Bring Jobs Home Act

I 116TH CONGRESS 2D SESSION H. R. 6992 To amend the Internal Revenue Code of 1986 to encourage domestic insourcing and discourage foreign outsourcing. IN THE HOUSE OF REPRESENTATIVES MAY 22, 2020 Mr. PASCRELL (for himself, Mr. DANNY K. DAVIS of Illinois, Ms. SA´NCHEZ, Ms. DELBENE, Mr. SWALWELL of California, Ms. NORTON, Ms. BROWNLEY of California, Mrs. WATSON COLEMAN, Ms. BARRAGA´N, Ms. LEE of California, and Mr. COHEN) 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 encourage domestic insourcing and discourage foreign outsourcing. 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 ‘‘Bring Jobs Home 4 Act’’. 5 SEC. 2. CREDIT FOR INSOURCING EXPENSES. 6 (a) IN GENERAL.—Subpart D of part IV of sub- 7 chapter A of chapter 1 of the Internal Revenue Code of 8 VerDate Sep 11 2014 18:22 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6992.IH H6992 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 6992 IH 1986 is amended by adding at the end the following new 1 section: 2 ‘‘SEC. 45U. CREDIT FOR INSOURCING EXPENSES. 3 ‘‘(a) IN GENERAL.—For purposes of section 38, the 4 insourcing expenses credit for any taxable year is an 5 amount equal to 20 percent of the eligible insourcing ex- 6 penses of the taxpayer which are taken into account in 7 such taxable year under subsection (d). 8 ‘‘(b) ELIGIBLE INSOURCING EXPENSES.—For pur- 9 poses of this section— 10 ‘‘(1) IN GENERAL.—The term ‘eligible 11 insourcing expenses’ means— 12 ‘‘(A) eligible expenses paid or incurred by 13 the taxpayer in connection with the elimination 14 of any business unit of the taxpayer (or of any 15 member of any expanded affiliated group in 16 which the taxpayer is also a member) located 17 outside the United States, and 18 ‘‘(B) eligible expenses paid or incurred by 19 the taxpayer in connection with the establish- 20 ment of any business unit of the taxpayer (or 21 of any member of any expanded affiliated group 22 in which the taxpayer is also a member) located 23 within the United States, 24 VerDate Sep 11 2014 18:22 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6992.IH H6992 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 6992 IH if such establishment constitutes the relocation of 1 business unit so eliminated. For purposes of the pre- 2 ceding sentence, a relocation shall not be treated as 3 failing to occur merely because such elimination oc- 4 curs in a different taxable year than such establish- 5 ment. 6 ‘‘(2) ELIGIBLE EXPENSES.—The term ‘eligible 7 expenses’ means— 8 ‘‘(A) any amount for which a deduction is 9 allowed to the taxpayer under section 162, and 10 ‘‘(B) permit and license fees, lease broker- 11 age fees, equipment installation costs, and, to 12 the extent provided by the Secretary, other 13 similar expenses. 14 Such term does not include any compensation which 15 is paid or incurred in connection with severance 16 from employment and, to the extent provided by the 17 Secretary, any similar amount. 18 ‘‘(3) BUSINESS UNIT.—The term ‘business unit’ 19 means— 20 ‘‘(A) any trade or business, and 21 ‘‘(B) any line of business, or functional 22 unit, which is part of any trade or business. 23 ‘‘(4) EXPANDED AFFILIATED GROUP.—The 24 term ‘expanded affiliated group’ means an affiliated 25 VerDate Sep 11 2014 18:22 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6992.IH H6992 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 6992 IH group as defined in section 1504(a), determined 1 without regard to section 1504(b)(3) and by sub- 2 stituting ‘more than 50 percent’ for ‘at least 80 per- 3 cent’ each place it appears in section 1504(a). A 4 partnership or any other entity (other than a cor- 5 poration) shall be treated as a member of an ex- 6 panded affiliated group if such entity is controlled 7 (within the meaning of section 954(d)(3)) by mem- 8 bers of such group (including any entity treated as 9 a member of such group by reason of this para- 10 graph). 11 ‘‘(5) EXPENSES MUST BE PURSUANT TO 12 INSOURCING PLAN.—Amounts shall be taken into ac- 13 count under paragraph (1) only to the extent that 14 such amounts are paid or incurred pursuant to a 15 written plan approved the board of directors or au- 16 thorized officers to carry out the relocation described 17 in paragraph (1). 18 ‘‘(6) OPERATING EXPENSES NOT TAKEN INTO 19 ACCOUNT.—Any amount paid or incurred in connec- 20 tion with the ongoing operation of a business unit 21 shall not be treated as an amount paid or incurred 22 in connection with the establishment or elimination 23 of such business unit. 24 VerDate Sep 11 2014 18:22 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H6992.IH H6992 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 6992 IH ‘‘(c) INCREASED DOMESTIC EMPLOYMENT REQUIRE- 1 MENT.