To amend the Internal Revenue Code of 1986 to deny deduction for outsourcing payments.
Summary
What This Bill Does
This bill adds Internal Revenue Code section 280I. Businesses may not deduct any premium, fee, royalty, service charge, or other payment made in the course of a trade or business to a foreign person for labor or services whose benefit is directed directly or indirectly to U.S. consumers. For mixed payments covering services directed to both U.S. and non-U.S. consumers, only the U.S.-directed share is treated as an outsourcing payment. Foreign person excludes U.S. persons and corporations or partnerships organized under the laws of U.S. possessions. Treasury must issue regulations or guidance needed to carry out the section and prevent avoidance or abuse, including through transfer pricing arrangements.
Who Benefits and How
U.S. workers, domestic service providers, federal taxpayers, and Treasury tax administrators benefit from a rule that removes a deduction advantage for outsourcing service work serving U.S. consumers.
Who Bears the Burden and How
Companies making outsourcing payments, foreign service providers, multinational tax departments, transfer-pricing advisors, and the Internal Revenue Service must classify payments, allocate mixed services, document foreign-person status, and apply anti-abuse guidance.
Key Provisions
- Creates new Internal Revenue Code section 280I denying deductions for outsourcing payments.
- Defines outsourcing payments as payments to foreign persons for labor or services directed to U.S. consumers.
- Requires proportional treatment for mixed payments serving both U.S. and non-U.S. consumers.
- Directs Treasury to issue regulations and anti-abuse guidance, including rules addressing transfer-pricing arrangements.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Denies income tax deductions for outsourcing payments made to foreign persons for labor or services directed to U.S. consumers and directs Treasury to issue anti-abuse guidance, including transfer-pricing rules.
Key Policy Areas
Tax, Labor, International Business
Primary Purpose
Denies income tax deductions for outsourcing payments made to foreign persons for labor or services directed to U.S. consumers and directs Treasury to issue anti-abuse guidance, including transfer-pricing rules.
Policy Domains
Substantive provisions
Identified Gains
- U.S. workers
- Domestic service providers
- Federal taxpayers
- Treasury tax administrators
Identified Costs
- Companies making outsourcing payments
- Foreign service providers
- Multinational tax departments
- Transfer-pricing advisors
- Internal Revenue Service
Sponsors
Legislative Progress
In CommitteeReferred to the House Committee on Ways and Means.
Introduced in House
Mr. Austin Scott of Georgia introduced the following bill; which …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Companies making outsourcing payments, Foreign service providers, Multinational tax departments
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "secretary"
- → Secretary of the Treasury
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology