Congress reopened the government last week and relieved a growing number of shutdown-related pain points, including suspended federal food assistance, unpaid federal employees, and nationwide air service disruptions. With funding through January 30, 2026, the continuing resolution (CR) kicks off the holiday season on a more optimistic note. It also creates some interesting opportunities (and potential risks) from a tax policy perspective, with a repopulated Internal Revenue Service (IRS) and at least two potential legislative vehicles.

The lights are back on at the Department of the Treasury and the IRS. And while Treasury assured that the shutdown would not delay work on guidance to implement the One Big Beautiful Bill Act (OBBBA), the return of thousands of IRS employees can only help speed things along.

The negotiating process that led to last week's CR also sets up a Senate debate on healthcare coverage in early December. Senate Majority Leader John Thune (R-SD) agreed to a stand-alone floor vote on a Democratic proposal to extend the COVID-era enhancements to the Affordable Care Act's (ACA) premium tax credit (PTC), which are set to lapse this year. On November 19, the Senate Finance Committee jumps into the debate with a hearing on controlling health costs. Without the promise of a House vote, the fate of this Senate effort is unknown, but it could become a vehicle for other tax legislation. Given the cost of extending the PTC, there may be more risks related to revenue offsets than new tax relief.

If the December effort is not successful, we'll look to January 30, 2026, when the current CR expires, as the next best opportunity for action on taxes, especially for issues with bipartisan support. Potential items for consideration include the remaining tax extenders (which would need retroactive extensions), the Taiwan "tax treaty" legislation, and perhaps a new set of retirement savings provisions (SECURE 3.0). Again, revenue offsets will be of significant concern in such a vehicle. #TaxTake

Upcoming Speaking Engagements and Events 

Mike will speak at the IFA USA DC Region webinar "A Review of the Priority Guidance Plan, Including the Department of Treasury's Efforts to Lessen the Regulatory Burden" on November 18. 

Layla and Mike will present at the UT Law Oil, Gas, and Energy Taxation Symposium on November 19.

Marc will speak at the UT Law 73rd Annual Taxation Conference on December 3.

In the News

Mike and fellow Tax Member Rob Kovacev and Counsel Sam Lapin contributed to the recently decided landmark U.S. Tax Court case Patel v. Commissioner, addressing application of the codified economic substance doctrine under Internal Revenue Code (IRC) § 7701(o). We discuss the ruling and its implications in a recent alert.

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