The House and Senate convene today at noon and 3 p.m., respectively.


Banking Bill. The House will finally take up the Senate’s bipartisan banking bill (S. 2155) with a vote as early as Tuesday. No changes will be made to the version that cleared the Senate back in March. Passage is expected, and the president will sign the bill as soon as it lands on his desk.

Other Votes. Before departing for recess, members will try to finish its work on the FY 2019 defense reauthorization bill (H.R. 5515). The House may also take another shot at the 2018 farm bill, which was rejected by the chamber last week.

CFIUS Bill. The House Financial Services Committee will mark up the Foreign Investment Risk Review Modernization Act (H.R. 5841) on Tuesday, a bill to overhaul the Committee on Foreign Investment in the United States (CFIUS) and strengthen the government’s ability to review certain outbound foreign investments.


Nomination Vote. There will be a cloture vote at 5:30 p.m. today on the nomination of Dana Baiocco to be a commissioner of the Consumer Product Safety Commission.

Veterans Bill. The Senate is expected to take up consideration of S. 2372, which would allow veterans to obtain health care outside of the Department of Veterans Affairs.

CFIUS Bill. The Senate Banking Committee will hold its own markup for the Foreign Investment Risk Review Modernization Act (S. 2098) on Tuesday.

Key Hearings

Tuesday, 5/22

  • House Financial Services Committee. Markup of the Foreign Investment Risk Review Modernization Act; Housing Choice Voucher Mobility Demonstration Act; Options Markets Stability Act; Transitional Housing for Recovery in viable Environments Demonstration Program Act; Modernizing Credit Opportunity Act. See bill details here.
  • Senate Appropriations Committee. Subcommittee hearing to examine the FY 2019 budget request of the Department of the Treasury.
  • Senate Banking Committee. Markup of the Foreign Investment Risk Review Modernization Act (S. 2098).

Wednesday, 5/23

  • Senate Banking Committee. Hearing on “Ten Years of Conservatorship: The Status of the Housing Finance System.”
  • House Ways and Means Committee. Subcommittee hearing on tax reform and small businesses.
  • House Financial Services Committee. Subcommittee hearing on “Legislative Proposals to Help Fuel Capital and Growth on Main Street.”
  • House Financial Services Committee. Subcommittee hearing on “The Impact of Autonomous Vehicles on the Future of Insurance.”
  • House Education and Workforce Committee. Subcommittee hearing on regulatory reform and economic opportunities for workers and employers.
  • Senate Appropriations Committee. Subcommittee hearing on the FY 2019 budget request of the HHS.

Thursday, 5/24

  • Senate Banking Committee. Hearing on “Cybersecurity: Risks to the Financial Services Industry and Its Preparedness.”
  • Senate Finance Committee. Hearing to examine rural healthcare in America.

The American Bar Association’s Section of Taxation held its 2018 May meeting last week, where tax practitioners and policymakers convened to discuss various tax issues and topics. Here are some highlights from the event:

  • Interest Expensing – 163(j): Guidance is expected late summer or fall. Brett York, attorney-advisor at the Treasury, is the point person on this issue. Treasury plans to add other factors that will alter the calculation of adjusted taxable income — a figure that companies use to determine how much of their business interest expense they can deduct.
  • Pass-through Deduction – 199A: Guidance is expected mid- to late-July.
  • GILTI – 951A: Guidance is expected late summer. There have been questions on whether taxpayers can include a “gross-up” in the GILTI basket (note: this is the amount equal to the taxes deemed to have been paid on the income that must be included in the corporation’s gross income under tax code Section 78).
  • BEAT – 59A: Guidance should be ready by November or December. Kevin Nichols, senior counsel at Treasury, is the point person for this issue.

On the energy front, Treasury’s Hannah Hawkins indicated that regulators are still working on guidances relating to the solar investment tax credit, Section 45J, Section 45Q, and 163(j) allocation for public utilities.

A series of IRS reform related bills passed by the House on April 17 are still pending in the Senate, but it is unclear as to how the upper chamber will proceed. The Senate Finance Committee is currently reviewing the House bills and will craft its own package in the coming weeks.

