End Outsourcing Act

I 116TH CONGRESS 2D SESSION H. R. 6121 To provide incentives for businesses to keep jobs in America, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 5, 2020 Mr. POCAN (for himself, Ms. KAPTUR, Ms. LEE of California, Ms. NORTON, and Mr. RYAN) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Education and Labor, Armed Services, and Oversight and Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the com- mittee concerned A BILL To provide incentives for businesses to keep jobs in America, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘End Outsourcing Act’’. 4 SEC. 2. OUTSOURCING STATEMENT IN WORKER ADJUST- 5 MENT AND RETRAINING NOTICE. 6 (a) OUTSOURCING STATEMENT.—Section 3 of the 7 Worker Adjustment and Retraining Notification Act (29 8 VerDate Sep 11 2014 02:32 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6121.IH H6121 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 6121 IH U.S.C. 2102) is amended by adding at the end the fol- 1 lowing: 2 ‘‘(e) OUTSOURCING STATEMENT.— 3 ‘‘(1) IN GENERAL.—For purposes of subsection 4 (a), the employer shall include an outsourcing state- 5 ment in the notice described in that subsection. The 6 outsourcing statement shall specify whether part or 7 all of the positions held by affected employees cov- 8 ered by subsection (a) will be moved to a country 9 outside the United States, regardless of whether the 10 positions are moved within the business enterprise 11 involved or to another business enterprise. The em- 12 ployer shall make the determination of whether the 13 positions are being so moved in accordance with reg- 14 ulations issued by the Secretary. The employer shall 15 serve the notice as required under subsection (a) and 16 submit the notice to the Secretary of Labor. 17 ‘‘(2) LIST.—Not less often than annually, the 18 Secretary shall publish and make available on the 19 website of the Department of Labor, a list including 20 each employer who— 21 ‘‘(A) has included an outsourcing state- 22 ment in a notice under paragraph (1); or 23 ‘‘(B) has incurred liability under section 5, 24 in part or in whole, because the employer or- 25 VerDate Sep 11 2014 02:32 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6121.IH H6121 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 6121 IH dered a plant closing or mass layoff without 1 having served a notice that is required, under 2 this section, to include an outsourcing state- 3 ment.’’. 4 (b) IMPLEMENTATION REPORT.—The Worker Ad- 5 justment and Retraining Notification Act is amended by 6 inserting after section 10 (29 U.S.C. 2109) the following: 7 ‘‘SEC. 10A. IMPLEMENTATION STUDY. 8 ‘‘(a) STUDY.—The Comptroller General of the United 9 States shall conduct a study of the implementation of sec- 10 tion 3(e) of the Worker Adjustment and Retraining Notifi- 11 cation Act (29 U.S.C. 2102(e)) by the Department of 12 Labor. 13 ‘‘(b) REPORT.—Not later than 3 years after the date 14 of enactment of this section, the Comptroller General shall 15 submit to the appropriate committees of Congress a report 16 containing the results of the study.’’. 17 SEC. 3. DENIAL OF DEDUCTION FOR OUTSOURCING EX- 18 PENSES. 19 (a) IN GENERAL.—Part IX of subchapter B of chap- 20 ter 1 of the Internal Revenue Code of 1986 is amended 21 by adding at the end the following new section: 22 VerDate Sep 11 2014 02:32 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6121.IH H6121 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 6121 IH ‘‘SEC. 280I. OUTSOURCING EXPENSES. 1 ‘‘(a) IN GENERAL.—No deduction otherwise allow- 2 able under this chapter shall be allowed for any specified 3 outsourcing expense. 4 ‘‘(b) SPECIFIED OUTSOURCING EXPENSE.—For pur- 5 poses of this section— 6 ‘‘(1) IN GENERAL.—The term ‘specified out- 7 sourcing expense’ means— 8 ‘‘(A) any eligible expense paid or incurred 9 by the taxpayer in connection with the elimi- 10 nation of any business unit of the taxpayer (or 11 of any member of any expanded affiliated group 12 in which the taxpayer is also a member) located 13 within the United States, and 14 ‘‘(B) any eligible expense paid or incurred 15 by the taxpayer in connection with the estab- 16 lishment of any business unit of the taxpayer 17 (or of any member of any expanded affiliated 18 group in which the taxpayer is also a member) 19 located outside the United States, 20 if such establishment constitutes the relocation of 21 the business unit so eliminated. For purposes of the 22 preceding sentence, a relocation shall not be treated 23 as failing to occur merely because such elimination 24 occurs in a different taxable year than such estab- 25 lishment. 26 VerDate Sep 11 2014 02:32 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H6121.IH H6121 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 6121 IH ‘‘(2) ELIGIBLE EXPENSES.