End Outsourcing Act

To provide incentives for businesses to keep jobs in America, and for other purposes. 1. Short title This Act may be cited as the End Outsourcing Act 2. Outsourcing statement in worker adjustment and retraining notice (a) Outsourcing statement Section 3 of the Worker Adjustment and Retraining Notification Act ( 29 U.S.C. 2102 (e) Outsourcing statement (1) In general For purposes of subsection (a), the employer shall include an outsourcing statement in the notice described in that subsection. The outsourcing statement shall specify whether part or all of the positions held by affected employees covered by subsection (a) will be moved to a country outside the United States, regardless of whether the positions are moved within the business enterprise involved or to another business enterprise. The employer shall make the determination of whether the positions are being so moved in accordance with regulations issued by the Secretary. The employer shall serve the notice as required under subsection (a) and submit the notice to the Secretary of Labor. (2) List Not less often than annually, the Secretary shall publish and make available on the website of the Department of Labor, a list including each employer who— (A) has included an outsourcing statement in a notice under paragraph (1); or (B) has incurred liability under section 5, in part or in whole, because the employer ordered a plant closing or mass layoff without having served a notice that is required, under this section, to include an outsourcing statement. . (b) Implementation report The Worker Adjustment and Retraining Notification Act is amended by inserting after section 10 ( 29 U.S.C. 2109 10A. Implementation study (a) Study The Comptroller General of the United States shall conduct a study of the implementation of section 3(e) of the Worker Adjustment and Retraining Notification Act ( 29 U.S.C. 2102(e) (b) Report Not later than 3 years after the date of enactment of this section, the Comptroller General shall submit to the appropriate committees of Congress a report containing the results of the study. . 3. Denial of deduction for outsourcing expenses (a) In general Part IX of subchapter B of chapter 1 280I. Outsourcing expenses (a) In general No deduction otherwise allowable under this chapter shall be allowed for any specified outsourcing expense. (b) Specified outsourcing expense For purposes of this section— (1) In general The term specified outsourcing expense (A) any eligible expense paid or incurred by the taxpayer in connection with the elimination of any business unit of the taxpayer (or of any member of any expanded affiliated group in which the taxpayer is also a member) located within the United States, and (B) any eligible expense paid or incurred by the taxpayer in connection with the establishment of any business unit of the taxpayer (or of any member of any expanded affiliated group in which the taxpayer is also a member) located outside the United States, if such establishment constitutes the relocation of the business unit so eliminated. For purposes of the preceding sentence, a relocation shall not be treated as failing to occur merely because such elimination occurs in a different taxable year than such establishment. (2) Eligible expenses The term eligible expenses (A) any amount for which a deduction is allowed to the taxpayer under section 162, and (B) permit and license fees, lease brokerage fees, equipment installation costs, and, to the extent provided by the Secretary, other similar expenses. Such term does not include any compensation which is paid or incurred in connection with severance from employment and, to the extent provided by the Secretary, any similar amount. (3) Business unit The term business unit (A) any trade or business, and (B) any line of business, or functional unit, which is part of any trade or business. (4) Expanded affiliated group The term expanded affiliated group more than 50 percent at least 80 percent (5) Operating expenses not taken into account Any amount paid or incurred in connection with the ongoing operation of a business unit shall not be treated as an amount paid or incurred in connection with the establishment or elimination of such business unit. (c) Special rules (1) Application to deductions for depreciation and amortization In the case of any portion of a specified outsourcing expense which is not deductible in the taxable year in which paid or incurred, such portion shall neither be chargeable to capital account nor amortizable. (2) Possessions treated as part of the United States For purposes of this section, the term United States (d) Regulations The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations which provide (or create a rebuttable presumption) that certain establishments of business units outside the United States will be treated as relocations (based on timing or such other factors as the Secretary may provide) of business units eliminated within the United States. . (b) Limitation on subpart F income of controlled foreign corporations determined without regard to specified outsourcing expenses Subsection (c) of section 952 of such Code is amended by adding at the end the following new paragraph: (4) Earnings and profits determined without regard to specified outsourcing expenses For purposes of this subsection, earnings and profits of any controlled foreign corporation shall be determined without regard to any specified outsourcing expense (as defined in section 280I(b)). . (c) Clerical amendment The table of sections for part IX of subchapter B of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 280I. Outsourcing expenses. . (d) Effective date The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act. 4. Denial of certain deductions