Here is a look at recent tax-related happenings on the Hill, including bipartisan support for a film tax incentive.
Lately on the Hill
Congress Passes CR, House Scales Back September Schedule
Congress approved a continuing resolution (H.R. 6500) that maintains current funding for the federal government through December 11, 2026, avoiding a partial government shutdown on October 1. The measure passed the House by a 370-to-48 vote after the Senate passed the measure in August by a 90-to-6 vote. President Donald Trump subsequently signed the bill into law.
Following passage of the continuing resolution, House Republican leaders canceled legislative work during the last two weeks of September. After a weeklong Labor Day recess, the House will return the week of September 14, before taking additional time in its districts ahead of the November 3 midterm elections.1
Trump’s Film Tax Incentive Gains Bipartisan Support
Trump called2 on Congress to enact a federal production incentive for the film and television industry, arguing that tax incentives could help bring production jobs back to the U.S. amid growing competition from foreign countries.
The proposal has drawn bipartisan support on Capitol Hill, with lawmakers pointing to potential legislation such as the CREATE Act (H.R. 4840), which would restore and expand the expired Internal Revenue Code (IRC) Section 181 deduction for film, television, and theater productions.3 While the White House has not released specific legislative details, supporters view the effort as an opportunity to encourage domestic production and employment through federal tax incentives.
Senator Says IRS Working on Automatic Trump Account Enrollment
Sen. Ted Cruz (R-TX) said the U.S. Department of the Treasury and the IRS are working to implement automatic enrollment for eligible children in Trump accounts, emphasizing that Congress intended the program to automatically enroll the roughly 70 million children under age 18 when the provision was enacted as part of the One Big Beautiful Bill Act.4
Trump Administration Eyes Expanded Semiconductor Tariffs
Commerce Secretary Howard Lutnick said the Trump administration is considering a new round of tariffs on semiconductors that could extend beyond chips to products containing them, including data center servers and consumer electronics.5
Lutnick indicated the tariffs would likely be paired with relief for companies that invest in U.S. manufacturing, saying the administration intends to reward domestic production while imposing higher costs on imports.
From the Courts
NIIT Foreign Tax Credit Claims Under U.S. Tax Treaties Rejected
In two companion decisions6 involving U.S. citizens residing in Canada and France, the U.S. Court of Appeals for the Federal Circuit held that foreign income taxes paid to those countries cannot be used to offset the U.S. net investment income tax (NIIT) under the applicable bilateral tax treaties. The court concluded that although the treaties are intended to mitigate double taxation, their foreign tax credit provisions remain subject to IRC limitations, and it does not permit foreign tax credits against the NIIT.
The decisions reverse favorable taxpayer rulings from the U.S. Court of Federal Claims and align with prior decisions holding that foreign tax credits generally may not be applied against the NIIT absent specific statutory authorization.
From Treasury & the IRS
TIGTA Reports Decline in IRS Enforcement Activity
A new report from the Treasury Inspector General for Tax Administration (TIGTA) found that while taxpayers paid a record $5.3 trillion in tax revenue during fiscal year (FY) 2025, IRS enforcement revenue declined from a historic high of $98.7 billion in FY 2024 to $93.8 billion, driven largely by a 35% drop in examination-related revenue. TIGTA attributed much of the decline to workforce reductions that cut IRS Examination and Collection staffing by approximately 27% from FY 2024 to FY 2025.
At the same time, collection revenue increased by 17% from FY 2023 to FY 2025 as the IRS resumed automated collection notices that had been intermittently paused during the COVID-19 pandemic.
Released Guidance
Vehicle Loan Interest Deduction: Final regulations (T.D. 10054) implement the deduction for up to $10,000 of qualified passenger vehicle loan interest, providing detailed rules on which vehicles, loans, and taxpayers qualify. The final regulations generally follow the proposed regulations but do add some clarifications, including expanded qualifying vehicle related costs, first lien financing, refinancing, and relief for dealer demonstrator vehicles under the original use requirement. The regulations also finalize new reporting requirements, requiring businesses that receive $600 or more of interest on qualifying vehicle loans to file Form 1098-VLI and furnish statements to borrowers.
Racial Nondiscrimination for Private Schools: Proposed regulations (REG-119986-25) would deny IRC §501(c)(3) tax-exempt status to private schools that discriminate based on race, color, or national or ethnic origin in admissions, scholarships, athletics, or other school-administered programs. The proposed rules would apply to taxable years beginning after May 31, 2027.
Accounting Method Change Procedures: Revenue Procedure 2026-32 modifies the automatic accounting method change procedures to reflect the One Big Beautiful Bill Act’s changes to research expenditures under IRC §§ 174 and 174A and residential construction contracts under §460. The guidance expands and extends automatic consent procedures, including waiver of certain eligibility rules through tax years beginning before 2028, and provides new automatic accounting method changes for residential construction contracts entered into after July 4, 2025. The revenue procedure generally applies to Forms 3115 filed after September 4, 2026, and includes transition relief and special filing rules for taxpayers with pending or recently filed method change requests.
Mitigation Rules for Double Research and Work Opportunity Credit: In Chief Counsel Advice 202634013, the IRS concluded that the mitigation provision under IRC §§1131–1314 may allow the agency to reopen an otherwise closed tax year to prevent a taxpayer from receiving a double benefit from the research credit and work opportunity credit, provided the statutory mitigation requirements are satisfied. The advice notes that once a qualifying determination occurs, such as the disposition of a refund claim or a closing agreement, the IRS generally has one year from the date of that determination to assess and collect any resulting deficiency.
CBP Supply Chain Transparency: Proposed regulations (RIN 1685-AA47) from U.S. Customs and Border Protection (CBP) seek comments on new import disclosure requirements that could require importers to provide greater information about parties involved, enhanced supply chain tracing solutions, and foreign export documentation to help detect customs fraud.
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“House GOP cuts 2 weeks from its schedule,” thehill.com, September 3, 2026.
- 2Donald J. Trump, truthsocial.com, August 31, 2026.
- 3“Lawmakers Laud Trump Support for Film Tax Credits: BGOV Tax,” news.bloombergtax.com, September 2, 2026.
- 4“Auto Enrollment in Trump Accounts Being Worked On, Cruz Says,” taxnotes.com, September 1, 2026.
- 5“Trump to Levy More Chip Tariffs, Exemptions for US Manufacturing,” news.bloombergtax.com, September 2, 2026.
- 6Estate of Bruyea v. United States, Fed. Cir., No. 25-1563, 8/31/2026; Christensen v. United States, Fed. Cir., No. 24-01284, 8/31/2026.