Capitol Hill has been relatively quiet with lawmakers back in their districts for the August recess, but the Internal Revenue Service (IRS) continues to experience turbulence — most recently marked by the abrupt departure of Commissioner Billy Long, just weeks into his tenure.
Congress is set to return on September 2, leaving less than a month for the legislative branch to reach a deal on government spending and avert a potential government shutdown on October 1. Meanwhile, the IRS continues to navigate operational challenges while working to implement the newly enacted tax reform bill.
The “One Big Beautiful Bill Act” Resources
On July 4, 2025, President Trump signed into law P.L. 119-21, Republicans’ comprehensive tax and spending package commonly referred to as the “One Big Beautiful Bill Act,” which ushered in sweeping changes to the tax policy landscape.
Cherry Bekaert is committed to providing resources to help our clients navigate the opportunities and obstacles provided by the bill. For more information on how the tax reform act may impact your tax situation:
- Engage With Our Thought Leadership: Cherry Bekaert’s Tax Policy Insights provide taxpayers with key details and observations on the overall bill, specific provisions, and how specific industries may be impacted
- Catch Up on Our Webinar Series: Recordings of our six-part webinar series, “Tax Horizons: Planning Ahead After the Reconciliation Bill” are available for playback.
We are closely monitoring the bill’s regulatory process, which is currently underway at Treasury and the IRS. These agencies are responsible for issuing a substantial amount of guidance — some of which is urgently needed, particularly for provisions with retroactive effective dates. Below, we discuss the first and only piece of guidance issued to date; we will continue to provide updates as developments occur.
New Wind and Solar Tax Credits Guidance
On August 15, the IRS issued Notice 2025-42, providing guidance on wind and solar tax credits. The notice makes changes to the beginning of construction requirements for wind and solar projects under the Clean Energy Investment Credit and Clean Energy Production Credit, both of which were terminated early in the tax reform bill.
Recently Passed Legislation: P.L. 129-27, 129-28 and 129-29
In addition to the “One Big Beautiful Bill,” Congress passed several other notable pieces of legislation last month, including:
P. L. 119-27: GENIUS Act
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act (P. L. 119-27) provides a regulatory framework for payment stablecoins — digital assets whose value is pegged 1:1 to another asset, often fiat currencies like the dollar. The GENIUS Act was the U.S.’s first major cryptocurrency bill.
P.L. 119-28: Rescissions Act of 2025
Just days before President Trump’s first rescission request was set to expire, Republicans passed a bill (P.L. 119-28) clawing back over $9 billion in already appropriated federal funding on a party-line vote. This was the first rescissions package Congress approved in over 30 years. The passage of this package has injected additional uncertainty into the government funding showdown Congress is facing, as Democrats have said they are reluctant to appropriate funds they don’t believe will be spent.
P.L. 119-29: Filing Relief for Natural Disasters Act
This bipartisan legislation (P.L. 119-29) enables the IRS to speed up relief for taxpayers impacted by natural disasters. The IRS will now be able to extend deadlines based on state-declared emergencies, rather than having to wait for a federal disaster declaration. Additionally, the bill increases the automatic extension available for affected taxpayers from 60 days to 120 days.
Government Funding
Government funding is only authorized through September 30. In order to avoid a shutdown, lawmakers must pass a spending measure before that date. Congress has a limited window to act, as it will have less than a month in session before the deadline once members return.
Each year, Congress is tasked with developing and passing 12 appropriations bills, individually or in groups (as an omnibus or several “minibus” bills). Alternatively, it can agree to a continuing resolution — a stopgap measure that temporarily funds the government, typically at prior year levels.
Appropriations is typically a bipartisan process, as 60 votes are needed to advance funding bills in the Senate. Though the Senate has passed three appropriations bills and the House has passed two, the chambers are on drastically different paths, particularly as it relates to funding levels:
- House of Representatives: Most Republicans in the House are advocating for significant reductions in government spending, generally aligning with President Trump’s “skinny budget” request, which calls for steep cuts to non-defense discretionary funding.
- To date, the nine appropriations bills advanced by the committee, two of which have passed the full House, have received only Republican support.
- Senate: The Senate has been eyeing modest increases in discretionary government spending. The seven bills that have cleared the committee, three of which have passed the full Senate, have all received bipartisan support.
Uncertainty and Impoundment Concerns
The House’s advancement of its agenda is largely viewed as performative, given the lack of viability of its bills in the Senate. The upper chamber’s attempts are viewed as a more reasonable starting point for bicameral negotiations. However, in the absence of a topline spending agreement between the chambers, the trajectory of government funding remains uncertain.
