Legislative Lowdown
House Passes Budget Resolution While Senate Republicans Work to Find Agreement: On Feb. 25, the House voted 217-215 to pass its fiscal year (FY) 2025 budget resolution (H.Con.Res. 14). Rep. Thomas Massie (R-KY) was the sole Republican to oppose the measure after Republican leadership secured support from several remaining holdouts in the lead up to the vote. The resolution allows the Ways and Means Committee to increase the deficit by up to $4.5 trillion and anticipates that other committees will achieve $2 trillion in spending cuts. The resolution also contains a $4 trillion increase in the debt ceiling.
Attention now shifts to discussions between House and Senate Republican leadership, as the two chambers need to settle on a single, unified resolution to draft and advance subsequent budget reconciliation legislation. However, Senate Republicans have stated that changes are needed to the House resolution, with Senate Majority Leader John Thune (R-SD) telling Republican offices that there will be meetings this week to move towards a mutual agreement, with particular emphasis on the Senate’s view that the House resolution does not provide sufficient space for a tax package. A key focus for Senate leaders will be an addition to the resolution that will allow for a permanent extension of the tax provisions in the Tax Cuts and Jobs Act (Pub. L. 115-97) through the use of a “current policy baseline,” an untested budgetary maneuver that may allow for the extension of expiring tax provisions without offsets. While Speaker Mike Johnson (R-LA) has endorsed the concept, it is unclear whether House fiscal hawks will be open to it without additional spending cuts, which are already complicating Senate support. Discussions between the two chambers are expected to continue throughout the month, with leaders aiming to arrive at an agreed FY 2025 budget resolution after the March recess.
Republican Leadership Pushes for a ‘Clean’ CR as Shutdown Looms: House and Senate Republicans are continuing to negotiate on government funding and the passage of a continuing resolution (CR) as the March 14 deadline to avoid a government shutdown draws closer. House Speaker Mike Johnson (R-LA) has called for a “clean” CR that maintains funding at current levels and codifies cuts made by the Department of Government Efficiency (DOGE) at a later date. While President Trump endorsed the strategy in a post on Truth Social on Feb. 27, some House Republicans have expressed opposition to a clean CR, citing fiscal sustainability concerns. The White House has also added a list of additional spending provisions (aka “anomalies”) to the discussions. Further, House Democrats have remained noncommittal, with Minority Leader Hakeem Jeffries (D-NY) saying that there has been “zero outreach” from Republicans. Democrats have also asked for the bill to include provisions that would limit President Trump’s discretion with respect to congressionally approved funding, effectively mandating that appropriated funds be spent, a provision opposed by Republicans.
Bessent to Meet with Congressional Republicans Weekly to Discuss Tax Issues: Treasury Secretary Scott Bessent reportedly will meet with the congressional Republican tax leadership—including Senate Majority Leader John Thune (R-SD), House Speaker Mike Johnson (R-LA), Senate Finance Committee Chairman Mike Crapo (R-ID) and House Ways and Means Committee Chairman Jason Smith (R-MO)—on a weekly basis. National Economic Council Chairman Kevin Hassett is also expected to join the discussions. The meetings will be used to discuss how to best enact President Trump’s tax policy priorities and seek to reconcile the difference in strategy between the House and Senate.
Ways and Means Committee Marks Up Disaster Relief, Cryptocurrency Legislation: On Feb. 26, the House Ways and Means Committee completed a markup of the Disaster Related Extension of Deadlines Act (H.R. 1491) and the Filing Relief for Natural Disasters Act (H.R. 517), as well as Congressional Review Act (CRA) legislation disapproving the rule promulgated by the Treasury Department and the Internal Revenue Service (IRS) related to “Gross Proceeds Reporting by Brokers that Regularly Provide Services Effectuating Digital Asset Sales” (H.J.Res. 25).
The two disaster-related bills seek to make it easier for taxpayers affected by natural disasters to receive tax-filing extensions by allowing for additional time to claim refunds, as well as enabling disasters declared by state governors to qualify for relief as well as a filing extension. It also extends the mandatory filing extension for a federally declared disaster from 60 days to 120 days. Both bills were reported from the committee with unanimous bipartisan support.
