The Senate convenes today at 3 p.m. Senators are gearing up to debate immigration and put together a bipartisan bill on the floor this week. The House will kick off its legislative business at noon on Tuesday.

The Trump Administration will roll out two big documents today – its FY 2019 budget request and infrastructure plan. Tax policy wonks can sit back and relax, as the administration has decided once again to not issue a “Greenbook” with the budget. In past administrations, the Greenbook typically accompanied the president’s budget plan, providing detailed explanations of tax proposals in the budget.

On the regulatory front, the Consumer Financial Protection Bureau (CFPB) is expected to release its revised strategic plan today.

House

Bills Under Consideration. The chamber will take up the following financial services and trade bills this week:

  1. H.R. 3978 – The TRID Improvement Act would modify disclosure requirements applicable to mortgage loan transactions. Specifically, the disclosed charges for any title insurance premium shall be equal to the amount charged for each individual title insurance policy, subject to any discounts as required by either state regulation or the title company rate filings.
  2. H.R. 3299 – The Protecting Consumers’ Access to Credit Act would clarify that bank loans that are valid when made as to their maximum rate of interest in accordance with federal law shall remain valid with respect to that rate regardless of whether a bank has subsequently sold or assigned the loan to a third party.
  3. H.R. 4979 – a bill that would extend the Generalized System of Preferences and make technical changes to the competitive need limitations provision of the program.

Budget Hearings. OMB Director Mick Mulvaney, Treasury Secretary Steven Mnuchin, and HHS Secretary Alex Azar will appear before their respective House committees this week to outline the administration’s FY 2019 budget request. See details in the activities section below.

Senate

Immigration. The upper chamber will be preoccupied with the immigration debate all week. Senate Majority Leader Mitch McConnell has put forth a “shell bill” (H.R. 2579) to kick off the process. The shell bill is the legislative vehicle that senators will use to write their bipartisan deal. There will be an open amendment process. Congress has until March 5 to come up with a solution for Dreamers whose legal status faces an uncertain future after the administration announced an end to the DACA program.

Budget Hearings. OMB Director Mick Mulvaney, Treasury Secretary Steven Mnuchin, and Acting IRS Commissioner David Kautter are scheduled to appear before their respective Senate committees to discuss the administration’s budget proposal.

Key Hearings

Tuesday, 2/13

  • Senate Budget Committee – OMB Director Mick Mulvaney to testify on the administration’s FY 2019 budget request.

 Wednesday, 2/14

  • Senate Finance Committee – Hearing on the administration’s FY 2019 budget request for the Treasury Department and on the tax reform law’s implementation. Treasury Secretary Steven Mnuchin to testify.
  • Senate Finance Committee – Hearing on the administration’s FY 2019 budget request for the IRS. Acting IRS Commissioner and Assistant Secretary for Tax Policy David Kautter to testify.
  • House Ways and Means Committee – Hearing on the administration’s FY 2019 budget request for the HHS Department. Secretary Alex Azar to testify.
  • House Budget Committee – OMB Director Mick Mulvaney to testify on the administration’s FY 2019 budget request.
  • House Financial Services Committee – Subcommittee hearing on legislative proposals regarding derivatives.
  • House Financial Services Committee – Subcommittee hearing on data security and breach notification.

Thursday, 2/15

  • House Financial Services Committee – Subcommittee hearing on “Examining De-risking and its Effect on Access to Financial Services.”
  • House Financial Services Committee – Subcommittee hearing on “Exploring the Financial Nexus of Terrorism, Drug Trafficking, and Organized Crime.”
  • House Ways and Means Committee – Hearing on the administration’s FY 2019 budget request for the Treasury Department. Secretary Steven Mnuchin to testify.
  • Senate Agriculture Committee – Hearing on the oversight of the CFTC, featuring CFTC Chairman Christopher Giancarlo.
  • Senate Finance Committee – Hearing on the administration’s FY 2019 budget request for the HHS Department. HHS Secretary Alex Azar to testify.

President Donald Trump will officially nominate Charles Rettig as IRS commissioner later today, according to a White House official.  Rettig is currently a tax lawyer with the firm Hochman, Salkin, Rettig, Toscher, and Perez, P.C. and has been with the firm for 35 years. Rettig would replace Treasury Assistant Secretary for Tax Policy David Kautter who has served as acting IRS commissioner since November 2017, when former Commissioner John Koskinen left the agency at the end of his term.

In case you missed it, check out our write-up on Rettig here.