According to intel gathered by the Tax Policy Update team, Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) are unlikely to hold a markup for the bill. All changes will need to be made during the drafting process. Additionally, the regulation of paid return preparers may still be in play, though it is unlikely that this politically fraught provision will make it into the final bill.

Last week, Chairman Hatch said that he is working closely with Ranking Member Wyden, as the committee moves forward with legislation. Sens. Rob Portman (R-OH) and Ben Cardin (D-MD) are heading up efforts for the committee. Both have indicated that they hope to introduce a package of noncontroversial bills, though Sen. Portman would like to hold hearings on the provisions. This will likely push the release of a bill until after Memorial Day recess.

House Ways and Means Chairman Kevin Brady (R-TX) noted that he doesn’t envision any issues on the Senate side, though he does expect it to take some time for the committee to reach an agreement on a final bill. Chairman Brady was told that the Senate will likely use the House bill as a “baseline.” The Senate will likely recycle parts of S. 3156 and S. 3157, two bills on taxpayer rights and identity theft protection that were marked up by the Senate Finance Committee in 2016.

Check out our comparison of the 2016 taxpayer identity theft legislation marked up by the Senate and the House-passed Taxpayer First Act.

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


Farm Bill. The 2018 farm bill (H.R. 2) may land on the House floor for debate as early as Wednesday, May 16. Republicans remain split on the measure, and Democrats are opposed to the bill’s work requirements for food stamp recipients. Passage in the House is up in the air. H.R. 2 is a non-starter for the Senate.

NAFTA. House Speaker Paul Ryan (R-WI) has marked May 17 as the deadline for administration officials to produce an agreement on NAFTA if they want Congress to vote on the renegotiated trade deal this year. Under fast-track procedures (Trade Promotion Authority), Congress must be given a 90-day notice of the administration’s intention to sign the agreement. It remains to be seen whether an agreement in principles can be reached before the deadline.

Hensarling Speaks. On Thursday, POLITICO will be hosting a discussion with House Financial Services Chairman Jeb Hensarling (R-TX) on the U.S. economy and the fiscal fights ahead in 2018. More importantly, let’s see if the chairman will give the audience a better sense of when the House will actually take up the Senate banking bill (S. 2155). House leaders are reportedly aiming to take a vote before the Memorial Day recess.


Judicial Nominations. Lawmakers have two votes today: the nominations of Michael Scudder and Amy St. Eve to be judges for the 7th Circuit.

Trump Visit. President Trump is expected to meet with Senate Republicans on Capitol Hill this Tuesday to discuss their legislative agenda.

Fed Nominations. The Senate Banking Committee meets Tuesday for a hearing 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 System Board of Governors.

Key Hearings

Tuesday, 5/15

  • Senate Banking Committee. Meeting to consider the nominations of Thelma Drake to be administrator of the Federal Transit Administration; Jeffrey Nadaner to be assistant secretary of Commerce for export enforcement; and Seth Appleton to be HUD assistant secretary for policy development and research. The committee will also hold a hearing 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 System Board of Governors.

Wednesday, 5/16

  • Senate Commerce Committee. Hearing on nominees to the NTSB, Amtrak Board of Directors, and NHTSA.
  • House Education and Workforce Committee. Subcommittee hearing on “Enhancing Retirement Security.”
  • House Financial Services Committee. Subcommittee hearing on the “Oversight of the SEC’s Division of Enforcement.”
  • House Financial Services Committee. Subcommittee hearing on the “Implementation of FinCEN’s Customer Due Diligence Rule.”
  • House Appropriations Committee. Subcommittee markup of the FY 2019 spending bill for Transportation-HUD.
  • House Ways and Means Committee. Hearing on the economic impact of the new tax law.

Thursday, 5/17

  • Joint Select Committee on Multiemployer Pension Plans. Hearing on the structure and financial outlook of the PBGC.
  • House Financial Services Committee. Subcommittee hearing on “Community Development Block Grant-Disaster Recovery Program.”
  • House Financial Services Committee. Subcommittee hearing on homelessness in America.

The Office of Information and Regulatory Affairs has updated its Unified Agenda of Regulatory and Deregulatory Actions for Spring 2018, providing a comprehensive look at the federal agencies’ rulemaking plans in the near-term.