and accounting methods for outsourcing employers (a) In general Part IX of subchapter B of chapter 1 280J. Limitations for outsourcing employers (a) In general During the disallowance period, an applicable taxpayer— (1) may not use the method provided in section 472(b) in inventorying goods, (2) may not use the lower of cost or market method of determining inventories for purposes of determining income, and (3) shall not be allowed any deduction under section 163 for interest paid or accrued on indebtedness. (b) Applicable taxpayer For purposes of subsection (a), the term applicable taxpayer (1) during the taxable year, has served written notice under subsection (a) of section 3 of the Worker Adjustment and Retraining Notification Act which includes an outsourcing statement described in subsection (e) of such section, and (2) the cumulative employment loss (excluding any part-time employees) for positions at facilities owned by such taxpayer which will be moved to a country outside of the United States, as determined pursuant to any outsourcing statements served by such taxpayer during such taxable year, exceeds 50 employees. (c) Disallowance period For purposes of subsection (a), the disallowance period is the period of 3 taxable years after the taxable year in which the statements described in subsection (b)(2) are required to be served. (d) Expanded affiliated group treated as single taxpayer For purposes of this section, the members of an expanded affiliated group (as defined in section 280I(b)(4)) shall be treated as a single taxpayer. (e) Regulations The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section. . (b) Clerical amendment The table of sections for part IX of subchapter B of chapter 1 Sec. 280J. Limitations for outsourcing employers. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 5. Current year inclusion of net CFC tested income (a) Repeal of tax-Free deemed return on investments (1) In general Section 951A(a) global intangible low-taxed income net CFC tested income (2) Conforming amendments (A) Section 951A of such Code is amended by striking subsections (b) and (d). (B) Section 951A(e)(1) of such Code is amended by striking subsections (b), (c)(1)(A), and subsections (c)(1)(A) and (C) Section 951A(f) of such Code is amended to read as follows: (f) Treatment as subpart F income for certain purposes (1) In general Except as provided in paragraph (2), any net CFC tested income included in gross income under subsection (a) shall be treated in the same manner as an amount included under section 951(a)(1)(A) for purposes of applying sections 168(h)(2)(B), 535(b)(10), 851(b), 904(h)(1), 959, 961, 962, 993(a)(1)(E), 996(f)(1), 1248(b)(1), 1248(d)(1), 6501(e)(1)(C), 6654(d)(2)(D), and 6655(e)(4). (2) Exception The Secretary shall provide rules for the application of paragraph (1) to other provisions of this title in any case in which the determination of subpart F income is required to be made at the level of the controlled foreign corporation. . (D) Section 960(d)(2)(A) of such Code is amended by striking global intangible low-taxed income (as defined in section 951A(b)) net CFC tested income (as defined in section 951A(c)) (b) Repeal of reduced rate of tax on net CFC tested income (1) In general Part VIII of subchapter B of chapter 1 of such Code is amended by striking section 250 (and by striking the item relating to such section in the table of sections of such part). (2) Conforming amendments (A) Section 59A(c)(4)(B)(i) of such Code is amended by striking section 172, 245A, or 250 section 172 or 245A (B) Section 172(d) of such Code is amended by striking paragraph (9). (C) Section 246(b)(1) of such Code is amended— (i) by striking subsection (a) and (b) of section 245, and section 250 and subsection (a) and (b) of section 245 (ii) by striking subsection (a) and (b) of section 245, and 250 and subsection (a) and (b) of section 245 (D) Section 469(i)(3)(F)(iii) is amended by striking 222, and 250 and 222 (c) Net CFC tested income determined without regard to high tax foreign income Section 951A(c)(2)(A)(i) of such Code is amended by redesignating subclauses (IV) and (V) as subclauses (V) and (VI), respectively, and by inserting after subclause (III) the following new subclause: (IV) any item of income subject to an effective rate of income tax imposed by a foreign country greater than the maximum rate of tax specified in section 11, . (d) Repeal of exclusion of foreign oil and gas extraction income from the determination of tested income Section 951A(c)(2)(A)(i) of such Code, as amended by subsection (c) is amended— (1) by adding and (2) by striking and over (3) by striking subclause (VI). (e) Increase in deemed paid credit for taxes properly attributable to tested income (1) In general Section 960(d) of such Code is amended by striking 80 percent of (2) Conforming amendment Section 78 of such Code is amended by striking (determined without regard to the phrase “80 percent of” in subsection (d)(1) thereof) (f) Effective date (1) In general Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2019, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end. (2) Repeal of reduced rate of tax; increase in deemed paid credit The amendments made by subsections (b) and (e) shall apply to taxable years beginning after December 31, 2019. 6. Recapture of credits for outsourcing employers (a) In general Part IV of subchapter A of chapter 1 H Recapture of credits for outsourcing employers Sec. 54. Recapture of credits for outsourcing employers. 