S. 2976

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2976 Introduced in Senate (IS)]

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119th CONGRESS
1st Session
S. 2976

To amend the Internal Revenue Code of 1986 to impose an excise tax on 
payments by United States taxpayers to foreign persons for services 
provided to United States consumers, and for other purposes.

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

October 6, 2025

Mr. Moreno introduced the following bill; which was read twice and 
referred to the Committee on Finance

_______________________________________________________________________

A BILL

To amend the Internal Revenue Code of 1986 to impose an excise tax on 
payments by United States taxpayers to foreign persons for services 
provided to United States consumers, and for other purposes.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Halting International Relocation of 
Employment Act'' or the ``HIRE Act''.

SEC. 2. OUTSOURCING EXCISE TAX.

(a) In General.--Subtitle D of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new chapter:

``CHAPTER 50B--OUTSOURCING

``Sec. 5000E. Outsourcing payments.

``SEC. 5000E. OUTSOURCING PAYMENTS.

``(a) Imposition of Tax.--There is hereby imposed a tax on any 
United States person making an outsourcing payment a tax equal to 25 
percent of the amount of such 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 related parties, controlled 
foreign corporations, and other intermediaries, or through the use of 
transfer pricing arrangements.''.
(b) Tax Not Deductible.--Section 275(a)(6) of the Internal Revenue 
Code of 1986 is amended by inserting ``50B,'' after ``50A''.
(c) Reporting.--The Secretary of the Treasury, or the Secretary's 
delegate, may--
(1) require United States persons making payments to 
foreign persons (as defined in section 5000E of the Internal 
Revenue Code of 1986, as added by subsection (a)) to file a 
return of tax under section 5000E of such Code or to file an 
information return concerning such payments, which may 
include--
(A) information on whether such payments are 
outsourcing payments (as defined in section 5000E of 
such Code), and
(B) such other information concerning such payment 
as the Secretary may reasonably require to enforce the 
amendments made by this section, and
(2) require the officers of any corporation to certify on 
such return, under penalty of perjury, the character of such 
payments.
For purposes part II of subchapter B of chapter 68 of the Internal 
Revenue Code of 1986, any return required to be filed under paragraph 
(1) shall be treated as an information return.
(d) Increased Penalty for Failure To Pay Tax.--Section 6651(a) of 
the Internal Revenue Code is amended by adding at the end the following 
new sentence: ``In the case of the failure to pay any tax imposed under 
chapter 50B, paragraphs (2) and (3) shall be applied by substituting 
`50 percent' for `05. percent' each place it appears and without regard 
to the phrase `not exceeding 25 percent in the aggregate' each place it 
appears.''.
(e) No Inference.--Nothing in this section or the amendments made 
by this section shall be construed to limit the application of the 
economic substance doctrine with respect to any payment described in 
section 5000E(b) of the Internal Revenue Code of 1986, as added by 
subsection (a).
(f) Clerical Amendment.--The table of chapters for subpart D of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new item:

``Chapter 50B--Outsourcing''.

(g) Effective Date.--The amendments made by this section shall 
apply to payments made after December 31, 2025.

SEC. 3. DOMESTIC WORKFORCE FUND.

(a) In General.--Subchapter A of chapter 98 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new section:

``SEC. 9512. DOMESTIC WORKFORCE FUND.

``(a) Establishment.--There is established in the Treasury of the 
United States a trust fund to be known as the `Domestic Workforce Fund' 
(hereafter in this section referred to as the `Fund'), consisting of 
such amounts as may be appropriated, credited, or paid into the Fund as 
provided in this section or section 9602(b).
``(b) Transfer to Fund.--There are hereby appropriated to the Fund 
amounts equivalent to the amounts received in the Treasury under--
``(1) the tax imposed under section 5000E,
``(2) so much of the additions to tax under section 6051(a) 
as relates to the failure to pay taxes imposed under section 
5000E, and
``(3) so much of the penalties imposed under part II of 
suchchapter B of chapter 68 as relates to returns described in 
section 2(b) of the Halting International Relocation of 
Employment Act.
``(c) Expenditures From Fund.--Amounts in the Fund shall be 
available, without further appropriation, solely for the following 
purposes:
``(1) Workforce development and retraining programs 
administered by the Department of Labor.
``(2) Apprenticeship programs and partnerships with 
industry to expand domestic employment in sectors impacted by 
outsourcing.
``(3) Grants to States for workforce development 
initiatives targeted at communities with high levels of job 
displacement.''.
(b) Clerical Amendment.--The table of sections for subchapter A of 
chapter 98 of such Code is amended by adding at the end the following 
new item:

``Sec. 9512. Domestic workforce fund.''.

SEC. 4. 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.

``No deduction shall be allowed under this chapter for any 
outsourcing payment (as defined in section 5000E(b)).''.
(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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