Based on a preliminary review, McGuireWoods Consulting’s Tax Policy Group has flagged some of the regulatory items that may be of interest to our clients. The list below is not meant to be exhaustive, but it provides a snapshot of what the Treasury Department is up to over the next few months. Full agency listings are available here.

Select Regulatory Items in the Unified Agenda (Spring 2018)

  • Dividend Equivalents From Sources Within the U.S. (TREAS)
  • REIT Income Tests (TREAS)
  • Tax on Property Owned by a C Corporation That Becomes Property of a RIC or REIT (TREAS)
  • Definition of Qualifying Energy Property, Sec. 48 Investment Tax Credit (TREAS)
  • Sec. 965 Transition Tax (TREAS)
  • Sec. 59A (TREAS)
  • Regulations Providing Guidance Under Sec. 1446(f) (TREAS)
  • Foreign Tax Credit Guidance (TREAS)
  • Sec. 451(b) Requirements (TREAS)
  • Sec. 199A Guidance (TREAS)
  • Rules Regarding Business Interest Limitation Under Section 163(j) (TREAS)
  • Guidance under Sec. 163(j) Applicable to Pass-Throughs (TREAS)


Identity thieves continue to become increasingly sophisticated. The IRS noted an increase in fake filings for C corporations, S corporations, partnerships, and returns from trusts and estates. Forms 1120, 1120S, 1041, and Schedule K-1 are all affected by the rise in fraud.

Cybercriminals are using stolen Employer Identification Numbers (EINs) to file fake returns. The IRS has asked businesses to contact the IRS if extension requests were denied because of duplicate EIN numbers or if they receive tax transcripts or other notices from the IRS that they did not request.

House Ways and Means Committee Chairman Kevin Brady (R-TX) is insisting that a second round of tax cuts (dubbed “Tax Cuts 2.0”) is a real thing. If Brady’s recent statements to reporters were to be taken seriously, Tax Cuts 2.0 would involve more than just making permanent the individual tax cuts enacted in 2017. The chairman is reportedly looking to include provisions that would make it easier for businesses to provide tuition assistance to workers; encourage Americans to save for retirement (Retirement Enhancement and Savings Act of 2018); increase access to health savings accounts; and provide technical corrections. The chairman has not committed to a timeline for the bill introduction of Tax Cuts 2.0

As the Tax Policy Update team has said before, Tax Cuts 2.0, despite Brady’s enthusiasm, is nothing more than a political messaging exercise for the GOP ahead of the midterm elections. Even if such a bill could clear the House, it would not get far in the Senate without Democratic support — Republicans can’t rely on budget reconciliation procedures again to force it through the chamber, given that Congress is not expected to agree on a budget resolution this year.

To be fair, Republicans are well aware that Tax Cuts 2.0 has little chance of getting to the president’s desk this year, but that doesn’t mean they can’t force their Democratic colleagues to take a tough vote this summer.

On May 4, New Jersey Governor Phil Murphy signed into law a provision that attempts to bypass the GOP tax law’s cap on the state and local tax deduction (SALT), which imposes a $10,000 federal limit on state and local tax deductions. The idea was first proposed by Rep. Josh Gottheimer (D-NJ).

Specifically, the provision would allow municipalities to establish charitable funds and give donors property tax credits in exchange for their contributions, which are still fully deductible. This is essentially a roundabout way of allowing residents to retain the tax benefits of the property tax deduction.

New York was the first state to enact this type of provision in response to the GOP’s cap on the SALT deduction. Lawmakers in several other states, including Illinois, are considering similar workarounds.

Interestingly, 33 states, including several GOP-led states, already have provisions in place that allow residents to receive a dollar-for-dollar reduction in taxes in exchange for charitable contributions to certain funds.

Of course, the IRS will have final authority to determine whether donations to these funds constitutes a charitable contribution. Acting Commissioner David Kautter has noted that contributions will only qualify for tax deductions if the donative intent was truly charitable. This might require the IRS to review existing provisions in other states that essentially allow residents to do the same thing as New Jersey’s new law. Several experts expect the IRS to rule against the new law, leading Democrats to consider the possibility of a lawsuit.