The CRA resolution reverses a Biden administration regulation issued in December 2024 concerning reporting requirements for decentralized finance (DeFi) brokers engaged in cryptocurrency transactions. Under the rule, DeFi brokers would need to file IRS Form 1099-DAs for all digital asset transactions conducted, putting them under the same requirements as securities brokers and centralized digital asset trading platforms. Republicans on the committee argued that the rule exceeds the statutory authority of the Treasury Department and IRS, creates unnecessary burdens for both brokers and the IRS with respect to filing and processing such forms, and unnecessarily constrains the digital asset industry. Democrats argued that the rule is necessary to guard against crypto-related fraud and criminal activity and that the Treasury Department should have oversight authority on DeFi platforms. The joint resolution reversing the regulations passed by a vote of 26-16 along party lines.
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Melanie Krause Takes Over as IRS Acting Commissioner: After Internal Revenue Service (IRS) Acting Commissioner Douglas O’Donnell announced his retirement on Feb. 25, Treasury Secretary Scott Bessent announced that IRS Chief Operating Officer Melanie Krause would serve as acting commissioner. Krause officially became commissioner upon O’Donnell’s retirement on Feb. 28. Krause began her career at the IRS in October 2021 as the chief data and analytics officer, holding this position until April 2024 when she was promoted to chief operating officer. She also served as acting deputy commissioner for services and enforcement from November 2022 to March 2023. Prior to her IRS service, she held roles at the Government Accountability Office and the Department of Veterans Affairs Office of Inspector General.
Trump Administration to Terminate Leases of Offices with TACs: On Feb. 25, a letter from the U.S. General Services Administration was circulated that detailed plans to terminate “all soft-term leases” on 128 offices hosting Taxpayer Assistance Centers (TACs) and five call sites as part of the Trump administration’s plans to cut costs and reduce the workforce of the federal government. The letter clarified that “public-facing” leases would be examined on a case-by-case basis to determine whether to terminate them, though it is unclear what differentiates a public-facing lease from a non-public-facing one, and whether shuttered TACs will be relocated or moved online. The IRS later clarified that TACs would remain open through the 2025 tax-filing season.
The closure of TACs will likely affect elderly taxpayers and identity theft victims, who often need to visit TACs for assistance on filing their tax returns. The closure also reverses course on Biden administration initiatives to use Inflation Reduction Act (Pub. L. 117-169) funding to improve taxpayer service by opening or reopening more than 50 TACs between 2022 and 2024.
IRS Rejects DHS Request for Addresses of Suspected Undocumented Immigrants: On Feb. 27, the Department of Homeland Security (DHS) reportedly sent a memo to the Internal Revenue Service (IRS) asking the agency to disclose the home addresses, phone numbers and email addresses of about 700,000 people suspected of living in the United States illegally as part of the Trump administration’s efforts to curb illegal immigration and deport undocumented immigrants. Then-IRS Acting Commissioner Douglas O’Donnell rejected DHS’ request, but after his resignation on Feb. 28, the new IRS Acting Commissioner Melanie Krause indicated that she was open to complying with DHS’ request, but no action seemed to have been taken as of Friday night. The DHS memo also requested IRS to use the IRS auditing and criminal investigation personnel to investigate businesses suspected of hiring undocumented immigrants and other immigrants who do not have U.S. work authorization. Under Internal Revenue Code Section 6103, taxpayer data is considered confidential and can only be shared by the IRS when collaborating with the IRS Criminal Investigations Division or external law enforcement agencies in conducting investigations.
