The Senate convenes today at 3 p.m., and the House meets Tuesday at noon.

All eyes will be on the House chamber this week as members prepare to take up two bills to reform the U.S. immigration system and address the fate of DACA recipients (so-called “Dreamers”).

First up will be Rep. Bob Goodlatte’s Securing America’s Future Act (H.R. 4760), a measure that would, among other things, give Dreamers legal status but no pathway towards citizenship. The bill is expected to fail.

The second vote will be on a compromise bill, the Border Security and Immigration Reform Act, drafted by House Republicans, which adheres to the White House’s immigration framework. The legislation would offer Dreamers a pathway towards citizenship, eliminate the diversity visa lottery program, provide funding for the border wall, and limit family-based immigration. According to Speaker Paul Ryan (R-WI), the compromise bill would also end the policy of family separation. However, some immigration experts have argued that the draft bill does nothing to address the widely excoriated practice of separating children from their parents at the border. At this writing, passage of the compromise bill is a toss-up.

President Trump is expected to meet with House Republicans on Tuesday evening to discuss the immigration votes and affirm his support for their efforts.

Here’s what else is in store for the week:

House

Opioid Bills. The chamber will take up another tranche of bills addressing the opioid crisis.

Budget Resolution. Introducing a budget blueprint for fiscal year 2019 is a moot exercise at this point, but House Budget Chairman Steve Womack (R-AR) may still release a budget plan for messaging purposes.

Tax Cut Hearing. The House Financial Services Committee will hold a Wednesday hearing to examine how tax cuts and deregulation can empower a pro-growth economy.

Senate

Defense Vote. Members are preparing to take a final vote today on the FY 2019 defense reauthorization bill (H.R. 5515). Votes are expected to begin around 5:30 p.m. Passage is expected. As a refresher, H.R. 5515 also contains the language of the Foreign Investment Risk Review Modernization Act (S. 2098), a measure that would update operations at the Committee on Foreign Investment in the United States’ (CFIUS). Of note, it would expand CFIUS’s ability to review certain inbound foreign investments.

FY 2019 Appropriations Minibus. The Senate will tackle its first appropriations package (H.R. 5895) this week. The “minibus” has already cleared the House and covers funding for Energy-Water, Legislative Branch, and Milcon-VA. The first procedural vote will take place after the defense vote.

Rescissions Package. The White House’s $15 billion spending cuts package may face a Senate vote this week. The deadline to pass the rescissions package is June 22. It remains unclear whether Senate Majority Leader Mitch McConnell (R-KY) has the necessary votes.

Key Hearings

Tuesday, 6/19

  • Senate Appropriations Committee. Subcommittee markup on the FY 2019 Financial Services spending bill.

Wednesday, 6/20

  • Senate Finance Committee. Hearing on “Current and Proposed Tariff Actions Administered by the Department of Commerce.” Secretary Ross to testify.
  • Senate Finance Committee. Subcommittee hearing on trade and commerce at U.S. ports of entry.
  • House Ways and Means Committee. Subcommittee hearing on “IRS and U.S. Department of Justice Efforts to Return Taxpayers’ Seized Funds.”
  • House Financial Services Committee. Hearing on “Empowering a Pro-Growth Economy by Cutting Taxes and Regulatory Red Tape.”
  • House Financial Services Committee. Subcommittee hearing on the illicit use of virtual currency.

Thursday, 6/21

  • House Financial Services Committee. Hearing on the oversight of the SEC. Chairman Clayton to testify.

 

In Notice 2018-55, the IRS provided private colleges and universities subject to the GOP tax law’s 1.4 percent endowment tax with much-needed relief. According to the notice, when colleges sell property, they will only have to apply the tax to gains in value since the end of 2017. The higher basis will result in less gain being subject to the endowment tax.

The notice indicated that the IRS is working on additional regulations to clarify the application of the endowment tax and has asked the public to submit comments by Sept. 6. The new endowment tax regulations is expected to have limited application, since the IRS estimates that fewer than 40 institutions are impacted by the rules.

