To amend the Internal Revenue Code of 1986 to deny deduction for outsourcing payments.
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Overview
This bill proposes to limit the ability of businesses to deduct payments made to foreign companies for labor or services that ultimately benefit consumers in the United States. Specifically, it defines ‘outsourcing payments’ as premiums, fees, or royalties paid to foreign entities when those services are directed toward U.S. consumers. The bill aims to prevent companies from reducing their tax liability by outsourcing work and then deducting payments to foreign companies. The changes will take effect for payments made after December 31, 2025.
Key provisions
- Defines ‘outsourcing payment’ as payments to foreign persons for labor or services benefiting U.S. consumers.
- Prohibits deductions for outsourcing payments.
- Establishes a calculation for determining the portion of a payment considered an outsourcing payment based on the location of consumers.
- Excludes U.S. possessions’ corporations and partnerships from the definition of ‘foreign person’.
- Authorizes the Secretary to issue regulations to prevent avoidance of the bill’s provisions.
Who is affected
- Businesses
- Foreign companies
- Taxpayers
Notable changes
- Denies deductions for payments made to foreign entities for services benefiting U.S. consumers.
- Introduces a specific definition of ‘outsourcing payment’.
Bill text
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Sponsors
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1 on record
Primary sponsor
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