—The term ‘eligible 1 expenses’ means— 2 ‘‘(A) any amount for which a deduction is 3 allowed to the taxpayer under section 162, and 4 ‘‘(B) permit and license fees, lease broker- 5 age fees, equipment installation costs, and, to 6 the extent provided by the Secretary, other 7 similar expenses. 8 Such term does not include any compensation which 9 is paid or incurred in connection with severance 10 from employment and, to the extent provided by the 11 Secretary, any similar amount. 12 ‘‘(3) BUSINESS UNIT.—The term ‘business unit’ 13 means— 14 ‘‘(A) any trade or business, and 15 ‘‘(B) any line of business, or functional 16 unit, which is part of any trade or business. 17 ‘‘(4) EXPANDED AFFILIATED GROUP.—The 18 term ‘expanded affiliated group’ means an affiliated 19 group as defined in section 1504(a), determined 20 without regard to section 1504(b)(3) and by sub- 21 stituting ‘more than 50 percent’ for ‘at least 80 per- 22 cent’ each place it appears in section 1504(a). A 23 partnership or any other entity (other than a cor- 24 poration) shall be treated as a member of an ex- 25 VerDate Sep 11 2014 02:32 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H6121.IH H6121 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 6121 IH panded affiliated group if such entity is controlled 1 (within the meaning of section 954(d)(3)) by mem- 2 bers of such group (including any entity treated as 3 a member of such group by reason of this para- 4 graph). 5 ‘‘(5) OPERATING EXPENSES NOT TAKEN INTO 6 ACCOUNT.—Any amount paid or incurred in connec- 7 tion with the ongoing operation of a business unit 8 shall not be treated as an amount paid or incurred 9 in connection with the establishment or elimination 10 of such business unit. 11 ‘‘(c) SPECIAL RULES.— 12 ‘‘(1) APPLICATION TO DEDUCTIONS FOR DE- 13 PRECIATION AND AMORTIZATION.—In the case of 14 any portion of a specified outsourcing expense which 15 is not deductible in the taxable year in which paid 16 or incurred, such portion shall neither be chargeable 17 to capital account nor amortizable. 18 ‘‘(2) POSSESSIONS TREATED AS PART OF THE 19 UNITED STATES.—For purposes of this section, the 20 term ‘United States’ shall be treated as including 21 each possession of the United States (including the 22 Commonwealth of Puerto Rico and the Common- 23 wealth of the Northern Mariana Islands). 24 VerDate Sep 11 2014 02:32 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H6121.IH H6121 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 6121 IH ‘‘(d) REGULATIONS.—The Secretary shall prescribe 1 such regulations or other guidance as may be necessary 2 or appropriate to carry out the purposes of this section, 3 including regulations which provide (or create a rebuttable 4 presumption) that certain establishments of business units 5 outside the United States will be treated as relocations 6 (based on timing or such other factors as the Secretary 7 may provide) of business units eliminated within the 8 United States.’’. 9 (b) LIMITATION ON SUBPART F INCOME OF CON- 10 TROLLED FOREIGN CORPORATIONS DETERMINED WITH- 11 OUT REGARD TO SPECIFIED OUTSOURCING EXPENSES.— 12 Subsection (c) of section 952 of such Code is amended 13 by adding at the end the following new paragraph: 14 ‘‘(4) EARNINGS AND PROFITS DETERMINED 15 WITHOUT REGARD TO SPECIFIED OUTSOURCING EX- 16 PENSES.—For purposes of this subsection, earnings 17 and profits of any controlled foreign corporation 18 shall be determined without regard to any specified 19 outsourcing expense (as defined in section 20 280I(b)).’’. 21 (c) CLERICAL AMENDMENT.—The table of sections 22 for part IX of subchapter B of chapter 1 of such Code 23 is amended by adding at the end the following new item: 24 ‘‘Sec. 280I. Outsourcing expenses.’’. VerDate Sep 11 2014 02:32 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6211 E:\BILLS\H6121.IH H6121 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 6121 IH (d) EFFECTIVE DATE.—The amendments made by 1 this section shall apply to amounts paid or incurred after 2 the date of the enactment of this Act. 3 SEC. 4. DENIAL OF CERTAIN DEDUCTIONS AND ACCOUNT- 4 ING METHODS FOR OUTSOURCING EMPLOY- 5 ERS. 6 (a) IN GENERAL.—Part IX of subchapter B of chap- 7 ter 1 of the Internal Revenue Code of 1986, as amended 8 by section 3, is amended by adding at the end the fol- 9 lowing new section: 10 ‘‘SEC. 280J. LIMITATIONS FOR OUTSOURCING EMPLOYERS. 11 ‘‘(a) IN GENERAL.—During the disallowance period, 12 an applicable taxpayer— 13 ‘‘(1) may not use the method provided in sec- 14 tion 472(b) in inventorying goods, 15 ‘‘(2) may not use the lower of cost or market 16 method of determining inventories for purposes of 17 determining income, and 18 ‘‘(3) shall not be allowed any deduction under 19 section 163 for interest paid or accrued on indebted- 20 ness. 21 ‘‘(b) APPLICABLE TAXPAYER.