House Ways and Means Chairman Kevin Brady announced plans to expand health savings accounts (HSAs) via a standalone bill, apart from the Tax Reform 2.0 effort.

The new HSA legislation will build off on changes passed by the House last year, allowing HSA funds to be used to purchase over-the-counter medicine. The package may include policies to expand Consumer Directed Health Plans and raise contribution limits.

Brady’s decision to move the HSA bill separately may signal a more bipartisan approach. Though, during last week’s health subcommittee hearings, several Democrats expressed skepticism that expanding HSAs would help drive down healthcare costs for consumers.

If only it were that easy to get some technical corrections to the 2017 tax law. It’s becoming increasingly unlikely that a technical corrections bill will see the light of day before the November elections. House Ways and Means Chairman Kevin Brady (R-TX) has already said that the corrections would not be hitching a ride with the FAA reauthorization bill.

Last week, Rep. Peter Roskam (R-IL) told an audience that there was no bipartisan support to move the ball forward in the near term. Ways and Means Ranking Member Richard Neal (D-MA) would like to hold hearings on any proposed fixes and other changes to the tax law before giving his support. Although lawmakers are sitting still on technical corrections, committee staff remains fully engaged in talks. There’s reportedly a list of corrections being circulated among the staffers.

Two potential corrections have been in the news recently. First, business groups have been pushing for a fix to the so-called “retail glitch” that extends the depreciation period for remodeling and other improvement costs over a 39-year window. Second, the 2017 tax law inadvertently eliminates the ability of sexual harassment victims to deduct their legal expenses. Since committee staffers have acknowledged these two mistakes, they will likely fix the provisions in any forthcoming technical corrections package.

 

The Senate convenes today at 3 p.m. The House returns Tuesday at noon.

House

Votes. Lawmakers will take up a slew of bills aimed at combating substance abuse and the opioid crisis. See the full list here.

Immigration Showdown. Moderate Republicans are close to reaching the number of signatures needed to force the chamber to consider a series of immigration bills. The deadline for the discharge petition is June 12. House GOP leaders have been working hard to persuade moderates to back away from the petition. Speaker Paul Ryan promised to address the DACA issue through a forthcoming compromised bill.

FY 2019 Financial Services Markup. The House Appropriations Committee will meet Wednesday to mark up the FY 2019 Financial Services spending bill, which covers funding for the IRS, SEC, and other related regulatory agencies.

Senate

FY 2019 Defense Reauthorization. Members will consider the defense reauthorization bill this week. A procedural vote is scheduled for 5:30 p.m. today, which will allow the chamber to begin debate.

Federal Reserve Nominations. The Senate Banking Committee will vote Tuesday on the nominations of Richard Clarida to be a member and vice chairman of the Federal Reserve Board of Governors; and Michelle Bowman to be a member of the Federal Reserve Board of Governors.

Nominations at Senate Finance. On Tuesday, the Senate Finance Committee will take up the following tax and trade related nominations:

  • Jeffrey Kessler to be an assistant commerce secretary
  • Elizabeth Ann Copeland to be a judge of the United States Tax Court
  • Patrick J. Urda to be a judge of the United States Tax Court
  • Amy Karpel to be a member of the United States International Trade Commission
  • Randolph J. Stayin to be a member of the United States International Trade Commission

Key Hearings

Tuesday, 6/12

  • Senate Finance Committee. Hearing on the nominations of Jeffrey Kessler to be an assistant Commerce secretary; Elizabeth Ann Copeland to be a judge of the United States Tax Court; Patrick J. Urda to be a judge of the United States Tax Court; Amy Karpel to be a member of the United States International Trade Commission; and Randolph J. Stayin to be a member of the United States International Trade Commission.
  • Senate Banking Committee. Committee vote on the nominations of Richard Clarida to be a member and vice chairman of the Federal Reserve Board of Governors; and Michelle Bowman to be a member of the Federal Reserve Board of Governors.
  • Senate HELP Committee. Hearing to examine the cost of prescription drugs, focusing on examining the President’s blueprint ‘American Patients First’ to lower drug prices.