54. Recapture of credits for outsourcing employers (a) In general Pursuant to regulations prescribed by the Secretary, in the case of a taxpayer which owns a facility for which there is an outsourcing event during the taxable year, the tax under this chapter for such taxable year shall be increased by the amount equal to the sum of— (1) any credits allowed under this chapter relating to expenses for design, construction, operation, or maintenance of such facility during the 5 taxable years preceding such taxable year, and (2) any grants provided by the Secretary in lieu of credits described in paragraph (1) during the 5 taxable years preceding such taxable year. (b) Outsourcing event For purposes of subsection (a), the term outsourcing event (c) Expanded affiliated group treated as single taxpayer For purposes of this section, the members of an expanded affiliated group (as defined in section 280I(b)(4)) shall be treated as a single taxpayer. . (b) Clerical amendment The table of subparts for part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item: Subpart H. Recapture of credits for outsourcing employers . (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 7. Credit for insourcing expenses (a) In general Subpart D of part IV of subchapter A of chapter 1 45T. Credit for insourcing expenses (a) In general For purposes of section 38, the insourcing expenses credit for any taxable year is an amount equal to 20 percent of the eligible insourcing expenses of the taxpayer which are taken into account in such taxable year under subsection (d). (b) Eligible insourcing expenses For purposes of this section— (1) In general The term eligible insourcing expenses (A) eligible expenses paid or incurred by the taxpayer in connection with the elimination of any business unit of the taxpayer (or of any member of any expanded affiliated group in which the taxpayer is also a member) located outside the United States, and (B) eligible expenses paid or incurred by the taxpayer in connection with the establishment of any business unit of the taxpayer (or of any member of any expanded affiliated group in which the taxpayer is also a member) located within— (i) a HUBZone (as defined in section 3(p)(2) of the Small Business Act ( 15 U.S.C. 632(p)(2) (ii) a low-income community (as described in section 45D(e)), if such establishment constitutes the relocation of the business unit so eliminated. For purposes of the preceding sentence, a relocation shall not be treated as failing to occur merely because such elimination occurs in a different taxable year than such establishment. (2) Eligible expenses The term eligible expenses (A) any amount for which a deduction is allowed to the taxpayer under section 162, and (B) permit and license fees, lease brokerage fees, equipment installation costs, and, to the extent provided by the Secretary, other similar expenses. Such term does not include any compensation which is paid or incurred in connection with severance from employment and, to the extent provided by the Secretary, any similar amount. (3) Business unit The term business unit (A) any trade or business, and (B) any line of business, or functional unit, which is part of any trade or business. (4) Expanded affiliated group The term expanded affiliated group more than 50 percent at least 80 percent (5) Expenses must be pursuant to insourcing plan Amounts shall be taken into account under paragraph (1) only to the extent that such amounts are paid or incurred pursuant to a written plan to carry out the relocation described in paragraph (1). (6) Operating expenses not taken into account Any amount paid or incurred in connection with the on-going operation of a business unit shall not be treated as an amount paid or incurred in connection with the establishment or elimination of such business unit. (c) Increased domestic employment requirement No credit shall be allowed under this section unless the number of full-time equivalent employees of the taxpayer for the taxable year for which the credit is claimed exceeds the number of full-time equivalent employees of the taxpayer for the last taxable year ending before the first taxable year in which such eligible insourcing expenses were paid or incurred. For purposes of this subsection, full-time equivalent employees has the meaning given such term under section 45R(d) (and the applicable rules of section 45R(e)). All employers treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as a single employer for purposes of this subsection. (d) Credit allowed upon completion of insourcing plan (1) In general Except as provided in paragraph (2), eligible insourcing expenses shall be taken into account under subsection (a) in the taxable year during which the plan described in subsection (b)(5) has been completed and all eligible insourcing expenses pursuant to such plan have been paid or incurred. (2) Election to apply employment test and claim credit in first full taxable year after completion of plan If the taxpayer elects the application of this paragraph, eligible insourcing expenses shall be taken into account under subsection (a) in the first taxable year after the taxable year described in paragraph (1). (e) Possessions treated as part of the United States For purposes of this section, the term United States (f) Regulations The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section. . (b) Credit To be part of general business credit Subsection (b) of section 38 of such Code is amended by striking plus , plus (33) the insourcing expenses credit determined under section 45T(a). . (c) Clerical amendment The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 45T. Credit for insourcing expenses. . (d) Effective date The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act. (e) Application to United States possessions (1) Payments to possessions (A) Mirror code possessions The Secretary of the Treasury shall make periodic payments to each possession of the United States with a mirror code tax system in an amount equal to the loss