Here’s a look at recent tax-related happenings on the Hill, including recent executive orders issued by President Donald Trump and lawmakers’ efforts to increase revenues.
Lately on the Hill
On January 20, Trump was inaugurated for his second term as president of the United States. Below is an overview of the executive orders issued during his first week in office that may impact the U.S. tax landscape1:
- Regulatory Freeze Pending Review: This order mandates that all executive departments and agencies refrain from proposing or issuing any new rules until they have been reviewed and approved by a department or agency head appointed by the president. In addition, any rules that have been sent but not yet published in the Federal Register must be immediately withdrawn.
- Hiring Freeze: This order imposes a hiring freeze on federal employees across the executive branch. The freeze will expire after 90 days for all agencies, except for the IRS, where it will remain in effect until the secretary of the Treasury determines that lifting it is in the national interest.
- America First Trade Policy: This order calls for an investigation into the causes of trade deficits, including details of economic and national security implications. It also requests appropriate measures, such as global tariffs, to remedy identified deficits and the establishment of an External Revenue Service, among other measures.
- Unleashing American Energy: This order includes provisions that may eliminate clean energy investment tax credits through the revocation of the Inflation Reduction Act (IRA).
- The Organization for Economic Co-Operation and Development (OECD) Global Tax Deal (Global Tax Deal): This order establishes a policy under which the Global Tax Deal will have no force and effect in the United States. It also authorizes the U.S. Department of the Treasury to develop options to address foreign countries that enact tax laws that are extraterritorial in nature, disproportionately impact U.S. companies, or affect income tax treaties. Review the latest insights from Forvis Mazars in this FORsights™ article, “The United States Postures on OECD’s Global Tax Regime.”.
Balancing the Budget
To pass an extension of the various tax benefits contained in the Tax Cuts and Jobs Act (TCJA), lawmakers are exploring ways to increase revenues.
The Congressional Budget Office projects the federal deficit to amount to $1.9 trillion in its most recent report, growing to $2.7 trillion by 2035. Federal debt is expected to rise from 100% of gross domestic product (GDP) in the current year to 118% by 2035, driven by increases to mandatory spending and swelling interest costs.
The House Ways and Means Committee is focused on manufacturing, citing a new study in an article released this week titled “The Golden Age of American Manufacturing Starts with the Extension of the Trump Tax Cuts.” The study2 considered nine tax provisions of the TCJA that have already expired, phased out, or are set to do so within the next tax year. It found that the expiration of the TCJA tax policies could disrupt approximately 5.9 million U.S. jobs and put $1.1 trillion of U.S. GDP at risk. Ways & Means Committee members held a Members Day hearing on January 22 to hear testimony on key tax issues. During the hearing, a variety of topics were brought up, primarily the impact of extending provisions of the TCJA and preserving existing clean energy tax credits.
The House Budget Committee distributed a list3 of various cost-cutting measures that may be referenced to offset an extension of the TCJA tax policies. The largest money-saving provisions under consideration are:
- Repeal of the green energy tax credits established by the IRA
- Repeal of the SALT deduction
- Elimination of the home mortgage interest deduction
- Introduction of a new destination-based tax, imposing a tax on goods where they are consumed rather than produced
- A 10% tariff on all imports
- Establishment of a Medicaid per capital cap
The report also recognized that policies such as no tax on overtime and a lowered corporate income tax rate could result in increased costs to the U.S. government of approximately $750 billion and $522 billion, respectively, over a 10-year period.
The Judicial Report
Updates on the Corporate Transparency Act (CTA)
On January 23, the U.S. Supreme Court stayed the injunction originating in the case of Texas Top Cop Shop, Inc. v. McHenry that would block enforcement of the CTA. Previously, the U.S. District Court for the Eastern District of Texas issued a nationwide injunction on December 3, which was subsequently lifted by the U.S. Court of Appeals for the Fifth Circuit on December 23, only to be reinstated on December 27. The Supreme Court’s move to stay the injunction returns the argument to the U.S. Court of Appeals for the Fifth Circuit, which is scheduled to hear arguments on March 25.
Notwithstanding, the most recent Financial Crimes Enforcement Network guidance indicates that companies are not subject to liability if they fail to file required information due to a separate nationwide injunction in the case of Smith v. U.S. Department of the Treasury. Therefore, companies are not currently required to file beneficial ownership information but may continue to voluntarily submit reports. For the latest insight from Forvis Mazars on recent developments concerning the CTA, see “Supreme Court Upholds Corporate Transparency Act.”
From the Treasury & IRS
The IRS concluded in AM 2025-001 that it has the authority to make periodic adjustments to payments of related parties under the arm’s-length standard and that a taxpayer cannot overcome the adjustment by invoking the general arm’s-length standard or best-method rule, provided specific exceptions in the Section 482 regulations do not apply.
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.
- 1This list includes executive orders that may have a direct impact on U.S. tax policy. Other provisions that may indirectly impact taxpayers may not be included in this list.
- 2Economic impacts of the expiration of tax policies that encourage manufacturing in the United States, prepared on behalf of the National Association of Manufacturers, January 2025.
- 3Reconciliation Menu by House Budget Committee, www.politico.com.