At a Glance
Corporate Transparency Act Filing Deadline Delayed as Treasury Suggests Limiting Scope: On Feb. 27, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced that no fines or penalties would be imposed on companies required to report beneficial ownership under the Corporate Transparency Act (CTA), indefinitely delaying the current March 21 filing deadline. FinCEN indicated that a new filing deadline would be announced by March 21 as part of a new interim final rule that will include a request for public comment on potential revisions to existing beneficial ownership reporting requirements. In a March 2 press release, the Treasury Department expanded on FinCEN’s announcement indicating that penalties will not be enforced on U.S. citizens or domestic reporting companies or beneficial owners even after the forthcoming rule changes take effect, suggesting that the updated rules will only apply to foreign corporations and their beneficial owners.
DOGE Executive Order Bars Travel for Treasury Department and IRS Officials: On Feb. 26, President Trump signed an executive order (EO) titled “Implementing the President’s ‘Department of Government Efficiency’ Cost Efficiency Initiative.” The EO includes a provision instructing the head of every federal agency to work with a Department of Government Efficiency (DOGE) team lead to build a “technological system within each agency that centrally records approval for federally funded travel for conferences and other non-essential purposes,” in an effort to require agency officials to justify nonessential travel. In addition, Treasury Department and Internal Revenue Service (IRS) employees’ credit cards would be frozen for 30 days and existing travel requests are to be reviewed by a “senior accountable official” before final approval by the Treasury Office of the Assistant Secretary for Management. As a result, agency officials have reportedly canceled scheduled appearances at tax conferences, potentially affecting the agencies’ ability to disseminate important information on programs and priorities.
Fallon Introduces Bill to Repeal Certain Tax Credits for Wind Energy: On Feb. 21, Rep. Pat Fallon (R-TX) introduced the Rescinding Offshore Wind Tax Credit Act (H.R. 1462), which would disallow the Section 45Y Clean Electricity Production Credit and the Section 48E Clean Energy Investment Credit for offshore wind facilities in U.S. coastal waters or inland navigable waters. The bill is currently cosponsored by Reps. Lance Gooden (R-TX) and Brandon Gill (R-TX).
Kustoff Introduces Bill to Provide Tax Credit for Domestic Agricultural Products: On Feb. 21, Rep. David Kustoff (R-TN) introduced the Grown in America Act of 2025 (H.R. 1707), which would create a tax credit to qualifying businesses that purchase domestically produced agriculture commodities. To qualify, at least 50% of purchases must be from domestic sources, with the eligibility threshold increasing by 5% each year the credit is in effect until it reaches 85%. The value of the credit is 25%, multiplied by the ratio of U.S. to non-U.S. agriculture purchases. The legislation is bipartisan, with Reps. Jim Costa (D-CA), Mark Alford (R-MO), David Rouzer (R-NC) and Mike Carey (R-OH) as original cosponsors.
Crapo Schedules Deputy Treasury Secretary Nomination Hearing Over Democrats’ Objections: On Feb. 27, Senate Finance Committee Chairman Mike Crapo (R-ID) announced that the committee would hold a hearing to consider the nomination of Michael Faulkender to be treasury deputy secretary. Later that day, Ranking Member Ron Wyden (D-OR) and other committee Democrats released a joint statement objecting to the hearing, claiming that personnel affiliated with Special Advisor Elon Musk have “infiltrated key systems and databases within Treasury and IRS [Internal Revenue Service]” illegally, potentially compromising the security of taxpayer data and leading to its misuse. Democrats further alleged that the Trump administration has “misled Ranking Member Wyden in a letter pertaining to the Treasury Department payment systems, declined to brief the Finance Committee on the Treasury Department infiltration without citing any valid reason, and refused to answer questions pertaining to the activities of these Musk-affiliated personnel.” The statement says that Congress is not able to conduct adequate oversight over these actions and thus should not hold the hearing. It remains to be seen whether Democrats’ criticisms will lead to a delay in the process of confirming other Treasury Department and IRS nominees, including the nomination of Ken Kies to be treasury assistant secretary for tax policy.
Hearings and Events
House Ways and Means Committee
The House Ways and Means Committee has no tax hearings scheduled for this week.
Senate Finance Committee
On March 6, the Senate Finance Committee will hold a hearing to consider the nomination of Michael Faulkender to be Deputy Treasury Secretary.