to that possession by reason of section 45T (B) Other possessions The Secretary of the Treasury shall make annual payments to each possession of the United States which does not have a mirror code tax system in an amount estimated by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of section 45T of such Code if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply with respect to any possession of the United States unless such possession has a plan, which has been approved by the Secretary of the Treasury, under which such possession will promptly distribute such payment to the residents of such possession. (2) Coordination with credit allowed against united states income taxes No credit shall be allowed against United States income taxes under section 45T of such Code to any person— (A) to whom a credit is allowed against taxes imposed by the possession by reason of such section, or (B) who is eligible for a payment under a plan described in paragraph (1)(B). (3) Definitions and special rules (A) Possessions of the United States For purposes of this section, the term possession of the United States (B) Mirror code tax system For purposes of this section, the term mirror code tax system (C) Treatment of payments For purposes of section 1324(b)(2) of title 31, United States Code, the payments under this section shall be treated in the same manner as a refund due from sections referred to in such section 1324(b)(2). 8. Authority for Federal contracting officers to take the outsourcing of jobs from the United States into account in awarding contracts (a) Department of Defense and related agency contracts (1) Consideration of outsourcing (A) In general Chapter 137 section 2327 2327a. Contracts: consideration of outsourcing of jobs (a) Disclosure of outsourcing of jobs (1) In general The head of an agency shall require a contractor that submits a bid or proposal in response to a solicitation issued by the agency to disclose in that bid or proposal if the contractor, or a subsidiary of the contractor, owns a facility for which there is an outsourcing event during the three-year period ending on the date of the submittal of the bid or proposal. (2) Outsourcing event For purposes of paragraph (1), the term outsourcing event (b) Consideration authorized (1) Agency contracting officers considering bids or proposals in response to a solicitation issued by the agency shall take into account any disclosure made pursuant to subsection (a) in such bids and proposals. (2) The head of an agency shall establish a negative preference of no less than 10 percent of the cost of a contract for purposes of evaluating a bid or proposal of a contractor that makes a disclosure pursuant to subsection (a). (c) Sense of Congress It is the sense of Congress that agency contracting officers should, using section 2304(b)(3) of this title, exclude contractors making a disclosure pursuant to subsection (a) in response to solicitations issued by the agency from the bidding process in connection with such solicitations on the grounds that the actions described in the disclosures are against the public interests of the United States. (d) Annual report The head of each agency shall submit to Congress each year a report on the following: (1) The number of solicitations made by the agency during the preceding year for which disclosures were made pursuant to subsection (a) in responsive bids or proposals. (2) The number of contracts awarded by the agency during the preceding year in which such disclosures were taken into account in the contract award. . (B) Clerical amendment The table of sections at the beginning of chapter 137 of such title is amended by inserting after the item relating to section 2327 the following new item: 2327a. Contracts: consideration of outsourcing of jobs. . (2) Exclusion of firms from sources Section 2304(b) of such title is amended— (A) by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively; (B) by inserting after paragraph (2) the following new paragraph: (3) The head of an agency may provide for the procurement of property and services covered by this chapter using competitive procedures but excluding a source making a disclosure pursuant to section 2327a(a) of this title in the bid or proposal in response to the solicitation issued by the agency if the head of the agency determines that the actions described by disclosure are against the public interests of the United States and the source is to be excluded on those grounds. Any such determination shall take into account the sense of Congress set forth in section 2327a(c) of this title. ; and (C) in paragraph (4), as so redesignated, by striking paragraphs (1) and (2) paragraphs (1), (2), and (3) (b) Other Federal contracts (1) Consideration of outsourcing Chapter 35 section 3303 3303a. Bidders outsourcing jobs: disclosure of outsourcing; consideration of outsourcing in award; exclusion from sources (a) Disclosure of outsourcing of jobs (1) In general The head of an executive agency shall require a contractor that submits a bid or proposal in response to a solicitation issued by the executive agency to disclose in that bid or proposal if the contractor, or a subsidiary of the contractor, owns a facility for which there is an outsourcing event during the three-year period ending on the date of the submittal of the bid or proposal. (2) Outsourcing event For purposes of paragraph (1), the term outsourcing event (b) Consideration authorized (1) Contracting officers of an executive agency considering bids or proposals in response to a solicitation issued by the executive agency shall take into account any disclosure made pursuant to subsection (a) in such bids and proposals. (2) The head of an executive agency shall establish a negative preference of no less