The Senate has released the legislative text of the continuing resolution (CR) that would fund the federal government at current levels through March 23. The text of the CR is available here, and a high-level summary can be viewed here.

The Senate will vote on the CR this afternoon – passage is expected. The House will take up its vote thereafter. House Speaker Paul Ryan expressed confidence this morning that he has the necessary votes to get the legislation across the finish line.

Here are some quick highlights from the Senate CR package:

  • A two-year bipartisan budget agreement that will raise the discretionary budget caps for defense and domestic programs
  • One-year extension of tax provisions that expired in 2016
  • Suspension of the debt ceiling through March 1, 2019
  • Extension of CHIP for an additional four years – bringing the total to 10 years
  • Disaster assistance for those affected by hurricanes and wildfires – $89.3 billion total with increased Medicaid funding for Puerto Rico and the U.S. Virgin Islands

In a surprise breakthrough in the budget negotiations, Senate leaders today announced that they have reached a two-year budget agreement to raise the discretionary spending caps on defense and domestic programs. If enacted, the bipartisan deal would allow congressional appropriators to begin finalizing an omnibus spending bill to fund the remainder of fiscal year 2018.

At this writing, the Senate is considering tucking the budget agreement into its CR package. The Senate CR would extend government funding through March 23 . But unlike the House-passed CR, the Senate version is expected to include the following major provisions:

  • Extension of the debt limit through 2018
  • $80+ billion in disaster assistance
  • Reauthorization of CHIP for a total of 10 years
  • Healthcare-related extenders
  • Tax extenders for 2017

The proposed Senate package faces an uncertain fate in the House, as Democratic members are inclined to oppose the deal without a fix for DACA. And House conservatives will likely frown upon the increased domestic spending levels. It remains to be seen whether the additional provisions outlined above will secure the necessary votes in the House. Official text to the Senate CR package is not yet available at this time, and votes have not been scheduled.

Be sure to check back for more updates.

On Jan. 30, the House Ways and Means Oversight Subcommittee, chaired by Rep. Lynn Jenkins (R-KS), convened a member-day hearing to discuss various legislation to improve tax administration, IRS operations, and taxpayer services. This hearing is a continuation of the subcommittee’s efforts to restructure the IRS.

The hearing came at a difficult time for the IRS, as it is grappling with budgetary constraints, loss of personnel, and an uphill task to implement the GOP’s new tax law.

During the hearing, GOP members and one Democrat, subcommittee ranking member John Lewis (D-GA), offered proposals to improve the IRS. Below is a list of key recommendations discussed at the hearing.

  • Oversight Subcommittee Chairman Lynn Jenkins (R-KS): Focus on the IRS’s dispute resolution process, without litigation, by ensuring that taxpayers have access to face-to-face meetings and an independent review of agency assessments.
  • Subcommittee ranking member John Lewis (D-GA): Eliminate the private debt collection program, which costs about three times more than it collects. Rep. Lewis also asked for better funding of the agency, improvements to the low-income taxpayer clinics, and oversight over paid-return preparers.
  • Rep. Dave Schweikert (R-WA): Use third-party data verification to speed up refund processing, replacing algorithms, which encourage cybercriminals to design clever workarounds.
  • Rep. Mike Bishop (R-MI): Find a way to assist the efforts of the IRS Security Summit – Rep. Bishop’s office is looking for a list of ideas that outline ways in which they might be helpful, absent legislation.
  • Rep. Tom Reed (R-NY): Introduce a call-back feature for those who have limited access to IRS centers due to geographic location.
  • Rep. LaHood (R-IL): Provide for free file permanence (H.R. 3641); and give the Taxpayer Advocate’s Office the necessary resources to ensure the IRS commissioner responds to taxpayer concerns in a timely manner.
  • Rep. Jason Smith (R-MO):  Modify the IRS’s appeals procedures by restricting the agency’s authority to designate cases for litigation without permitting an appeal. (Preserving Taxpayers’ Rights Act – H.R. 3220).
  • Rep. Jim Renacci (R-OH): Enact additional measures to prevent tax refund fraud, including the establishment of a centralized point of contact for victims of identity theft and a requirement that the IRS notify victims of identity theft. (Identity Refund Fraud Prevention Act of 2017 – H.R. 439).
  • Rep. Tom Rice (R-SC): Require the IRS to provide uniform guidance on the use of electronic signatures, instead of antiquated “wet” signatures. (Electronic Signature Standards Act of 2017 – H.R. 3153).
  • Rep. Bill Posey (R-FL): Provide simplified tax forms for individuals 65 and over. (Seniors’ Tax Simplification Act of 2017 – H.R. 2721).

