The US Congress will return to Washington next week for an abbreviated session before adjourning for the November midterm elections. The Senate returns from its August recess on 14 September. The House will return from the Labor Day holiday next week and is not expected to be in session after 17 September, through the November elections. A post-election lame-duck session is currently scheduled to begin on 9 November.

It is unclear what, if any, legislation will be considered before Congress adjourns.

Congressional action on outstanding tax issues during the lame-duck session after the elections also remains uncertain. One option is a bipartisan bill, which could include tax extenders and potentially other issues like US-Taiwan tax relief and tax administration proposals. The bill could be attached to a longer-term government funding measure that will be needed when the current Continuing Resolution to fund the federal government expires in December. Another possible track for tax legislation is a budget reconciliation bill that requires only a majority vote in both Houses.

Treasury and the IRS on 10 September released proposed regulations (REG-117273-25) under IRC Sections 904(b)(5) and 250(b)(3) related to the allocation and apportionment of deductions to (1) IRC Section 951A net controlled foreign corporation (CFC) tested income (NCTI category income) for foreign tax credit limitation purposes and (2) deduction-eligible income (DEI) for purposes of the deduction for foreign-derived deduction eligible income (FDDEI).

IRC Sections 904(b)(5) and 250(b)(3) were enacted as part of the One Big Beautiful Bill Act to limit deductions allocable to NCTI, DEI and FDDEI. Both provisions exclude the allocation of interest and research and experimentation expenses. IRC Section 904(b)(5) further provides that NCTI category income is reduced by other deductions only if those deductions are "directly allocable" to NCTI. These statutory changes apply to tax years beginning after 31 December 2025.

The proposed regulations treat stewardship expenses and supportive/overhead expenses, along with certain other categories of expenses, as expenses not directly allocable to NCTI. In contrast, IRC Section 986(c) currency losses assigned to NCTI with respect to distributions of previously taxed earnings and profits (PTEP) would be treated as directly allocable to NCTI. Deductions subject to IRC Section 904(b)(5) that are reallocated to US-source income under the proposed regulations would be taken into account by the overall domestic loss (ODL) rules in IRC Section 904(g)(2). Taxpayers may rely on the proposed regulations before finalization, provided each proposed rule is respectively followed in its entirety. An EY Tax Alert is forthcoming.

President Trump on 8 September issued five proclamations under Section 338 of the Tariff Act of 1930 that revise the 50% tariffs announced in July (and which took effect on 22 August) imposed on certain Canadian goods and prohibit imports of selected Canadian alcoholic beverages, dairy products, and motor vehicle-related goods. The White House described the measures as a response to Canada's continued and additional trade actions affecting US exports. The tariff-list changes take effect on 15 September, while the import bans take effect 29 September.

In an 8 September statement, U.S. Trade Representative Jamieson Greer indicated the revisions target selected Canadian sectors while removing certain non-sensitive goods from the tariff lists.

These actions apply in addition to any existing tariffs imposed under Section 232 of the Trade Expansion Act of 1962 and will apply to all covered goods regardless of whether they qualify for preferential treatment under the US-Mexico-Canada Agreement (USMCA). An EY Global Tax Alert provides details.

The OECD on 11 September released a revised version of the GloBE Information Return (September 2026) (GIR) that reflects the side-by-side (SbS) package released in January 2026. According to the OECD, the new GIR is to be used for GIR filings for fiscal years beginning on or after 31 December 2025. However, the new GIR also includes notes that provide clarifications that are unrelated to the SbS package and the document indicates that these notes should be filed in any future GIR filing. The GIR provides standard information that is "designed to facilitate compliance with and administration of the Global Minimum Tax." More specifically, it is aimed at providing tax administrations with the information they need to complete a risk assessment and evaluate a Constituent Entity's Pillar Two Top-up-Tax liability.

The US Treasury immediately released a press release welcoming the issuance of the new GIR with elements of the SbS package.