President Trump met with House Republicans on 6 February to establish a framework for a tax bill ahead of a potential committee-level markup of an FY2025 budget resolution next week. Discussions are continuing and may extend into the weekend. House Majority Leader Steve Scalise (R-LA) was cited as saying the emerging tax framework for budget reconciliation could call for enacting a combination of permanent and temporary tax provisions. The primary dispute among House Republicans has been the spending-cut amount that should accompany a tax bill, and the related matters of the baseline and duration of tax-cut extensions, which will affect the cost of the package.

White House Press Secretary Karoline Leavitt also said this week that in addition to increasing the state and local tax deduction cap, the President wants to end the preferential tax treatment of carried interest.

The 25% tariffs on Canadian imports (10% tariffs for energy resources) and 25% tariffs on Mexican imports that were to be effective on 4 February under Executive Orders (EOs) signed by President Trump were delayed for 30 days this week as both nations negotiate with the Administration. The Trump Administration also imposed a new 10% tariff on imports from China (in addition to the tariffs already in force) that is now effective.

Companies that have North American import and export operations, as well as those that import into the US from China, depending on their specific situations, should consider immediate action. A Tax Alert on the US EOs imposing tariffs on Canada, Mexico and China is available here.

President Trump on 31 January signed an Executive Order that requires federal agencies to identify at least 10 existing regulations for repeal when a new regulation is proposed. This is a significant expansion from the 2-1 executive order signed during the first Trump Administration. If there are incremental costs related to a new regulation, the EO directs that those be offset by the elimination of existing costs associated with the 10 regulations.

The EO also directs the Treasury Secretary and the OMB Director to reinstate the 2018 general framework under which the Office of Information and Regulatory Affairs within OMB will review tax regulatory actions. The Biden Administration canceled the 2018 Treasury and OMB memorandum of agreement in June 2023. Congress also could utilize the Congressional Review Act to roll back recently finalized regulations from the Biden Administration to help meet the EO's goals. For more information, see and Office of Public Policy fact sheet here.

An IRS official recently discussed generic legal advice memorandum AM 2025-001 (GLAM), which addresses the relationship between the general arm's-length standard and the specific periodic adjustment rules. "The new GLAM reaffirms the IRS's long-standing advice in that area," the official said, adding that the IRS intends to issue more guidance on the subject.

The official said the GLAM "refutes incorrect arguments that an arm's-length result is solely and best evidenced by contemporaneous information like data of comparable uncontrolled transactions." According to the official, these arguments do not properly consider the provision of IRC Section 482, which states "income from the transfer (or license) of intangible property shall be commensurate with the income attributable to the intangible." A Tax Alert provides details.

Taxpayers should consider reviewing their current transfer pricing policies, particularly for high-profit intangibles and cost-sharing arrangements, to ensure alignment with the IRS's reaffirmed interpretation of the interplay between the general arm's-length standard and the specific periodic adjustment rules.

The US government reportedly has withdrawn from participation in ongoing discussions in the United Nations to develop a framework convention on international tax cooperation. According to reports, the US delegate described the negotiations on the framework as "inconsistent with U.S. priorities" and an "unwelcome overreach." The official was further quoted as saying "the process that has been adopted will lead to a convention that would unacceptably hamper nations' abilit[ies] to enact tax policies that serve the interests of their citizens, businesses, and workers."