H.R. 7559

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7559 Introduced in House (IH)]

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119th CONGRESS
2d Session
H. R. 7559

To amend the Internal Revenue Code of 1986 to deny deduction for 
outsourcing payments.

_______________________________________________________________________

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.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SEC. 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:

``SEC. 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.
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