than 10 percent of the cost of a contract for purposes of evaluating a bid or proposal of a contractor that makes a disclosure pursuant to subsection (a). (c) Exclusion from sources (1) In general The head of an executive agency may provide for the procurement of property and services using competitive procedures but excluding a source making a disclosure under subsection (a) in the bid or proposal in response to the solicitation issued by the executive agency if the head of the executive agency determines that the actions described by disclosure are against the public interests of the United States and the source is to be excluded on those grounds. Any such determination shall take into account the sense of Congress set forth in paragraph (2). (2) Sense of Congress It is the sense of Congress that contracting officers of executive agencies may use paragraph (1) to exclude contractors making a disclosure pursuant to subsection (a) in response to a solicitation issued by the executive agency from the bidding process in connection with the solicitation on the grounds that the actions described by the disclosure are against the public interests of the United States. (d) Annual report The head of each executive agency shall submit to Congress each year a report on the following: (1) The number of solicitations made by the executive agency during the preceding year for which disclosures were made pursuant to subsection (a) in responsive bids or proposals. (2) The number of contracts awarded to contractors that disclosed having outsourced more than 50 jobs during the preceding three years. . (2) Clerical amendment The table of sections at the beginning of chapter 35 of such title is amended by inserting after the item relating to section 3303 the following new item: 3303a. Bidders outsourcing jobs: disclosure of outsourcing; consideration of outsourcing in award; exclusion from sources. . (3) Conforming amendment Section 3301(a) of such title is amended by inserting 3303a(c), 3303, (c) Regulations (1) In general Not later than 180 days after the date of the enactment of this Act, the Federal Acquisition Regulatory Council, in consultation with the heads of relevant agencies, shall amend the Federal Acquisition Regulation and the Defense Federal Acquisition Regulation Supplement to carry out the requirements of section 3303a of title 41, United States Code, and section 2327a of title 10, United States Code, as added by this section. (2) Definition of outsourcing For purposes of defining outsourcing pursuant to paragraph (1), the Federal Acquisition Regulatory Council may utilize regulations prescribed by the Secretary of Labor. (d) Rule of construction This section, and the amendments made by this section, shall be applied in a manner consistent with United States obligations under international agreements. 9. Authority for Federal agencies to take the outsourcing of jobs from the United States into account for grants, loans, and loan guarantees (a) Disclosure of outsourcing of jobs (1) In general The head of any Federal agency, or their delegate, shall require any entity that submits a request for an applicable agency action to disclose in the request if such entity, or any subsidiary of such entity, owns a facility for which there is an outsourcing event during the 3-year period ending on the date of the submission of the request. (2) Outsourcing event For purposes of paragraph (1), the term outsourcing event (b) Consideration authority (1) In general In considering a request by an entity for an applicable agency action, the head of any Federal agency, as well as any officers, employees, and contractors of such Agency, shall take into account any disclosure made pursuant to subsection (a) for purposes of such request. (2) Negative preference The head of any Federal agency shall establish a negative preference of not less than 10 percent of the scoring evaluation for any request for an applicable agency action by an entity that makes a disclosure pursuant to subsection (a). (c) Sense of Congress It is the sense of Congress that Federal agencies should, in considering requests by entities for any applicable agency action, exclude entities making a disclosure of an outsourcing event pursuant to subsection (a) on the grounds that the actions described in the disclosures are against the public interests of the United States. (d) Annual report The head of each Federal agency shall submit to Congress each year a report on the following: (1) The number of entities making a disclosure of an outsourcing event pursuant to subsection (a) in regards to a request for applicable agency action during the preceding year. (2) The number of requests for applicable agency action which were granted by the agency during the preceding year in which such disclosures were taken into account. (e) Applicable agency action For purposes of this section, the term applicable agency action

Summary: End Outsourcing Act This bill addresses the outsourcing (transfer) of jobs and companies from the United States to low-tax foreign jurisdictions. The bill (1) requires employers to include an outsourcing statement in worker adjustment and retraining notices; (2) denies employers a tax deduction for outsourcing expenses, including license fees and equipment installation costs; (3) allows a tax credit for similar insourcing expenses; (4) denies employers the use of certain favorable accounting methods and a deduction for interest paid on indebtedness; and (5) requires the recapture of certain tax credit amounts allowed to outsourcing employers. The bill authorizes federal contracting officers to take the outsourcing of jobs from the United States into account in awarding contracts and grants and extending loans and loan guarantees to corporations.