I 

112TH CONGRESS 

2D SESSION H. R. 5542 

To amend the Internal Revenue Code of 1986 to encourage domestic 

insourcing and discourage foreign outsourcing. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 8, 2012 

Mr. PASCRELL (for himself, Mr. LEVIN, Mr. RANGEL, Mr. STARK, Mr. 

MCDERMOTT, Mr. LEWIS of Georgia, Mr. NEAL, Mr. BECERRA, Mr. 

DOGGETT, Mr. THOMPSON of California, Mr. LARSON of Connecticut, Mr. 

BLUMENAUER, Mr. KIND, Ms. BERKLEY, and Mr. CROWLEY) 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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Bring Jobs Home 

5 Act’’. 

6 SEC. 2. CREDIT FOR INSOURCING EXPENSES. 

7 (a) IN GENERAL.—Subpart D of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 45S. CREDIT FOR INSOURCING EXPENSES. 

4 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

5 insourcing expenses credit for any taxable year is an 

6 amount equal to 20 percent of the eligible insourcing ex7 penses of the taxpayer which are taken into account in 

8 such taxable year under subsection (d). 

9 ‘‘(b) ELIGIBLE INSOURCING EXPENSES.—For pur10 poses of this section— 

11 ‘‘(1) IN GENERAL.—The term ‘eligible 

12 insourcing expenses’ means— 

13 ‘‘(A) eligible expenses paid or incurred by 

14 the taxpayer in connection with the elimination 

15 of any business unit of the taxpayer (or of any 

16 member of any expanded affiliated group in 

17 which the taxpayer is also a member) located 

18 outside the United States, and 

19 ‘‘(B) eligible expenses paid or incurred by 

20 the taxpayer in connection with the establish21 ment of any business unit of the taxpayer (or 

22 of any member of any expanded affiliated group 

23 in which the taxpayer is also a member) located 

24 within the United States, 


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1 if such establishment constitutes the relocation of 

2 business unit so eliminated. For purposes of the pre3 ceding sentence, a relocation shall not be treated as 

4 failing to occur merely because such elimination oc5 curs in a different taxable year than such establish6 ment. 

7 ‘‘(2) ELIGIBLE EXPENSES.—The term ‘eligible 

8 expenses’ means— 

9 ‘‘(A) any amount for which a deduction is 

10 allowed to the taxpayer under section 162, and 

11 ‘‘(B) permit and license fees, lease broker12 age fees, equipment installation costs, and, to 

13 the extent provided by the Secretary, other 

14 similar expenses. 

15 Such term does not include any compensation which 

16 is paid or incurred in connection with severance 

17 from employment and, to the extent provided by the 

18 Secretary, any similar amount. 

19 ‘‘(3) BUSINESS UNIT.—The term ‘business unit’ 

20 means— 

21 ‘‘(A) any trade or business, and 

22 ‘‘(B) any line of business, or functional 

23 unit, which is part of any trade or business. 

24 ‘‘(4) EXPANDED AFFILIATED GROUP.—The 

25 term ‘expanded affiliated group’ means an affiliated 


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1 group as defined in section 1504(a), determined 

2 without regard to section 1504(b)(3) and by sub3 stituting ‘more than 50 percent’ for ‘at least 80 per4 cent’ each place it appears in section 1504(a). A 

5 partnership or any other entity (other than a cor6 poration) shall be treated as a member of an ex7 panded affiliated group if such entity is controlled 

8 (within the meaning of section 954(d)(3)) by mem9 bers of such group (including any entity treated as 

10 a member of such group by reason of this para11 graph). 

12 ‘‘(5) EXPENSES MUST BE PURSUANT TO

13 INSOURCING PLAN.—Amounts shall be taken into ac14 count under paragraph (1) only to the extent that 

15 such amounts are paid or incurred pursuant to a 

16 written plan to carry out the relocation described in 

17 paragraph (1). 

18 ‘‘(6) OPERATING EXPENSES NOT TAKEN INTO

19 ACCOUNT.—Any amount paid or incurred in connec20 tion with the on-going 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 ‘‘(c) INCREASED DOMESTIC EMPLOYMENT REQUIRE25 MENT.—No credit shall be allowed under this section unVerDate Mar 15 2010 06:16 May 10, 2012 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5542.IH H5542

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1 less the number of full-time equivalent employees of the 

2 taxpayer for the taxable year for which the credit is 

3 claimed exceeds the number of full-time equivalent em4 ployees of the taxpayer for the last taxable year ending 

5 before the first taxable year in which such eligible 

6 insourcing expenses were paid or incurred. For purposes 

7 of this subsection, full-time equivalent employees has the 

8 meaning given such term under section 45R(d) (and the 

9 applicable rules of section 45R(e)), determined by only 

10 taking into account wages (as otherwise defined in section 

11 45R(e)) paid with respect to services performed within the 

12 United States. All employers treated as a single employer 

13 under subsection (b), (c), (m), or (o) of section 414 shall 

14 be treated as a single employer for purposes of this sub15 section. 