—No credit shall be allowed under this section un- 2 less the number of full-time equivalent employees of the 3 taxpayer for the taxable year for which the credit is 4 claimed exceeds the number of full-time equivalent em- 5 ployees of the taxpayer for the last taxable year ending 6 before the first taxable year in which such eligible 7 insourcing expenses were paid or incurred. For purposes 8 of this subsection, full-time equivalent employees has the 9 meaning given such term under section 45R(d) (and the 10 applicable rules of section 45R(e)), determined by only 11 taking into account wages (as otherwise defined in section 12 45R(e)) paid with respect to services performed within the 13 United States. All employers treated as a single employer 14 under subsection (b), (c), (m), or (o) of section 414 shall 15 be treated as a single employer for purposes of this sub- 16 section. 17 ‘‘(d) CREDIT ALLOWED UPON COMPLETION OF 18 INSOURCING PLAN.— 19 ‘‘(1) IN GENERAL.—Except as provided in para- 20 graph (2), eligible insourcing expenses shall be taken 21 into account under subsection (a) in the taxable year 22 during which the plan described in subsection (b)(5) 23 has been completed and all eligible insourcing ex- 24 VerDate Sep 11 2014 18:22 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H6992.IH H6992 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 6992 IH penses pursuant to such plan have been paid or in- 1 curred. 2 ‘‘(2) ELECTION TO APPLY EMPLOYMENT TEST 3 AND CLAIM CREDIT IN FIRST FULL TAXABLE YEAR 4 AFTER COMPLETION OF PLAN.—If the taxpayer 5 elects the application of this paragraph, eligible 6 insourcing expenses shall be taken into account 7 under subsection (a) in the first taxable year after 8 the taxable year described in paragraph (1). 9 ‘‘(e) POSSESSIONS TREATED AS PART OF THE 10 UNITED STATES.—For purposes of this section, the term 11 ‘United States’ shall be treated as including each posses- 12 sion of the United States (including the Commonwealth 13 of Puerto Rico and the Commonwealth of the Northern 14 Mariana Islands). 15 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 16 such regulations or other guidance as may be necessary 17 or appropriate to carry out the purposes of this section.’’. 18 (b) CREDIT TO BE PART OF GENERAL BUSINESS 19 CREDIT.—Section 38(b) of such Code is amended by strik- 20 ing ‘‘plus’’ at the end of paragraph (32), by striking the 21 period at the end of paragraph (33) and inserting ‘‘, plus’’, 22 and by adding at the end the following new paragraph: 23 ‘‘(34) the insourcing expenses credit determined 24 under section 45U(a).’’. 25 VerDate Sep 11 2014 18:22 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H6992.IH H6992 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 6992 IH (c) CONFORMING AMENDMENTS.— 1 (1) Section 280C of such Code is amended by 2 adding at the end the following new subsection: 3 ‘‘(i) CREDIT FOR INSOURCING EXPENSES.—No de- 4 duction shall be allowed for that portion of the expenses 5 otherwise allowable as a deduction taken into account in 6 determining the credit under section 45U for the taxable 7 year which is equal to the amount of the credit determined 8 for such taxable year under section 45U(a).’’. 9 (2) The table of sections for subpart D of part 10 IV of subchapter A of chapter 1 of such Code is 11 amended by adding at the end the following new 12 item: 13 ‘‘Sec. 45U. Credit for insourcing expenses.’’. (d) EFFECTIVE DATE.—The amendments made by 14 this section shall apply to amounts paid or incurred after 15 the date of the enactment of this Act. 16 (e) APPLICATION TO UNITED STATES POSSES- 17 SIONS.— 18 (1) PAYMENTS TO POSSESSIONS.— 19 (A) MIRROR CODE POSSESSIONS.—The 20 Secretary of the Treasury shall make periodic 21 payments to the United States Virgin Islands, 22 Guam, and the Commonwealth of the Northern 23 Mariana Islands in an amount equal to the loss 24 to that possession by reason of section 45U of 25 VerDate Sep 11 2014 18:22 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H6992.IH H6992 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 6992 IH the Internal Revenue Code of 1986. Such 1 amount shall be determined by the Secretary of 2 the Treasury based on information provided by 3 the government of the respective possession. 4 (B) OTHER POSSESSIONS.—The Secretary 5 of the Treasury shall make annual payments to 6 the Commonwealth of Puerto Rico and Amer- 7 ican Samoa in an amount estimated by the Sec- 8 retary of the Treasury as being equal to the ag- 9 gregate benefits that would have been provided 10 to residents of each such possession by reason 11 of section 45U of such Code if a mirror code 12 tax system had been in effect in such posses- 13 sion. The preceding sentence shall not apply 14 with respect to any possession of the United 15 States unless such possession has a plan, which 16 has been approved by the Secretary of the 17 Treasury, under which such possession will 18 promptly distribute such payment to the resi- 19 dents of such possession. 