Today, Congress will miss President Trump's June 1 deadline to deliver Reconciliation 2.0, a $72 billion Department of Homeland Security (DHS) funding package for Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP). While today's deadline was always viewed as optimistic, Republican concerns regarding the proposed $1.8 billion "anti-weaponization" fund and proposed White House ballroom security funding have complicated and delayed consideration of the reconciliation bill.
 
Further consideration of Reconciliation 2.0 will use up some of the limited time that Congress has before the midterm elections to potentially consider a Reconciliation 3.0 package, which seems likely to have a tax title of unknown scope and revenue impact. In addition, the potential main drivers of Reconciliation 3.0 – supplemental defense funding and components of the Save American Voter Eligibility (SAVE) Act – are not without controversy. Further, the political relevance of the SAVE legislation may have diminished following recent U.S. and Virginia Supreme Court decisions on state redistricting.
 
It is important to note that several political developments – including the primary losses of Senators Cassidy (R-LA) and Cornyn (R-TX) – may impact the speed, content, and viability of Reconciliation 3.0 in the Senate. Although Republicans maintain a 53-47 majority, several retiring members and party moderates – including Senators Cassidy, Collins (R-ME), Cornyn, McConnell (R-KY), Murkowski (R-AK), Paul (R-KY), and Tillis (R-NC) – could be considered swing votes, effectively reducing that majority and making passage of any Republican-only bill challenging.
 
Also in the news, on May 28, the Joint Committee on Taxation (JCT) issued its long-awaited Blue Book on last year's One Big Beautiful Bill Act (OBBBA), with its explanation of the tax provisions of the law and its budget effects. The Blue Book identifies several provisions where a technical correction may be needed, including the effective date for section 960(d)(4), which disallows a foreign tax credit for 10 percent of foreign taxes paid or deemed paid with respect to distributions of previously taxed earnings and profits (PTEP) attributable to section 951A inclusions. The Internal Revenue Service (IRS) issued interim guidance in Notice 2025-77 providing that the new 10 percent "haircut" applied only to distributions of section 951A PTEP resulting from section 951A inclusions in a U.S. shareholder's taxable year ending after June 28, 2025. The Blue Book suggests that the intention of the provision was instead to apply the 10 percent haircut to all section 951A PTEP distributions made after June 28, 2025. #TaxTake

Upcoming Speaking Engagements 

Mike, Rocco, and George Hani will speak at the Texas Federal Tax Institute on June 3.

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