Here’s a look at recent tax-related happenings on the Hill, including a nomination for assistant secretary of tax policy and the signing of the American Relief Act, 2025, which delayed a government shutdown.
Lately on the Hill
President-elect Donald Trump nominated Ken Kies to serve as assistant secretary of tax policy. It is likely the administration will push for a single reconciliatory bill early this year containing legislation on tax policy, border security, and extending or eliminating the debt ceiling.
American Relief Act, 2025
On December 21, the American Relief Act, 2025 was signed into law, delaying a government shutdown until March 14, 2025. The act also served to extend the 2018 Farm Bill through September 2025 and reserved up to $100 billion in funding for federal disaster assistance programs.
According to the Congressional Budget Office (CBO) report released on December 20, the bill also rescinds $20 billion in funding for the IRS, which is expected to give rise to a $100 billion loss in revenue raised over the following 10-year period. The $20 billion was part of an initial $80 billion that was reserved by the Inflation Reduction Act of 2022 (IRA) to improve technology, customer service, and tax law enforcement in the IRS.
Recently, the IRS announced in a news release that $4.7 billion had been recovered from U.S. taxpayers as part of the new initiatives served by funding from the IRA.
The Judicial Report
Latest on the Corporate Transparency Act
The Fifth Circuit Court of Appeals reinstated a lower court’s injunction blocking enforcement of the Corporate Transparency Act in its latest order, with arguments scheduled to be heard in March of this year. The latest announcement by the Financial Crimes Enforcement Network (FinCEN) for companies required to file beneficial ownership information (BOI) (following the announcement of extension of time to file reports) states in part that companies that do not file BOI information while the injunction is in place are not subject to liability; however, companies may continue to file reports of their own volition.
From the Treasury & IRS
The IRS released Final Regulations (T.D. 10017) containing rules regarding supervisory approval of penalties. The final regulations adopt the April 2023 proposed regulations issued under Section 6765(b) with minor modifications.
The IRS issued final regulations (T.D. 10018) along with proposed regulations (REG-134420-10) to modify reporting under the consolidated return rules of §1502. The proposed regulations clarify treatment under §357 of liabilities in a §351 tax-deferred exchange between members of a consolidated group, stating that such assumption of the liabilities does not reduce the transferor’s basis in the stock transferred.
Final Regulations (T.D. 10020) combine existing guidance for taxpayers when determining whether state and local tax-exempt bonds are considered retired for federal income tax purposes.
The IRS issued final regulations (T.D. 10021) providing guidance for taxpayers reporting transactions with digital assets. The final regulations are limited to decentralized finance (DeFi) transactions and will be implemented over several years, applying to sales of digital assets occurring on or after January 1, 2027. Notice 2025-3 provides transitional relief from penalties and Notice 2025-7 provides temporary relief for taxpayers identifying digital assets that are in the custody of a broker.
The IRS released final regulations (T.D. 10023) that provide guidance for taxpayers claiming a tax credit for production and investment in clean hydrogen under §45V, explaining how to properly determine life cycle greenhouse emissions and how energy attribute certificates are considered. Click here to read more about the energy production tax credits available to taxpayers under §45.
The IRS issued proposed regulations (REG-116610-20) to apply Circular 230 rules to all tax professionals who practice before the IRS. Previously, the Circular 230 rules were limited to attorneys, CPAs, enrolled agents, and other types of practitioners explicitly listed therein. In addition, the proposed regulations eliminate the rules regarding the charging of contingent fees for preparations of income tax returns and claims of tax refunds, instead labeling the conduct as disreputable and subject to potential sanctions.
The IRS has issued proposed regulations (REG-115560-23) under the §5000D excise tax on sales of any drug defined in §1192(d) of the Social Security Act that is manufactured or produced in the U.S. or entered into the U.S. for consumption, use, or warehousing. Final Regulations (T.D. 10003) provide guidance for taxpayers reporting liability for the excise tax. Revenue Procedure 2025-9 provides the safe harbor percentage method that manufacturers, producers, or importers of designated drugs may rely upon when calculating applicable sales until the regulations are finalized or other guidance is issued.
The IRS corrected final regulations (T.D. 10012) to exclude certain unincorporated organizations owned in whole or in part by applicable entities from application of the partnership tax rules.
The IRS corrected proposed regulations (REG-112129-23) to clarify nuances around calculating certain book-to-tax differences in property for companies subject to the corporate alternative minimum tax.
In Notice 2025-04, the IRS provided that U.S. companies may rely on the Organisation for Economic Co-operation and Development’s (OECD) amount B transfer pricing simplification rules. The OECD issued an updated report in February 2024 on reporting for routine marketing and distribution transactions for tangible goods (amount B). The OECD has published a Pricing Automation Tool to assist companies applying a new transfer pricing method.1
While Notice 2025-05 contained standard mileage rates for the 2025 tax year, the IRS also announced (IR-2024-312) optional standard mileage rates for calculating deductible expenses incurred in operating a vehicle for business, charitable, medical, or moving purposes. The optional rate may be used instead of tracking the actual associated costs.
In Announcement 2025-2, the IRS expressed the intention to enforce proposed regulations on required minimum distributions of §401(a)(9) in final regulations that will apply beginning calendar year 2026.
In Announcement 2025-5, the U.S. Department of the Treasury suspended Article III, paragraph 1(g) of the Income Tax Treaty between the U.S. and the Union of Soviet Socialist Republics as it relates to the Republic of Belarus, following action by Belarus to suspend the provision earlier in 2024. Subparagraph 1(g) of Article III incorporates interest on credits, loans, and income related to other forms of indebtedness between the U.S. and Belarus. The suspension is effective December 17, 2024 through December 31, 2026, or until agreed upon by both governments.
The IRS announced (IR-2024-314) that it will issue the 2021 Recovery Rebate Credit to up to 1 million taxpayers who did not previously claim the credit.
The IRS announced that designated officials of C corporations may now use the Business Tax Account (BTA), an online self-service tool, on behalf of their corporation. The BTA allows businesses to view their tax balances, make payments, and access transcripts online.
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.
- 1https://www.oecd.org/en/topics/sub-issues/transfer-pricing/pillar-one-amount-b.html#pricing-automation-tool.