Here is a look at recent tax-related happenings on the Hill, including President Donald Trump signing a disaster tax relief extension bill into law.
Lately on the Hill
House & Senate in Session, Administration Updates Budget Estimates
Both chambers of Congress returned to Capitol Hill this week for a brief period before returning to their districts and states in the final run-up to the midterm elections. The House of Representatives is slated to end its September work period after this week, two weeks earlier than initially scheduled. The Senate plans to work through September into the first couple of days of October. No significant tax-related bills are expected to pass during this time; however, the Committee on Ways and Means is planning a markup this week on legislation, including the taxation of cryptocurrency.1
The Office of Management and Budget transmitted the Fiscal Year 2027 Mid-Session Review to Congress, providing the administration’s updated budget estimates. The report attributes higher 2027 revenue projections to technical revisions affecting individual income taxes and economic changes affecting corporate income taxes, while noting that lower projected 2026 receipts are partly attributable to revised expectations for customs duty collections. Notably absent from the estimates are projections related to the annual deficit, which is expected to surpass $2 trillion dollars.2
Disaster Tax Relief Extension Bill Signed Into Law
Trump has signed the Doug LaMalfa Federal Disaster Tax Relief Certainty Act (H.R. 5366) , which extends disaster relief provisions through December 31, 2026. The legislation allows taxpayers affected by qualified disasters occurring after July 4, 2025 and before January 1, 2027 to continue benefiting from enhanced casualty loss rules, including the ability to claim certain disaster losses without meeting the normal 10% of adjusted gross income (AGI) threshold and to add qualified disaster losses to the standard deduction.
Trump Expands Canada Trade Restrictions
The White House issued five proclamations targeting Canada over alleged discrimination against U.S. alcoholic beverages, dairy products, and motor vehicles. The actions build on prior proclamations that imposed additional 50% duties on certain Canadian products effective August 22, 2026 and modify the scope of products subject to those duties beginning September 15, 2026. For products remaining subject to the tariffs, the administration retained the 50% duty rate, while also announcing that certain Canadian alcoholic beverages, dairy products, and motor vehicles and parts identified in the proclamations’ annexes will be banned from importation into the U.S. effective September 29, 2026.
From the Courts
Court Addresses BBA Limitations Period
In Katanga Properties, LLC v. Commissioner,3 the U.S. Tax Court held that a Notice of Final Partnership Adjustment issued under the Bipartisan Budget Act (BBA) centralized partnership audit regime was timely because an agreed extension of the Internal Revenue Code (IRC) Section 6235 limitations period extended the deadline for making partnership adjustments through May 30, 2025. The court rejected the partnership’s argument that the IRS was limited to the 330-day period following issuance of the Notice of Proposed Partnership Adjustment, concluding instead that IRC §6235 permits adjustments through the latest applicable limitations period. The decision underscores that partnerships subject to the BBA audit regime may remain exposed to IRS adjustments beyond the normal 330-day period when they execute statute extension agreements during an examination.
From Treasury & the IRS
OIRA Receives Scholarship Tax Credit Proposed Regs
The Office of Information and Regulatory Affairs (OIRA) will review proposed regulations concerning the new tax credit for contributions by individuals to scholarship-granting organizations as enacted under the One Big Beautiful Bill Act (OB3). The rules will implement IRC §25F, providing guidance on key issues for such organizations and participating states, including eligibility, compliance, record-keeping, and information reporting.
CAP Application Period Opens
The IRS announced applications for the 2027 Compliance Assurance Process (CAP) are open through October 30, 2026, with acceptance decisions expected in February 2027. The CAP program allows eligible large corporate taxpayers to resolve tax issues with the IRS in real time before returns are filed, providing greater tax certainty and improving compliance.
Released Guidance
Foreign Tax Credit and Section 250 Deduction: Proposed regulations (REG-117273-25) would implement new IRC §904(b)(5) rules added by the OB3, which modify how deductions are allocated to foreign source IRC §951A category income for foreign tax credit limitation purposes. The proposed regulations also provide guidance on changes to IRC §250(b)(3) affecting the calculation of deduction eligible income and foreign-derived deduction eligible income (FDDEI). The proposed rules generally apply to tax years beginning after December 31, 2025, and taxpayers may rely on them before final regulations are issued if applied consistently. For more information, read our FORsights™ article, “Sections 250 and 904 Proposed Regulations: Allocation and Apportionment.”
Qualified Opportunity Zones: Proposed regulations (REG-116506-25) provide new reporting and disclosure requirements for Qualified Opportunity Funds and Qualified Opportunity Zone Businesses, including annual information returns, investor statements, and information-sharing requirements between funds and portfolio businesses. The proposal would also establish penalties for failures to file required information returns or furnish required statements and would update Form 8996 reporting obligations for Qualified Opportunity Funds. The proposed rules generally would apply beginning on the date the final regulations are published.
Clean Fuel Production Credit: Notice 2026-53 provides the calendar year 2026 emissions rate table for the IRC §45Z clean fuel production credit and guidance on recent OB3 changes. The guidance is effective September 8, 2026. For additional information, see our FORsights article, “Section 45Z Clean Fuel Credit Guidance: What Notice 2026-53 Means for Producers.”
OECD GloBE Information Return: The Organisation for Economic Co-operation and Development (OECD) released an updated GloBE Information Return that incorporates the Pillar Two simplifications agreed to in the January 2026 Side-by-Side Package. The revised return must be used for GloBE Information Returns relating to fiscal years beginning on or after December 31, 2025.
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.