Capitol Hill Recap: Lame Duck Lawmaking

Most people use the winter months to spend time with family and recharge for the upcoming year. For Congress, it can be a bit different.

The “lame duck” session following the November elections can be a dead time—or a time when business actually gets done, with lawmakers further removed from political constraints.

This year’s session could end up being a busy time. With a full plate over the summer, lawmakers are putting aside some pressing items, hoping that the lame duck session will be where they can be addressed.

That includes the potential bipartisan tax bill on cryptocurrencies, where there is some room for common ground. Rep. Richard Neal, D-Mass., the ranking member of Ways and Means, has already said he doesn’t think it can be finished until the November election. But he’s left some hope that they could get it done shortly thereafter.

They still would need to find consensus on key issues such as how to source and categorize staking and mining income—a highly technical issue which many members are still wrapping their heads around—and how to best allow cryptos to be used for ordinary transactions. Proposals have included a "de minimis" rule to exempt some transactions from capital gains requirements, as well as safe harbors tied to "stablecoins," which are cryptos tied to government-set currencies.

Aside from crypto, representatives are also hoping to pass an array of Internal Revenue Service and tax administrative reforms. While there is bipartisan agreement on most (though not all) of the proposals that have been floated, there’s still some question of whether or not the larger political situation will intrude. President Trump’s controversial immunity agreements with the Justice Department over potential IRS audits has made any legislation regarding the agency impossible during the election season. But the temperature may have cooled by December.

Recent Tax Pieces:

Latest Republican Tax Proposals Stall Ahead of Midterms – Katie Lobosco, Tax Notes ($):

But lawmakers have put months of work into other legislative proposals, including those addressing digital assets, capital gains, and tax administration. They’ve held hearings and have looked for ways to attach bills to must-pass spending packages.

Other ideas have been somewhat fleeting, such as Trump’s pitch to allow homeowners to claim a depreciation deduction for their primary residences and a push for a gas tax holiday to counteract rising prices at the pump because of the war with Iran.

Despite the momentum and bipartisan support for some tax proposals, there are a limited number of legislative days remaining before the November elections, and the proposals are likely on hold until the lame-duck session.

Trump Tax Official Ken Kies’ Exit Disrupts Work on GOP Tax Law – Erin Schilling and Erin Slowery, Bloomberg Tax ($):

The Treasury Department and IRS are losing a key figure in implementing Republicans’ landmark 2025 tax law as Ken Kies exits, which could slow any regulatory projects with tough policy calls still pending.

Seasoned tax lobbyist Kies has served as the assistant Treasury secretary for tax policy, a Senate-confirmed position, and as acting chief counsel for the IRS for the past year. With the dual roles, he has the final say on tax regulations and guidance.

“So when there’s a disagreement, I look at myself and go, ‘Well, no we can’t do that. Yes, we can do that,’” Kies said during a March conference. “It’s very efficient.”

GOP Nod on Paid Preparer Oversight Reverses Years of Resistance – Chris Cioffi, Bloomberg Tax($):

Tax prep giants, government officials and industry professionals, along with a bipartisan chorus of lawmakers, have said standards are needed to protect taxpayers and reduce fraud. But momentum toward enactment has been slow.

The bill Smith amended, among other changes, protects unwitting victims of paid preparer fraud from future IRS enforcement, and was sponsored by Malliotakis (R-N.Y.). He didn’t say why Steube or Panetta were not named as sponsors of the legislation.

“We’re just trying to share the love to make sure everyone’s part of the legislation,” Smith said.

Treasury, IRS Propose Smoothing Opportunity Zone Transition — Mostly – Marie Sapirie, Tax Notes ($):

For the most part, the notice received positive reviews from tax professionals who have been eagerly awaiting transition guidance. Matthew Peurach of Seyfarth Shaw LLP said the notice largely clarified the transition between OZ 1.0 and OZ 2.0 in a manner the industry expected. “It answers most of the urgent transition questions, but some of the harder structural questions were kicked down the road,” he said.

“I think, overall, people will be happy with the guidance,” said Jessica Millett of Hogan Lovells Cadwalader. “What we’re watching for now is the scope of the proposed regulations.” Tax professionals and taxpayers have a list of questions — including from OZ 1.0 — that they would like the IRS and Treasury to answer, like how to voluntarily decertify a qualified opportunity fund, Millett said.

Judge Denounces Trump’s I.R.S. Suit as Improper Exercise in Self-Dealing – Andrew Duehren and Alan Feur, The New York Times ($):

The decision by Judge Williams, who sits in Federal District Court in Miami, did not explicitly kill the deal that Mr. Trump had worked out with his own government to receive what amounted to amnesty from I.R.S. investigations. But the scathing ruling exposed the negotiations between Mr. Trump’s personal lawyers and senior officials at the Justice Department for what she says they were: backroom dealings that did not arise from a legitimate legal process.

“The nature of the suit itself and the conduct of the parties and counsel from its filing make plain that this was an attempt to use the court to provide some legitimacy to an agreement to confer immunity to people and entities affiliated with the president,” the judge wrote.

Public Domain Supervillain of the Week

Every week, a new villain from the Golden Age of comics, who's fallen out of favor.

This week's entry: Red Lash.

Debut Year: 1943

Debut Publication: Cat-Man Comics #19

Arch-nemesis: The Hood (see May 28, 2025 post)

Origin story: An enemy interrogator during World War II.

Abilities: Aside from his unusual strength, long whips have been welded to both of his hands.