This month, trade policy developments took center stage, as court rulings and executive actions reshaped the administration’s tariff regime. At the same time, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) pushed ahead with tax reform guidance, midterm primary season got underway, and Congress continued to struggle with lapsed government funding.
Government Funding
There haven’t been many meaningful developments since our February 2026 Tax Policy Review. The Department of Homeland Security (DHS) remains shut down and few advancements have been made in negotiations between Democrats and the White House.
Looking Ahead to FY27
The White House is expected to release the president’s FY27 discretionary budget request, which outlines the administration’s policy and funding priorities for the year ahead, the week of March 30. Assistant Secretary for Tax Policy Ken Kies suggested that Treasury does not intend to issue a Greenbook, which includes general explanations of budget proposals, this year.
Congress holds authority over discretionary appropriations and is not required to consider or adopt the president’s budget proposal; however, the request can still shape the budget process, particularly among members of the president’s party.
Potential Legislation
Congress is likely to be occupied by non-tax measures in the short term — including housing reform, DHS funding, Foreign Intelligence Surveillance Act (FISA) reauthorization, supplemental funding for the Iran war, and consideration of the SAVE America Act, among others.
Prospects for a Second Reconciliation Bill
Speaker of the House Mike Johnson (R-LA) has agreed to pursue a second reconciliation bill, a key demand from the more conservative members of his caucus. Republicans have not determined what the bill might include; when asked about its contents, Johnson stated, “We’ll finalize our Venn diagram and see what fits in the middle.”
Despite the interest, prospects for the bill appear dim, as President Trump has not endorsed the effort and numerous House Republicans remain skeptical that there is sufficient interest. “I’d love to do a second reconciliation bill, but I’d also love to be Brad Pitt,” said House Ways and Means Chair Jason Smith (R-MO). “It’s never going to happen.”
Bipartisan Tax Administration Proposal
After months of collaboration, Senate Finance Committee Chair Mike Crapo (R-ID) and Ranking Member Ron Wyden (D-OR) introduced the bipartisan Taxpayer Assistance and Service Act, an IRS administration reform package.
The proposed legislation is “designed to improve communication between the IRS and taxpayers, streamline processes for tax compliance and ensure taxpayers have access to timely expert assistance, among other much-needed reforms.” The bipartisan proposal won the approval of both the National Taxpayer Advocate and the American Institute of CPAs.
Implementing Tax Reform
In the last month, Treasury has issued several new pieces of guidance relating to P.L. 119-21, commonly referred to as the “One Big Beautiful Bill Act” (OBBBA):
- Corporate Alternative Minimum Tax (CAMT): Notice 2026-07 provides guidance that will allow businesses to expense unamortized research and experimental expenditures from 2022 through 2024 without adding to their CAMT liability. The notice also contains guidance relating to other CAMT adjustments where book and tax timing often differ.
- Qualified Production Property (QPP): Notice 2026-16 provides guidance on how to claim the temporary 100% special deduction allowance on qualifying real property, or QPP. For more details see our piece on interim guidance on Qualified Production Property depreciation.
- Trump Accounts: Treasury and the IRS issued two notices of proposed rulemaking related to Trump accounts. REG-117270-25 outlines rules for the operation procedures for the accounts and REG-117002-25 provides details on the one-time $1,000 government contribution under the pilot program for children born between 2025 and 2028.
New Regulatory Guidance
Treasury and the IRS also released proposed regulations (REG-108921-25) that would revoke final regulations (TD 10028) identifying certain partnership related-party basis adjustment transactions as transactions of interest (TOIs). The preamble to the proposed regulations notes that the forthcoming final regulations will treat the “removal of the Basis Shifting TOI Regulations as occurring” on January 14, 2025, which is the applicability date of the previously issued final regulations. “Thus, participants and material advisors will be able to treat the Basis Shifting TOI Regulations as never having taken effect.”
IRS Updates
The IRS is more than halfway through the spring filing season. According to the agency’s latest filing season statistics, nearly 61 million of the 164 million tax returns expected by April 15 have been received as of March 6, 2026. The average refund is currently $352 higher than last year, an increase of 10.6%.
IRS Leadership
In an update on the IRS commissioner position, the agency acknowledged Treasury Secretary Scott Bessent is no longer serving as acting IRS commissioner. Under the 1998 Federal Vacancies Reform Act, officials serving in vacant positions are limited to 210 days — a limit Bessent reached on March 7.
The IRS noted, however, that Bessent, in his capacity as Treasury secretary, maintains oversight over the agency and “retains the authority and responsibility to perform the functions and duties of vacant Treasury offices that are not filled on an acting basis.”