16 ‘‘(d) CREDIT ALLOWED UPON COMPLETION OF

17 INSOURCING PLAN.— 

18 ‘‘(1) IN GENERAL.—Except as provided in para19 graph (2), eligible insourcing expenses shall be taken 

20 into account under subsection (a) in the taxable year 

21 during which the plan described in subsection (b)(5) 

22 has been completed and all eligible insourcing ex23 penses pursuant to such plan have been paid or in24 curred. 


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1 ‘‘(2) ELECTION TO APPLY EMPLOYMENT TEST

2 AND CLAIM CREDIT IN FIRST FULL TAXABLE YEAR

3 AFTER COMPLETION OF PLAN.—If the taxpayer 

4 elects the application of this paragraph, eligible 

5 insourcing expenses shall be taken into account 

6 under subsection (a) in the first taxable year after 

7 the taxable year described in paragraph (1). 

8 ‘‘(e) POSSESSIONS TREATED AS PART OF THE

9 UNITED STATES.—For purposes of this section, the term 

10 ‘United States’ shall be treated as including each posses11 sion of the United States (including the Commonwealth 

12 of Puerto Rico and the Commonwealth of the Northern 

13 Mariana Islands). 

14 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 

15 such regulations or other guidance as may be necessary 

16 or appropriate to carry out the purposes of this section.’’. 

17 (b) CREDIT TO BE PART OF GENERAL BUSINESS

18 CREDIT.—Subsection (b) of section 38 of such Code is 

19 amended by striking ‘‘plus’’ at the end of paragraph (35), 

20 by striking the period at the end of paragraph (36) and 

21 inserting ‘‘, plus’’, and by adding at the end the following 

22 new paragraph: 

23 ‘‘(37) the insourcing expenses credit determined 

24 under section 45S(a).’’. 


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1 (c) CLERICAL AMENDMENT.—The table of sections 

2 for subpart D of part IV of subchapter A of chapter 1 

3 of such Code is amended by adding at the end the fol4 lowing new item: 

‘‘Sec. 45S. Credit for insourcing expenses.’’. 

5 (d) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to amounts paid or incurred after 

7 the date of the enactment of this Act. 

8 (e) APPLICATION TO UNITED STATES POSSES9 SIONS.— 

10 (1) PAYMENTS TO POSSESSIONS.— 

11 (A) MIRROR CODE POSSESSIONS.—The 

12 Secretary of the Treasury shall make periodic 

13 payments to each possession of the United 

14 States with a mirror code tax system in an 

15 amount equal to the loss to that possession by 

16 reason of section 45S of the Internal Revenue 

17 Code of 1986. Such amount shall be determined 

18 by the Secretary of the Treasury based on in19 formation provided by the government of the re20 spective possession. 

21 (B) OTHER POSSESSIONS.—The Secretary 

22 of the Treasury shall make annual payments to 

23 each possession of the United States which does 

24 not have a mirror code tax system in an 

25 amount estimated by the Secretary of the 


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1 Treasury as being equal to the aggregate bene2 fits that would have been provided to residents 

3 of such possession by reason of section 45S of 

4 such Code if a mirror code tax system had been 

5 in effect in such possession. The preceding sen6 tence shall not apply with respect to any posses7 sion of the United States unless such possession 

8 has a plan, which has been approved by the 

9 Secretary of the Treasury, under which such 

10 possession will promptly distribute such pay11 ment to the residents of such possession. 

12 (2) COORDINATION WITH CREDIT ALLOWED

13 AGAINST UNITED STATES INCOME TAXES.—No cred14 it shall be allowed against United States income 

15 taxes under section 45S of such Code to any per16 son— 

17 (A) to whom a credit is allowed against 

18 taxes imposed by the possession by reason of 

19 such section, or 

20 (B) who is eligible for a payment under a 

21 plan described in paragraph (1)(B). 

22 (3) DEFINITIONS AND SPECIAL RULES.— 

23 (A) POSSESSIONS OF THE UNITED

24 STATES.—For purposes of this section, the 

25 term ‘‘possession of the United States’’ includes 


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1 the Commonwealth of Puerto Rico and the 

2 Commonwealth of the Northern Mariana Is3 lands. 

4 (B) MIRROR CODE TAX SYSTEM.—For pur5 poses of this section, the term ‘‘mirror code tax 

6 system’’ means, with respect to any possession 

7 of the United States, the income tax system of 

8 such possession if the income tax liability of the 

9 residents of such possession under such system 

10 is determined by reference to the income tax 

11 laws of the United States as if such possession 

12 were the United States. 

