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Bipartisan legislation in the Senate aimed at reforming and streamlining operations at the IRS has been put on pause due to political opposition to President Donald Trump’s settlement of a lawsuit against the agency and his own government that precludes the agency from auditing him or his family.
Senate Finance Committee Chair Mike Crapo, R-Idaho, intended to hold a debate and amendment committee meeting this month aimed at advancing the Taxpayer Assistance and Service Act (S. 3931), which he jointly introduced with Sen. Ron Wyden, D-Ore., the top Democrat on the committee, in February. However, because Democrats on the committee wanted an amendment to the bill that would undo the unusual audit immunity granted by the settlement, Crapo said the session would be postponed.
“Sen. Wyden and I have worked very hard to keep this bill very bipartisan, to have no partisan amendments on it,” Crapo told Punchbowl News on June 15. “It appears that there may have been an effort to do that. So until we can get that ironed out, I’m not going to hold the markup.”
Grant Thornton insight:
The president would likely veto any bill altering the settlement from his lawsuit. Because of that, a settlement-related amendment to the tax administration bill, which focuses on relatively noncontroversial issues such as digitizing more of the tax return process, expanding IRS customer service callback options, and allowing the Tax Court to hear refund cases, would need broad bipartisan support to have a chance of overriding a veto.
It is more likely that the bill remains stalled as Congress heads into election season, or that Crapo placates Democrats with a separate vote on the settlement. Because of the noncontroversial nature of the underlying bill, its best chance for advancement could be during a lame duck session following midterm elections. However, this is by no means guaranteed, as each lame duck session has major time constraints and its own unique dynamics.
Reconciliation “3.0” on the backburner
Despite enthusiasm from some Republicans for passing a possible third revenue or spending policy bill along party lines using the procedure known as budget reconciliation, Senate Majority Leader John Thune, R-S.D., recently acknowledged that there may not be enough consensus among Republicans to pass another major bill along partisan lines.
“You’ve got to have something that gets 50 [votes in the Senate] and 218 [votes in the House of Representatives], and I’m not sure exactly at this point what that is,” Thune told reporters on June 15, according to Punchbowl News.
House Budget Committee Chair Jodey Arrington, R-Texas, has said he wants to pass a budget blueprint in June that would start the process on a new reconciliation bill. The Senate would have to pass an identical budget resolution.
Grant Thornton insight:
A reconciliation bill would be a potential vehicle for any tax policy that the slim majorities of Republicans in the House and Senate want to advance but feel they could not win any Democrats on. However, the vast majority of tax policy was addressed in last year’s One Big Beautiful Bill Act, the first bill of this Congress to use budget reconciliation. (Because reconciliation is tied to annual budget resolutions, its potential use is limited each Congress.)
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