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

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 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain. 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.