—For purposes of sub- 22 section (a), the term ‘applicable taxpayer’ means a tax- 23 payer which— 24 VerDate Sep 11 2014 02:32 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H6121.IH H6121 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 6121 IH ‘‘(1) during the taxable year, has served written 1 notice under subsection (a) of section 3 of the Work- 2 er Adjustment and Retraining Notification Act 3 which includes an outsourcing statement described 4 in subsection (e) of such section, and 5 ‘‘(2) the cumulative employment loss (excluding 6 any part-time employees) for positions at facilities 7 owned by such taxpayer which will be moved to a 8 country outside of the United States, as determined 9 pursuant to any outsourcing statements served by 10 such taxpayer during such taxable year, exceeds 50 11 employees. 12 ‘‘(c) DISALLOWANCE PERIOD.—For purposes of sub- 13 section (a), the disallowance period is the period of 3 tax- 14 able years after the taxable year in which the statements 15 described in subsection (b)(2) are required to be served. 16 ‘‘(d) EXPANDED AFFILIATED GROUP TREATED AS 17 SINGLE TAXPAYER.—For purposes of this section, the 18 members of an expanded affiliated group (as defined in 19 section 280I(b)(4)) shall be treated as a single taxpayer. 20 ‘‘(e) REGULATIONS.—The Secretary shall prescribe 21 such regulations or other guidance as may be necessary 22 or appropriate to carry out the purposes of this section.’’. 23 (b) CLERICAL AMENDMENT.—The table of sections 24 for part IX of subchapter B of chapter 1 of the Internal 25 VerDate Sep 11 2014 02:32 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H6121.IH H6121 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 6121 IH Revenue Code of 1986, as amended by section 3, is 1 amended by adding at the end the following new item: 2 ‘‘Sec. 280J. Limitations for outsourcing employers.’’. (c) EFFECTIVE DATE.—The amendments made by 3 this section shall apply to taxable years beginning after 4 the date of the enactment of this Act. 5 SEC. 5. CURRENT YEAR INCLUSION OF NET CFC TESTED IN- 6 COME. 7 (a) REPEAL OF TAX-FREE DEEMED RETURN ON IN- 8 VESTMENTS.— 9 (1) IN GENERAL.—Section 951A(a) of the In- 10 ternal Revenue Code of 1986 is amended by striking 11 ‘‘global intangible low-taxed income’’ and inserting 12 ‘‘net CFC tested income’’. 13 (2) CONFORMING AMENDMENTS.— 14 (A) Section 951A of such Code is amended 15 by striking subsections (b) and (d). 16 (B) Section 951A(e)(1) of such Code is 17 amended by striking ‘‘subsections (b), 18 (c)(1)(A), and’’ and inserting ‘‘subsections 19 (c)(1)(A) and’’. 20 (C) Section 951A(f) of such Code is 21 amended to read as follows: 22 ‘‘(f) TREATMENT AS SUBPART F INCOME FOR CER- 23 TAIN PURPOSES.— 24 VerDate Sep 11 2014 02:32 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H6121.IH H6121 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 6121 IH ‘‘(1) IN GENERAL.—Except as provided in para- 1 graph (2), any net CFC tested income included in 2 gross income under subsection (a) shall be treated in 3 the same manner as an amount included under sec- 4 tion 951(a)(1)(A) for purposes of applying sections 5 168(h)(2)(B), 535(b)(10), 851(b), 904(h)(1), 959, 6 961, 962, 993(a)(1)(E), 996(f)(1), 1248(b)(1), 7 1248(d)(1), 6501(e)(1)(C), 6654(d)(2)(D), and 8 6655(e)(4). 9 ‘‘(2) EXCEPTION.—The Secretary shall provide 10 rules for the application of paragraph (1) to other 11 provisions of this title in any case in which the de- 12 termination of subpart F income is required to be 13 made at the level of the controlled foreign corpora- 14 tion.’’. 15 (D) Section 960(d)(2)(A) of such Code is 16 amended by striking ‘‘global intangible low- 17 taxed income (as defined in section 951A(b))’’ 18 and inserting ‘‘net CFC tested income (as de- 19 fined in section 951A(c))’’. 20 (b) REPEAL OF REDUCED RATE OF TAX ON NET 21 CFC TESTED INCOME.— 22 (1) IN GENERAL.—Part VIII of subchapter B 23 of chapter 1 of such Code is amended by striking 24 VerDate Sep 11 2014 02:32 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H6121.IH H6121 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 6121 IH section 250 (and by striking the item relating to 1 such section in the table of sections of such part). 2 (2) CONFORMING AMENDMENTS.— 3 (A) Section 59A(c)(4)(B)(i) of such Code 4 is amended by striking ‘‘section 172, 245A, or 5 250’’ and inserting ‘‘section 172 or 245A’’. 6 (B) Section 172(d) of such Code is amend- 7 ed by striking paragraph (9). 8 (C) Section 246(b)(1) of such Code is 9 amended— 10 (i) by striking ‘‘subsection (a) and (b) 11 of section 245, and section 25 [Text truncated for display. 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