H.R. 7559

119 HR 7559 IH: To amend the Internal Revenue Code of 1986 to deny deduction for outsourcing payments.
 U.S. House of Representatives
 2026-02-12
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 EN
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 I  119th CONGRESS  2d Session  H. R. 7559  IN THE HOUSE OF REPRESENTATIVES   February 12, 2026   Mr. Austin Scott of Georgia  introduced the following bill; which was referred to the  Committee on Ways and Means    A BILL
To amend the Internal Revenue Code of 1986 to deny deduction for outsourcing payments.
1.
Denial of income tax deduction on outsourcing payments
(a)
In general
Part IX of subchapter B of  chapter 1  of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
280I.
Outsourcing payments
(a)
In general
No deduction shall be allowed under this chapter for any outsourcing payment.
(b)
Outsourcing payment
For purposes of this section—
(1)
In general
The term  outsourcing payment  means any premium, fee, royalty, service charge, or other payment made—
(A)
in the course of a trade or business,
(B)
to a foreign person, and
(C)
with respect to labor or services the benefit of which is directed, directly or indirectly, to consumers located in the United States.
(2)
Mixed payments
In the case of any payment to a foreign person with respect to which labor or services are directed to consumers both within and without the United States, the amount treated as an outsourcing payment shall not exceed the amount equal to the product of such payment and a fraction—
(A)
the numerator of which is the amount of labor or services with respect to such payment directed to consumers within the United States, to
(B)
the labor or services with respect to such payment directed to all consumers.
(c)
Foreign person
For purposes of this section, the term  foreign person  means any person who is not a United States person, except that such term shall not include any corporation or partnership which is organized under the laws of a possession of the United States.
(d)
Regulations and other guidance
The Secretary shall prescribe such regulations and other guidance as may be necessary or appropriate to carry out this section, including regulations or guidance to prevent the avoidance or abuse of the purposes of this section, including through the use of transfer pricing arrangements.
 .
(b)
Clerical amendment
The table of section for part IX of subchapter B of  chapter 1  of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Sec. 280I. Outsourcing payments.
  .
(c)
Effective date
The amendments made by this section shall apply to payments made after December 31, 2025, in taxable years ending after such date.