20 (2) COORDINATION WITH CREDIT ALLOWED 21 AGAINST UNITED STATES INCOME TAXES.—No cred- 22 it shall be allowed against United States income 23 taxes under section 45U of such Code to any per- 24 son— 25 VerDate Sep 11 2014 18:22 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H6992.IH H6992 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 6992 IH (A) to whom a credit is allowed against 1 taxes imposed by the possession by reason of 2 such section, or 3 (B) who is eligible for a payment under a 4 plan described in paragraph (1)(B). 5 (3) TREATMENT OF PAYMENTS.—For purposes 6 of section 1324(b)(2) of title 31, United States 7 Code, the payments under this section shall be treat- 8 ed in the same manner as a refund due from sec- 9 tions referred to in such section 1324(b)(2). 10 SEC. 3. DENIAL OF DEDUCTION FOR OUTSOURCING EX- 11 PENSES. 12 (a) IN GENERAL.—Part IX of subchapter B of chap- 13 ter 1 of the Internal Revenue Code of 1986 is amended 14 by adding at the end the following new section: 15 ‘‘SEC. 280I. OUTSOURCING EXPENSES. 16 ‘‘(a) IN GENERAL.—No deduction otherwise allow- 17 able under this chapter shall be allowed for any specified 18 outsourcing expense. 19 ‘‘(b) SPECIFIED OUTSOURCING EXPENSE.—For pur- 20 poses of this section— 21 ‘‘(1) IN GENERAL.—The term ‘specified out- 22 sourcing expense’ means— 23 ‘‘(A) any eligible expense paid or incurred 24 by the taxpayer in connection with the elimi- 25 VerDate Sep 11 2014 18:22 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H6992.IH H6992 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 6992 IH nation of any business unit of the taxpayer (or 1 of any member of any expanded affiliated group 2 in which the taxpayer is also a member) located 3 within the United States, and 4 ‘‘(B) any eligible expense paid or incurred 5 by the taxpayer in connection with the estab- 6 lishment of any business unit of the taxpayer 7 (or of any member of any expanded affiliated 8 group in which the taxpayer is also a member) 9 located outside the United States, 10 if such establishment constitutes the relocation of 11 business unit so eliminated. For purposes of the pre- 12 ceding sentence, a relocation shall not be treated as 13 failing to occur merely because such elimination oc- 14 curs in a different taxable year than such establish- 15 ment. 16 ‘‘(2) APPLICATION OF CERTAIN DEFINITIONS 17 AND RULES.— 18 ‘‘(A) DEFINITIONS.—For purposes of this 19 section, the terms ‘eligible expenses’, ‘business 20 unit’, and ‘expanded affiliated group’ shall have 21 the respective meanings given such terms by 22 section 45U(b). 23 ‘‘(B) OPERATING EXPENSES NOT TAKEN 24 INTO ACCOUNT.—A rule similar to the rule of 25 VerDate Sep 11 2014 18:22 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H6992.IH H6992 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 6992 IH section 45U(b)(6) shall apply for purposes of 1 this section. 2 ‘‘(c) SPECIAL RULES.— 3 ‘‘(1) APPLICATION TO DEDUCTIONS FOR DE- 4 PRECIATION AND AMORTIZATION.—In the case of 5 any portion of a specified outsourcing expense which 6 is not deductible in the taxable year in which paid 7 or incurred, such portion shall neither be chargeable 8 to capital account nor amortizable. 9 ‘‘(2) POSSESSIONS TREATED AS PART OF THE 10 UNITED STATES.—For purposes of this section, the 11 term ‘United States’ shall be treated as including 12 each possession of the United States (including the 13 Commonwealth of Puerto Rico and the Common- 14 wealth of the Northern Mariana Islands). 15 ‘‘(d) REGULATIONS.—The Secretary shall prescribe 16 such regulations or other guidance as may be necessary 17 or appropriate to carry out the purposes of this section, 18 including regulations which provide (or create a rebuttable 19 presumption) that certain establishments of business units 20 outside the United States will be treated as relocations 21 (based on timing or such other factors as the Secretary 22 may provide) of business units eliminated within the 23 United States.’’. 24 VerDate Sep 11 2014 18:22 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H6992.IH H6992 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 6992 IH (b) LIMITATION ON SUBPART F INCOME OF CON- 1 TROLLED FOREIGN CORPORATIONS DETERMINED WITH- 2 OUT REGARD TO SPECIFIED OUTSOURCING EXPENSES.— 3 Section 952(c) of such Code is amended by adding at the 4 end the following new paragraph: 5 ‘‘(4) EARNINGS AND PROFITS DETERMINED 6 WITHOUT REGARD TO SPECIFIED OUTSOURCING EX- 7 PENSES.—For purposes of this subsection, earnings 8 and profits of any controlled foreign corporation 9 shall be determined without regar [Text truncated for display. 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