Wednesday, 6/13

  • House Appropriations Committee. Markup of the FY 2019 Financial Services spending bill.
  • House Financial Services Committee. Subcommittee hearing on “Ensuring Effectiveness, Fairness, and Transparency in Securities Law Enforcement,” including H.R. 2128 (115), the “Due Process Restoration Act of 2017” and H.R. 5037 (115), the “Securities Fraud Act of 2018.”
  • Joint Select Committee on Solvency of MEPs. Hearing to examine employer perspectives on multiemployer pension plans.
  • House Financial Services Committee. Hearing on “Financial Industry Regulation: the Office of the Comptroller of the Currency.”

Thursday, 6/14

  • Senate Banking Committee. Hearing with Comptroller of the Currency Joseph Otting to receive an update on the OCC.

In a May 30 letter to the IRS, the American Institute of CPAs (AICPA) asked for additional guidance on the tax treatment of virtual currency transactions.

The IRS first issued guidance on the topic in 2014 (Notice 2014-21), which explains the application of existing tax principles to the use of virtual currency. The explanations come in the form of answers to frequently asked questions (FAQs).

The AICPA is now asking the agency to provide supplemental guidance to Notice 2014-21. Specifically, the AICPA recommends that the agency address the following issues:

  • Expenses of obtaining virtual currency
  • Acceptable valuation and documentation
  • Computation of gains and losses
  • Need for a de minimis election
  • Valuation for charitable contribution purposes
  • Virtual currency events
  • Virtual currency held and used by a dealer
  • Traders and dealers of virtual currency
  • Treatment under Internal Revenue Code (IRC) section 1031
  • Treatment under IRC section 453
  • Holding virtual currency in a retirement account
  • Foreign reporting requirements for virtual currency

On May 23, the IRS released a new five-year Fiscal Year 2018-2022 IRS Strategic Plan, which includes goals for upgrading information technology (IT) systems, expanding digital platforms and services for taxpayers, and improving tax administration. The new strategic plan comes as Congress considers legislation to modernize IRS operations.

The strategic plan is meant to serve as a roadmap to help guide the agency’s programs and operations. Developed with input from external partners as well as IRS employees, the plan specifically focuses on six goals to help improve customer service:

  • Empower and enable all taxpayers to meet their tax obligations.
  • Protect the integrity of the tax system by encouraging compliance through administering and enforcing the tax code.
  • Collaborate with external partners proactively to improve tax administration.
  • Cultivate a well-equipped, diverse, flexible and engaged workforce.
  • Advance data access, usability and analytics to inform decision-making and improve operational outcomes.
  • Drive increased agility, efficiency, effectiveness and security in IRS operations.

Given recent events, the strategic plan also focuses on cybersecurity, promising to develop an early-warning and notification system to detect compliance problems and expand the agency’s cybercrimes unit, among other goals.

In a statement accompanying the release of the strategic plan, Acting IRS Commissioner David Kautter said he hopes the plan will result in higher compliance rates and increased taxpayer satisfaction as cases are resolved in a timely manner.

In June, the congressional tax-writing committees may hold additional hearings on the economic impact of tax reform. Additionally, a House Ways and Means Committee hearing regarding the impact of tariffs on international tax policy could also be on the horizon given recent trade conflicts with U.S. allies. Ways and Means may also hold a markup of legislation related to health savings accounts near the end of June.

Senate Finance Chairman Orrin Hatch (R-UT) is expected to schedule a third hearing on pension reform over at the Joint Select Committee on Solvency of Multiemployer Pension Plans. Both Hatch and Ways and Means Chairman Kevin Brady (R-TX) have previously expressed interest in advancing legislation this year to boost retirement savings.

On June 12, The Senate Finance Committee will consider the nominations of Patrick J. Urda and Elizabeth Ann Copeland to be judges on the U.S. Tax Court.