Updated: 6/9/2025
Here’s a look at recent tax-related happenings on the Hill, including the Senate starting its review of the One Big Beautiful Bill Act.
Lately on the Hill
Joint Committee on Taxation Releases Estimated Tax Revenue Effects for Reconciliation Bill
On May 20, 2025, the House Budget Committee released a report explaining the provisions contained in the One Big Beautiful Bill Act that was passed by the House on May 22, 2025. Recently, the Joint Committee on Taxation released its updated estimates for the effects of the bill. The total estimated increase in the deficit over the 10-year budget period is around $3.9 trillion.
Reconciliation Package Now in the Senate
The Senate returned from recess on Monday, June 2 and will begin its review of the One Big Beautiful Bill Act. As discussed on episode 2 of our podcast, legislative consultant Marc Gerson outlined the Senate’s approach to the bill.
Key issues that the Senate will look at include:
- Cuts to Medicaid
- IRA Green Energy Credits
- Budget Deficits
- “Big Three Issues”: Bonus Depreciation, Section 174 Capitalization, and 163(j)
U.S. Sen. Josh Hawley (R-MO) spoke out vocally against cuts to Medicaid and vowed to take a closer look at the cuts in the House bill, saying, “Republicans need to open their eyes: Our voters support social insurance programs.”1 In addition, Hawley said, “They ought to close the carried interest loophole.”2
U.S. Sen. Rand Paul (R-KY) expressed hesitation over potential increases to the federal deficit that the bill may present. He stated, “I’ll consider voting if they take the debt ceiling off of it.”3
As noted on the podcast, the House and Senate are working under different deficit impact baselines. Extensions to the Tax Cuts and Jobs Act of 2017 must be fiscally accounted for in the House but not in the Senate.
Trump Administration Reviews Corporate AMT Rules
The Trump administration announced that it will be reviewing the proposed regulations that would implement a corporate alternative minimum tax (CAMT). The proposed regulations would assess a 15% AMT on corporations with at least $1 billion in annual adjusted financial statement income (AFSI) averaged over three years for tax years beginning after December 31, 2022. The current administration has just begun its review process and will likely take a fair amount of time to release updated instructions.4 For further information, we explore the CAMT here.
Notice 2025-27 provides interim guidance pending final regulations relating to the corporate alternative minimum tax. The notice includes a provision for an optional simplified method for determining applicable corporation status and whether such corporations are subject to the tax on their adjusted financial statement income. The simplified method or “safe harbor” provides a taxpayer-friendly increase to the exempt threshold from $500 million average yearly financial statement income, according to a previously issued proposed rule (REG-112129-23), to $800 million. Furthermore, for foreign-parented groups, the threshold is increased from $50 million to $80 million.
Proposed New IRC Section Allows Retaliation Against Countries With Discriminatory Taxes
The One Big Beautiful Bill act proposed a new Internal Revenue Code (IRC) section, §899, designed to retaliate against countries with discriminatory tax policies. Section 899 increases U.S. tax rates on foreign persons resident in jurisdictions unfairly targeting the United States.5 The code section hikes tax rates 5% each year, up to 20% above the statutory rate, until the jurisdictions repeal the discriminatory taxes. Section 899 would also increase the tax rate surrounding base erosion and anti-abuse taxes (BEAT) from 10% to 12.5% and eliminate the thresholds for when BEAT applies. If enacted, this could result in more domestic corporations being subject to BEAT.
IRS Aims for June Release of Catch-Up Contribution Regulations
The IRS is striving to release regulations surrounding catch-up contributions in June. These rules, codified in the Consolidated Appropriation Act of 2023, mandate that contributions by high-income taxpayers be designated as after-tax Roth contributions.6
Tariffs on Steel to Double
In a trip to Pennsylvania to tout a deal between U.S. Steel and Nippon Steel, President Donald Trump announced that tariffs on steel would be doubled from 25% to 50%.7 These tariffs are in addition to tariffs in place on aluminum, automobiles, and a baseline tariff on all imports.
White House Issues Sequestration Order for Fiscal Year 2026
On May 30, the White House issued a sequestration order that implemented automatic budget cuts for the 2026 fiscal year. The cuts align with the report issued by the Office of Management and Budget’s report issued on May 30, 2025.
Judicial Update
Courts Block Reciprocal & Fentanyl-Related Tariffs
On May 28, 2025, the U.S. Court of International Trade (CIT) blocked Trump’s “Liberation Day” tariffs that were levied in response to declared emergencies related to fentanyl and trade deficits. A second decision in the U.S. District Court for the District of Columbia halted these tariffs using similar arguments related to the International Emergency Economic Powers Act (IEEPA) and constitutional authority of Congress to levy tariffs. Under each decision, the courts ruled that reciprocal and fentanyl tariffs levied by the executive branch were outside the president’s authority and must be discontinued and refunded. In their decisions, the courts allowed 10 days and 14 days respectively to halt the collection and administration of these tariffs. Tariffs on automobiles, steel, and aluminum under §232 and China under §301 fall outside of this ruling and remain intact.
The president quickly moved to appeal these two decisions to prevent setbacks to his tariff agenda.8
The executive branch received a temporary reprieve from the Federal Circuit Court of Appeals, which granted a stay on the CIT’s decision until it can hear further arguments on June 9. The District Court’s decision remains in effect and continues to block reciprocal and fentanyl-related tariffs. Please reference the alert from Forvis Mazars related to this case to learn more.
Tax Court Rules Soroban Hedge Fund Partners Are Subject to Self-Employment Tax
On May 28, 2025, in Soroban Capital Partners LP v. Commissioner,9 the U.S. Tax Court found that the owners of Soroban Capital Partners, LP were subject to self-employment tax.10 The IRS increased the hedge fund’s self-employment income by more than $141 million, which dramatically increased the partners' self-employment tax liability.
Soroban Capital Partners maintained the income should be excluded under IRC §1402(a)(13). Under that code section, a limited partner must satisfy the following tests to exclude distributive income from self-employment tax:
- The partner did provide services to the partnership in the form of a trade or business,
- No obligations exist between the partner and the partnership, and
- The partner’s share of any capital has been paid to the partner by the end of the taxable year.
The court held that the partners of Soroban Capital Partners violated this test as they worked full time at Soroban and did not contribute capital in proportion to their income share.
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“Hawley Stakes Ground as Chief GOP Defender of Medicaid,” msn.com, May 28, 2025.
- 2“Not Done Yet: U.S. Senate Republicans Plan Changes to House’s Trump Tax-Cuts Bill,” checkpoint.com, May 26, 2025.
- 3“Rand Paul a Hard No on House GOP’s ‘Big Beautiful Bill,’” thehill.com, May 22, 2025.
- 4“Corporate AMT Rules Under Policy Review by Trump Administration,” taxnotes.com, May 30, 2025.
- 5“Section 899 Backs Up U.S. Negotiating Position, Burch Says,” taxnotes.com, May 30, 2025.
- 6“IRS Hopes for June Release of Catch-Up Contribution Regs,” taxnotes.com, May 30, 2025.
- 7“Trump Announces Plan to Double Steel Tariffs,” thehill.com, May 30, 2025.
- 8“These Trump Tariffs are Still in Place,” thehill.com, May 29, 2025.
- 9https://aboutblaw.com/bimp.
- 10“Soroban Hedge Fund Partners Subject to Self-Employment Taxes,” bloomberglaw.com, May 28, 2025.