**An update to this post can be viewed here.**

Congress is getting ready to vote for its fifth continuing resolution (CR) this week. The current CR expires on Feb. 8. Because congressional leaders still have not produced a long-term budget and spending agreement, another temporary funding bill is needed to keep the federal government running.

Last night, House GOP leaders introduced a CR (H.R. 1892) that would keep the government funded through March 23. The Department of Defense, however, would be funded through Sept. 30 with an increased budget of $659 billion. The beefed-up defense spending isn’t going to sit well with Senate Democrats who have been trying to secure parity between defense and domestic spending levels in the broader budget negotiations. Don’t be surprised if the Senate decides to take out the defense funding booster once it gets ahold of the CR. The House is expected to take a vote on the stopgap on Tuesday night.

On the healthcare front, the House CR includes various provisions addressing health and Medicare extenders. The temporary funding bill does not include funding for disaster assistance as some had hoped. The White House’s $90 million request for the Internal Revenue Service has also been left out. A section-by-section summary of the CR is available here.

The CR, as written, is expected to clear the House, but it will undergo changes in the Senate. Some are hoping that the small tax section in the House CR will provide a placeholder for the upper chamber to insert its tax extenders package. But that’s still up in the air.

Whatever the final form the CR may take, GOP leaders will likely get the votes they need to keep the government open — even though House conservatives are raising a stink about doing another stopgap measure. Democrats are expected to support the CR to avoid making another strategic error like last month’s melodramatic three-day shutdown.

Given that negotiations on DACA and a two-year budget agreement are ongoing, Congress is unlikely to produce a budget deal until late March, which means the FY 2018 omnibus spending bill won’t be fully baked until April.

The House and Senate convene today at noon and 3 p.m., respectively. Democrats will kick off their annual policy retreat in Cambridge, MD on Wednesday.

The current continuing resolution (CR) is set to expire on Feb. 8. The House is expected to take up another temporary government funding bill as early as Tuesday. At this writing, bill text for the CR has not been released, but the stopgap will reportedly run through March 22 to give lawmakers more time to work out a deal on DACA, discretionary budget caps, and a long-term funding bill for fiscal year 2018.

Based on the chatter from Capitol Hill, the CR may also include disaster assistance funding and a few minor healthcare provisions. Democrats are expected to support the forthcoming CR.

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

House

  • Bills Under Consideration. Lawmakers will take up consideration of H.R. 4547, a bill that would amend the Social Security Act to strengthen the representative payment program; and H.R. 1153, the Mortgage Choice Act of 2017, a bill that would improve the definitions provided for points and fees in connection with a mortgage transaction.
  • House FSOC Hearing. Treasury Secretary Steven Mnuchin will appear before the financial services committee on Tuesday to give his annual report of the Financial Stability Oversight Council.
  • Infrastructure Hearing. The House Energy and Commerce Committee will hold a subcommittee hearing on America’s nuclear infrastructure on Tuesday.
  • Ways and Means Policy Retreat. Republicans on the committee will meet Feb. 6 to discuss priorities for 2018.

Senate

  • Nomination. The Senate will consider the nomination of Andrei Iancu to be the undersecretary of commerce for intellectual property and the director of the U.S. Patent and Trademark Office. A vote is scheduled for 5:30 p.m. today.
  • Virtual Currencies. SEC Chairman Jay Clayton and CFTC Chairman Christopher Giancarlo will appear before the Senate Banking Committee on Tuesday to discuss the oversight roles of their agencies.
  • Retirement Savings. On Tuesday, the Senate HELP Committee will hold a subcommittee hearing on the gig economy and the future of retirement savings.

Fixes for the New GOP Tax Law. A technical corrections bill is registering as a weak blip on the radar — it’s all talks at the moment, and prospects remain dim. Democrats have shown little interest in getting a package of fixes done this year. Tom Barthold, chief of staff for the Joint Committee on Taxation (JCT), said that his team is still working to determine all the necessary fixes, encouraging individuals and companies to help lawmakers identify areas that require corrections or clarifications.

JCT Bluebook. The new tax law is also pushing the JCT staff to consider issuing its bluebook sooner rather than later. The JCT bluebook is generally published at the end of each Congress* and provides a general explanation of all tax legislation enacted in the first and second sessions. Based on recent statements by JCT officials, the enactment of the tax bill last year may require staff to put together a bluebook for just the first session of the 115th Congress. However, the final decision is yet to be made.