Complicating matters is the concern that, even if a deal is reached and signed into law, there is no guarantee the administration will adhere to it. President Trump has signaled he’s willing to continue to withhold federal funds, a legally questionable process called impoundment, and is open to sending additional rescissions packages.
|
Appropriations Bill |
Status in House |
Status in Senate |
| Agriculture-FDA | Committee approval | Initial passage |
| Commerce-Justice-Science | Subcomittee approval | Committee approval |
| Defense | Initial passage | Committee approval |
| Energy-Water | Committee approval | No progress |
| Financial Services | Subcomittee approval | No progress |
| Homeland Security | Committee approval | No progress |
| Interior-Enviroment | Committee approval | Committee approval |
| Labor-HHS-Education | No progress | Committee approval |
| Legislative Branch | Committee approval | Initial passage |
| Military Construction-VA | Initial passage | Initial passage |
| State-Foreign Operations | Committee approval | No progress |
| Transportation-HUD | Committee approval | Committee approval |
*As of date of publication
Potential Legislation Changes
Though September is likely to be dominated by government funding negotiations, we’re closely monitoring several other legislative initiatives, including:
Reconciliation 2.0
Some Republicans, including Speaker Mike Johnson (R-LA) and Senate Finance Committee Chair Mike Crapo (R-ID), have voiced support for a second reconciliation bill. Enthusiasm for a potential FY26 legislation, which some policymakers are referring to as “2 Big 2 Beautiful,” appears to be more pronounced in the House at the moment.
Suggestions on what may be included in a subsequent reconciliation package include: reworked provisions that the Senate parliamentarian previously rejected, technical corrections to the first bill, an increase to the qualified business income (QBI) deduction rate, a return of the Section 899 retaliatory tax if the negotiated deals don’t materialize, and potential changes to capital gains taxes (for home sales and/or indexing for inflation), among other Republican priorities.
Bipartisan Tax Extenders
Though many provisions were permanently extended with the passage of P.L. 119-21, a number are slated to expire at the end of 2025. Republicans are advocating for a bipartisan tax extender package to address these and other broadly supported tax initiatives, such as a reversion of the new wagering tax limitation and new retirement provisions.
We have yet to see whether Democrats have the appetite for a bipartisan tax package in the wake of tax reform or if the two parties can come to an agreement on the extension of the Affordable Care Act’s enhanced premium tax credits, an expensive Democratic priority, which expires at the end of 2025.
Additional Rescissions Packages
The Office of Budget and Management (OMB) Director Russell Vought has stated he intends to send additional rescissions packages to Congress. He has also refused to rule out the possibility of using pocket rescissions, which effectively cancel funding by sending requests so late in the fiscal year that Congress doesn’t have time to respond. If and when OMB will send requests, as well as how Republicans will respond to them, is currently unknown.
IRS Challenges
So far, 2025 has proven to be a difficult year for the IRS. On August 8, IRS Commissioner Billy Long was removed from office after less than two months in seat. Treasury Secretary Scott Bessent has assumed the responsibilities of the role, serving as acting commissioner while also running the Treasury Department. Bessent is the seventh person to hold the position in less than seven months.
The service has also experienced a significant decline in staffing, losing approximately 25% of its workforce between February and May of 2025 due to the deferred resignation program, various other incentives and reductions in force, per a Treasury Inspector General for Tax Administration report.
Amid all this turmoil, the IRS is tasked with implementing the sweeping tax reform bill Republicans passed last month. Although the 2025 tax reform bill was passed much earlier in the year than the Tax Cuts and Jobs Act (TCJA) in 2017, there are numerous retroactive provisions that require both guidance and changes to IRS forms.
Finally, the IRS may need to fulfill its mission with significantly less funding — the House Financial Services appropriations bill proposes annual IRS funding of just $9.5 billion, a 23% reduction from current funding levels.
Trade Policy
We anticipate continued volatility and uncertainty in international trade policy over the coming months. While the U.S. has negotiated trade agreements with several nations, the tariff rates applicable to most of our trading partners remain in flux.
On July 31, the White House issued an executive order retaining the 10% baseline import duty and imposing additional duties on listed nations, which went into effect on August 7. Rates remain subject to change based on a myriad of inputs from the outcome of future negotiations to the administration’s opinion of decisions made by foreign governments (such as India’s continued purchase of Russian oil).
Cherry Bekaert continues to help our clients navigate the complexities of an ever-evolving trade policy landscape. Visit our Tariff Consulting Services page for more information.
Your Guide Forward
Cherry Bekaert’s Tax Policy group is committed to bringing you information on the latest tax developments and opportunities.
Explore our past Tax Policy Reviews for additional updates and insights.
