.
- 8“IRS Pressed to Ease Digital Asset Broker Reporting Rules,” taxnotes.com, July 9, 2026.
- 9“U.S. Isn’t Privileged With Side-by-Side Safe Harbor, Burch Says,” taxnotes.com, July 10, 2026.
- 10“OECD Is Aware of Pillar 2 Filing Issues, Corwin Says,” taxnotes.com, July 10, 2026.
- 11“Top Treasury Tax Official, Acting IRS Lawyer Kies to Depart,” news.bloombergtax.com, July 13, 2026.