*Each Congress typically covers a two-year period and is split into two sessions. For example, the first session of the 115th Congress ended on Jan. 3, 2018.

Priority Guidance Plan. The Internal Revenue Service (IRS) will soon update its 2017-2018 Priority Guidance Plan issued in Oct. 2017 to reflect new priorities stemming from the GOP tax law. Urgent guidance projects include clarifications for the following:

  • pass-through income – Sec. 199A
  • interest deductibility – Sec. 163(j)
  • bonus depreciation – Sec. 168(k)
  • deemed repatriation tax

Passing a tax extenders package remains a top priority for both Republicans and Democrats on the Senate Finance Committee.  The question of timing, however, is anybody’s guess.

There’s no doubt that Senate Finance Chairman Orrin Hatch’s (R-UT) Tax Extender Act of 2017 (S. 2256) will serve as the starting point for any forthcoming package. McGuireWoods Consulting’s (MWC) Tax Policy Update team has put together an overview of S.2256 here.

Democrats are in the process of putting together an extenders wish list, but most of what they want are already in Hatch’s bill. Because the legislative window for getting things done in an election year is small, don’t be surprised if the Senate committee foregoes a formal markup entirely and negotiates a package behind closed doors.

Given that there’s no strong interest in getting extenders done on the House side, the Senate will likely try to move an extenders package by attaching it to a must-pass bill (e.g., FY 2018 spending bill).

The Tax Policy Update team has picked up chatter that Republicans of the House Ways and Means Committee might end up addressing extenders in a piecemeal fashion — for example, adding a set of provisions in the forthcoming disaster relief bill and then doing another set in the FAA reauthorization bill.

As always, the MWC Tax Policy Update team will keep you posted on any new developments.

The House and Senate convene today at noon and 2 p.m., respectively.

It will be a relatively tame week in Congress given that Republicans are leaving Wednesday for their three-day annual policy retreat in West Sulphur Springs, WV. Democrats will have their policy huddle next week in Cambridge, MD.

Here’s what’s in store for the week:

House

Bills Under Suspension. The following financial services bills will be taken up under suspension of the rules:

  1. H.R. 1457 – The MOBILE Act would authorizes a financial institution to record personal information from a scan, copy, or image of an individual’s driver’s license or personal identification card and store the information electronically when an individual initiates an online request to open an account or obtain a financial product.
  2. H.R. 1426 – The Federal Savings Association Charter Flexibility Act would amend the Home Owners’ Loan Act to permit a federal savings association to elect to operate, subject to supervision by the Office of the Comptroller of the Currency, with the same rights and duties as a national bank.
  3. H.R. 2255 – The HOME Act would amend the Truth in Lending Act to deem mortgage appraisal services donated by a fee appraiser to an organization that is eligible to receive tax-deductible charitable contributions to be customary and reasonable.
  4. H.R. 4292 – The Financial Institution Living Will Improvement Act would reform the living will process under the Dodd-Frank Act and Consumer Protection Act by requiring certain institutions to submit resolution plans once every two years. The bill would also require the FDIC and the Fed to provide additional feedback to those financial institutions about their plans and to publicly disclose their assessment framework.
  5. H.R. 4792 – the Small Business Access to Capital After a Natural Disaster Act would expand access to capital for small businesses affected by hurricanes or other natural disasters.

FY 2018 Defense Spending Bill. The House will take up consideration of H.R. 695, the Defense appropriations bill for fiscal year 2018.

Key Hearings. On Tuesday, the Oversight Subcommittee of the House Ways and Means Committee will hold a member day hearing on legislation to improve tax administration. The House Financial Services Committee will hold a subcommittee hearing to examine opportunities and challenges in the fintech marketplace.

Senate

Cloture Votes. The chamber will vote on a cloture motion for the nomination of David Ryan Stras to be the U.S. Circuit Judge for the 8th Circuit. Members will also resume consideration of S. 2311, the Pain-Capable Unborn Child Protection Act, with a cloture vote at 5:30 p.m today.

FSOC Hearing. The Senate Banking Committee will hold a hearing Tuesday to receive the Financial Stability Oversight Council’s (FSOC) annual report. Treasury Secretary Steven Mnuchin is set to testify.

President Donald Trump will head over to Capitol Hill on Tuesday to deliver his first State of the Union – look for the president to offer details on his much-anticipated $1 trillion infrastructure plan.