The House and Senate are returning to session for a two-week stretch and a legislative agenda that could easily fill a month or more. The list of issues to be addressed includes reconciliation to fund immigration and border enforcement, reauthorizing farm programs and foreign surveillance authority, a Federal Reserve nominee, fiscal year (FY) 2027 appropriations, and nascent plans to pursue supplemental defense spending.

Topping this month's agenda is legislation to fund Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) for several years with a filibuster-proof reconciliation bill. Next week, the Committees on Homeland Security and the Judiciary in both chambers are expected to advance their respective portions of what will be a combined bill providing just over $70 billion in funding. The goal is to get a final bill to the president by June 1. Congressional Republicans appear largely unified on the content and timeline for action on this second reconciliation bill.

GOP unity is less certain when it comes to the strategy and content for a potential third reconciliation bill. Cheerleaders for Reconciliation 3.0 include the chairmen of the Committees on the Budget in the House and Senate. Chairmen Lindsey Graham (R-SC) and Jodey Arrington (R-TX) are both skeptical about finding Democratic support for supplemental defense spending, which would drive a third bite at the reconciliation apple.

How taxes fit in remains to be seen. Representative Arrington has been especially vocal about the need to find revenue offsets, noting fraud and abuse among means-tested social programs and tax credits. He has also talked about tax policy aimed at affordability in the healthcare and housing sectors. The need for revenue offsets/tax increases complicates everything, especially in an election year where Republicans are fighting an uphill battle to retain control of Congress. In any case, Arrington is bullish about moving forward. "I'm telling you, we're going to get a third reconciliation," he predicted. "We're going to keep advancing the America First agenda. We're going to keep delivering on what the American people sent us here to do."

With Reconciliation 2.0 advancing, both chambers are also working behind the scenes to hammer out a long-term extension of the section 702 intelligence collection authority under the Foreign Intelligence Surveillance Act (FISA). Supporters warn of security lapses without an extension, while privacy advocates continue to seek more protections against potential abuse and improper intrusions on the private communications of U.S. citizens. After multiple short-term extensions this spring, the section 702 authority is currently set to lapse on June 12, 2026. If past is prologue, another temporary extension may be needed.

Another priority in motion is potential Senate progress on a farm bill. The House passed a five-year farm bill reauthorization late last month, setting the stage for Senate work "in the coming weeks," says Senate Committee on Agriculture Chairman John Boozman (R-AR). The Senate will also spend this week working to confirm Kevin Warsh as the next Chairman of the Federal Reserve. The term of current Chairman Jerome Powell is set to expire on May 15.

As it stands now, expectations for high-profile action on tax policy this month are low, but we are closely watching the Committee on Ways and Means' work to spotlight abuses among certain entities and sectors of the non-profit community. As typically happens after a committee spends so much time and attention on an issue, legislation and a markup may not be far off. It is important to note that any bill to reform the non-profit sector would almost certainly raise revenue. And whenever that happens, there's never a shortage of ideas on how to use that revenue for reducing taxes. #TaxTake

Upcoming Speaking Engagements 

Rocco will speak at the Tax Council Policy Institute (TCPI) symposium Tax Matters: Federal, State, and Global Taxes in Turbulent Times on May 14.

Marc, Sam Lapin, and Lisandra Ortiz will speak at the Federal Bar Association (FBA) Insurance Tax Seminar on May 28-29

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