The US Senate last week temporarily delayed further action on the budget reconciliation 2.0 bill due to unrelated internal Republican disagreements on various issues. The Senate postponed until after the one-week Memorial Day recess the process of limitless amendment votes and a final vote on the Immigration and Customs Enforcement and Customs and Border Protection budget reconciliation legislation.

The Senate is expected to turn to budget reconciliation next week when Congress returns to Washington.

The Congressional Joint Committee on Taxation (JCT) on 28 May released explanations of provisions enacted by the 2025 One Big Beautiful Bill Act. The so-called "Blue Book" provides the JCT's explanations of the provisions as well as suggested technical corrections.

Treasury and the IRS on 29 May issued proposed regulations amending the IRC Section 892 proposed regulations on foreign governments' US investment income, which were originally issued in December 2025. The latest proposed regulations address applicability dates, grandfathering protection and transitional relief to "ensure that certain existing foreign government holdings, as well as holdings acquired during a transition period, would not be subject to the final regulations."

The new IRC Section 892 proposed rules clarify that the existing IRC Section 892 rules apply to foreign government holdings that were acquired before the date of the December 2025 proposed rules. They also clarify that the existing IRC Section 892 rules apply to foreign government holdings "acquired on or after the applicability date if acquired pursuant to a binding commitment entered into before the applicability date."

The new proposed rules note that the US government did not intend for the 2025 proposed regulations, after finalization, to apply retroactively to foreign government holdings of debt and interests in entities. A Tax Alert is forthcoming.

The OECD on 28 May released an updated Consolidated Commentary to the Global Anti-Base Erosion Model Rules (2026), which includes administrative guidance released by the Inclusive Framework over the period March 2022 through January 2026. The consolidated commentary provides comprehensive guidance on the application and interpretation of the Global Anti-Base Erosion (GloBE) Rules. It includes sections on the Pillar Two "side-by-side" system released in January 2026.