13 (C) TREATMENT OF PAYMENTS.—For pur14 poses of section 1324(b)(2) of title 31, United 

15 States Code, the payments under this section 

16 shall be treated in the same manner as a refund 

17 due from sections referred to in such section 

18 1324(b)(2). 

19 SEC. 3. DENIAL OF DEDUCTION FOR OUTSOURCING EX20 PENSES. 

21 (a) IN GENERAL.—Part IX of subchapter B of chap22 ter 1 of the Internal Revenue Code of 1986 is amended 

23 by adding at the end the following new section: 


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1 ‘‘SEC. 280I. OUTSOURCING EXPENSES. 

2 ‘‘(a) IN GENERAL.—No deduction otherwise allow3 able under this chapter shall be allowed for any specified 

4 outsourcing expense. 

5 ‘‘(b) SPECIFIED OUTSOURCING EXPENSE.—For pur6 poses of this section— 

7 ‘‘(1) IN GENERAL.—The term ‘specified out8 sourcing expense’ means— 

9 ‘‘(A) any eligible expense paid or incurred 

10 by the taxpayer in connection with the elimi11 nation of any business unit of the taxpayer (or 

12 of any member of any expanded affiliated group 

13 in which the taxpayer is also a member) located 

14 within the United States, and 

15 ‘‘(B) any eligible expense paid or incurred 

16 by the taxpayer in connection with the estab17 lishment of any business unit of the taxpayer 

18 (or of any member of any expanded affiliated 

19 group in which the taxpayer is also a member) 

20 located outside the United States, 

21 if such establishment constitutes the relocation of 

22 business unit so eliminated. For purposes of the pre23 ceding sentence, a relocation shall not be treated as 

24 failing to occur merely because such elimination oc25 curs in a different taxable year than such establish26 ment. 


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1 ‘‘(2) APPLICATION OF CERTAIN DEFINITIONS

2 AND RULES.— 

3 ‘‘(A) DEFINITIONS.—For purposes of this 

4 section, the terms ‘eligible expenses’, ‘business 

5 unit’, and ‘expanded affiliated group’ shall have 

6 the respective meanings given such terms by 

7 section 45S(b). 

8 ‘‘(B) OPERATING EXPENSES NOT TAKEN

9 INTO ACCOUNT.—A rule similar to the rule of 

10 section 45S(b)(6) shall apply for purposes of 

11 this section. 

12 ‘‘(c) SPECIAL RULES.— 

13 ‘‘(1) APPLICATION TO DEDUCTIONS FOR DE14 PRECIATION AND AMORTIZATION.—In the case of 

15 any portion of a specified outsourcing expense which 

16 is not deductible in the taxable year in which paid 

17 or incurred, such portion shall neither be chargeable 

18 to capital account nor amortizable. 

19 ‘‘(2) POSSESSIONS TREATED AS PART OF THE

20 UNITED STATES.—For purposes of this section, the 

21 term ‘United States’ shall be treated as including 

22 each possession of the United States (including the 

23 Commonwealth of Puerto Rico and the Common24 wealth of the Northern Mariana Islands). 


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1 ‘‘(d) REGULATIONS.—The Secretary shall prescribe 

2 such regulations or other guidance as may be necessary 

3 or appropriate to carry out the purposes of this section, 

4 including regulations which provide (or create a rebuttable 

5 presumption) that certain establishments of business units 

6 outside the United States will be treated as relocations 

7 (based on timing or such other factors as the Secretary 

8 may provide) of business units eliminated within the 

9 United States.’’. 

10 (b) LIMITATION ON SUBPART F INCOME OF CON11 TROLLED FOREIGN CORPORATIONS DETERMINED WITH12 OUT REGARD TO SPECIFIED OUTSOURCING EXPENSES.— 

13 Subsection (c) of section 952 of such Code is amended 

14 by adding at the end the following new paragraph: 

15 ‘‘(4) EARNINGS AND PROFITS DETERMINED

16 WITHOUT REGARD TO SPECIFIED OUTSOURCING EX17 PENSES.—For purposes of this subsection, earnings 

18 and profits of any controlled foreign corporation 

19 shall be determined without regard to any specified 

20 outsourcing expense (as defined in section 

21 280I(b)).’’. 

22 (c) CLERICAL AMENDMENT.—The table of sections 

23 for part IX of subchapter B of chapter 1 of such Code 

24 is amended by adding at the end the following new item: 

‘‘Sec. 280I. Outsourcing expenses.’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to amounts paid or incurred after 

3 the date of the enactment of this Act. 

Æ 


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