Here is a look at recent tax-related happenings on the Hill, including an acceleration of tariff refunds.
Lately on the Hill
Third Reconciliation Effort Moves Forward Without Tax Provisions
House Republicans last week advanced a third budget reconciliation bill following discussions at the White House over the party’s legislative priorities.1 The fiscal year 2027 budget resolution approved by the House Budget Committee on a party-line vote provides reconciliation instructions to the Agriculture, Armed Services, Intelligence, and House Administration committees, allowing them to advance legislation focused on defense, election security, and other spending priorities.2 Notably absent from the package are instructions for the House Ways and Means Committee, meaning the bill does not provide a path for additional tax legislation as drafted.
Tariff Refunds Accelerate as Fiscal Impact Grows
The financial consequences of the invalidation of International Emergency Economic Powers Act (IEEPA)-based tariffs are becoming increasingly apparent. The U.S. Department of the Treasury reported that it paid approximately $49 billion in tariff refunds during June, following nearly $22 billion in refunds issued in May, as importers continue to receive repayments of duties previously collected under tariffs later determined to be unlawful.3 The surge in refunds contributed to a widening federal budget deficit, with Treasury reporting a $1.37 trillion deficit through the first nine months of fiscal year 2026, reversing a trend of recent deficit improvement.
CBP Releases Forced Labor Compliance Expectations for Importers
U.S. Customs and Border Protection (CBP) has released comprehensive new operational guidance outlining how importers can prepare for and respond to forced labor enforcement actions, currently pursued by the White House, under the Uyghur Forced Labor Prevention Act, the Countering America’s Adversaries Through Sanctions Act, and other existing forced labor authorities. The guidance emphasizes that importers must exercise “reasonable care” by maintaining detailed supply chain tracing documentation, conducting due diligence reviews, and verifying the origin of goods and raw materials before importation.
USTR Finalizes Section 301 Tariffs on Brazil
The U.S. Trade Representative (USTR) announced final action under §301 of the Trade Act of 1974, imposing a 25% tariff on certain Brazilian imports following a yearlong investigation into a range of Brazilian trade practices. USTR concluded that measures involving digital trade, electronic payment services, tariff preferences, anti-corruption enforcement, and others unfairly burden U.S. commerce, prompting the administration to move forward with tariffs after negotiations failed to resolve the concerns. The tariffs generally apply to all goods of Brazil, exempting certain goods including semiconductor articles, fertilizers, pharmaceuticals, and certain agricultural products.
From the Courts
Former IRS Chief Counsel Nominated to Tax Court
President Donald Trump has nominated Andrew A. De Mello, a former acting IRS chief counsel, to fill the U.S. Tax Court’s vacancy. If confirmed, De Mello would become the first Tax Court judge nominated during Trump’s second term and would restore the court to a full panel of 19 voting judges.4
Foreign Dividend Deduction Limits Rejected
In Siemens Medical Solutions USA, Inc. v. Commissioner,5 the U.S. Tax Court held that Treasury’s extraordinary disposition rules unlawfully restricted the 100% dividends received deduction under Internal Revenue Code (IRC) §245A. The court concluded that the temporary regulations conflicted with the plain language of the Tax Cuts and Jobs Act by denying a portion of deduction Congress expressly allowed, reaffirming that Treasury cannot use regulations to override clear statutory text. The decision is another significant post-Loper Bright ruling benefiting taxpayers challenging Treasury regulations.
Progress Highlighted on IEEPA Tariff Refund Program
In Euro-Notions Florida, Inc. v. United States,6 the U.S. Court of International Trade reviewed a status update from CBP regarding the administration of refunds for duties collected under the IEEPA. CBP reported that approximately $121.75 billion in potential and certified refunds have been accepted through its Consolidated Administration and Processing of Entries (CAPE) system, with approximately $86.3 billion already certified and transmitted to Treasury for disbursement. The court also discussed CAPE enhancements, including procedures to reliquidate certain finally liquidated entries and functionality for entries with open protests. The developments could affect thousands of pending refund claims.
From Treasury & the IRS
IRS CEO Bisignano to Lead Trump Accounts Expansion
Treasury announced that Frank Bisignano will lead the next phase of implementing and expanding Trump Accounts. Treasury said more than 6.5 million families have already enrolled, including more than 1.5 million children eligible for the program’s $1,000 pilot contribution.
Released Guidance
August 2026 AFR: Revenue Ruling 2026-13 provides the August 2026 applicable federal rates (AFR), adjusted AFR, adjusted federal long-term rate and long-term tax-exempt rate, percentages for determining the low-income housing credit, and the federal rate for determining the present value of an annuity, and interest for life or for a term of years, or a remainder or reversionary interest.
Update to Rates and Yield Curves: Notice 2026-44 provides the corporate bond monthly yield curve and corresponding spot segment rates derived from June 2026 data, the 24‑month average corporate bond segment rates applicable for July 2026, and the 30‑year Treasury securities interest rates and weighted average rates.
Partnership Conditional DRO: In a Chief Counsel memorandum, the IRS concluded that a limited partner’s obligation to restore a deficit capital account only when demanded by the general partner is a conditional obligation and, therefore, does not qualify as a deficit restoration obligation (DRO) under partnership tax regulations. Because the partnership agreement did not require the partner to restore the deficit upon liquidation and provided no meaningful recourse beyond potential distribution withholding, the IRS determined that the partner did not bear the economic risk of loss for the partnership liability and the obligation is disregarded for IRC §752 liability allocation purposes. The memorandum is important because it reinforces that only unconditional DROs can directly affect a partner’s share of debt and tax basis.
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 “Republicans to Visit White House as GOP Pushes Third Budget Bill,” news.bloombergtax.com, July 14, 2026.
- 2 “House Leaders Leave Tax Out of Third Reconciliation Plan,” taxnotes.com, July 16, 2026.
- 3 “Tariff Refunds Trigger Widening in US Budget Gap for 2026,” news.bloombergtax.com, July 13, 2026.
- 4 “Trump Nominates Former IRS Lawyer as Tax Court Judge,” taxnotes.com, July 15, 2026.
- 5 Siemens Medical Solutions USA, Inc. v. Commissioner, T.C., No. 11432-25, July 15, 2026.
- 6 Euro-Notions Florida, Inc. v. United States, CIT No. 25-00595, July 15, 2026.