The press release also stated that IRS Chief Executive Officer Frank J. Bisignano is “leading day-to-day operations and reporting directly to the Secretary.” Bisignano’s appointment to the newly created CEO role has drawn sharp criticism from Democrats in recent months, citing both the lack of a constitutional appointment and his simultaneous service as commissioner of the Social Security Administration, which divides his time between the two agencies.
Economic Outlook
The past month’s data was mixed showing stable but sticky inflation, net job losses and softer-than-expected growth:
- Inflation: Annual inflation, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), held steady at 2.4%. February’s data only reflects conditions leading up to the U.S. attacks on Iran; the resulting energy shock from the conflict is likely to place upward pressure on inflation over the coming months.
- Employment: The U.S. economy unexpectedly lost 92,000 jobs in February, pushing the unemployment rate back up to 4.4%. Payroll figures for December 2025 and January 2026 were also revised downward, reducing prior jobs gains by a combined 69,000.
- Gross Domestic Product (GDP): The second estimate of 2025 Q4 GDP came in well under expectations, showing annualized growth of just 0.7% during the final quarter of the year. The Bureau of Economic Analysis estimates the government shutdown decreased annualized GDP in the final quarter of the year by “about 1.0 percentage point.”
The Federal Open Market Committee (FOMC) is meeting this week and is widely expected to hold the federal funds rate steady at the 3.5% – 3.75% range. Central bank policymakers will need to navigate inflation risks tied to elevated energy costs over the coming months. Fears over a possible spike in inflation are pushing expectations for an interest rate cut to later in the year.
Trade Policy
During his second term, President Trump has sought to fundamentally reshape U.S. trade policy in pursuit of an “America First” agenda. While this period has been characterized by frequent policy shifts that have introduced elevated uncertainty for businesses, developments over the last month have been especially consequential.
Trade Policy Timeline
- February 20: The Supreme Court ruled the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs. The same day Trump issued:
- An executive order ceasing the collection of IEEPA tariffs.
- A proclamation implementing broad 10% tariffs under Section 122 of the Trade Act of 1974.
- February 24: The new Section 122 tariffs went into effect.
- March 4: The Court of International Trade (CIT) ordered the U.S. Customs and Border Protection (CBP) to refund the IEEPA duties.
- March 5: 24 states filed a lawsuit in the CIT challenging the Section 122 tariffs.
- March 6: The CIT paused the March 4 order in response to a CBP filed declaration requesting a 45-day extension to update its system and processes.
- March 11: The Trump administration announced Section 301 trade investigations into China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India “relating to structural excess capacity and production in manufacturing sectors.”
- March 12: The Trump administration announced a second round of Section 301 trade investigations into 60 of our largest trading partners relating to “failures to take action on forced labor.”
The newly imposed Section 122 tariffs are widely viewed as a replacement for the IEEPA tariffs the Supreme Court struck down last month. Under the Trade Act of 1974, Section 122 tariffs can only be in place for 150 days, meaning the current levies are scheduled to expire after July 24, 2026. The Section 301 tariff investigations announced last week are poised to be completed before the July expiration date.
U.S. Trade Representative Jameison Greer has signaled additional investigations are likely, while Bessent predicted tariffs would quickly return to where they stood before the Supreme Court ruling. “It’s my strong belief that the tariff rates will be back to their old rate within five months,” he said. We expect trade policy to remain in flux and significant uncertainty to persist in the short term.
Cherry Bekaert is here to help our clients navigate uncertainty in trade policy. If you’re interested in reading more about this month’s developments, please visit:
- Supreme Court Strikes Down Reciprocal Tariffs
- IEEPA Tariff Refunds: Court of International Trade Orders & What Importers Should Do Next
- Tariff Refunds Process: U.S. Customs & Border Patrol Files Update
- How Section 122 Tariffs Are Being Challenged in the Court of International Trade
Control of Congress: 2026 Midterms
Last month we launched Cherry Bekaert’s 2026 Midterm Election Resource to help our clients proactively monitor the upcoming elections, the outcome of will shape the future of tax policy.
Primary season began on March 3 with contests in Texas, North Carolina and Arkansas, followed closely by Mississippi on March 10 and Illinois on March 17. At the same time, more House lawmakers have announced they won’t seek reelection in 2026. In total, 57 House members — 36 Republicans and 21 Democrats — have chosen not to run again.
Check back regularly, as our team will update this page with new developments and further insights as Election Day approaches.
Your Guide Forward
Cherry Bekaert’s Tax Policy group is committed to bringing you information on the latest tax policy developments and opportunities.
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