Sponsor
Bernardo Moreno
Senator · R-OH
Senator · R-OH
The bill raises new federal revenue and directs it to workforce programs while increasing taxes on foreign-directed payments and denying deductions for outsourcing—benefiting displaced workers and government funding stability but imposing higher tax bills, compliance costs, and funding governance trade-offs that could raise prices and strain businesses.
Workers in displaced industries and jobseekers will get access to retraining, apprenticeships, and state-targeted workforce grants funded by a dedicated trust, improving reemployment opportunities.
Taxpayers and the federal government: a new excise tax on certain payments to foreign persons will raise federal receipts that can fund domestic programs.
Taxpayers and financial institutions: new reporting, filing, and officer-certification requirements improve transparency of cross-border payments and strengthen IRS enforcement and compliance.
A wide range of U.S. businesses and payers (including small businesses and contractors) will face higher federal tax liabilities because the new excise tax plus nondeductibility increases their effective tax costs.
Consumers, workers, and taxpayers: higher tax costs for firms that outsource could be passed through as higher prices, reduced hiring, or compressed wages and benefits.
Financial institutions and businesses will incur new compliance, reporting, and certification obligations (with penalties for false certification), raising administrative costs and legal exposure.
Based on analysis of 4 sections of legislative text.
Imposes an excise tax on defined outsourcing payments, denies related deductions, and dedicates revenues to a new Domestic Workforce Fund for retraining and state grants.
Official title: Amend the Internal Revenue Code of 1986 to impose an excise tax on payments by United States taxpayers to foreign persons for services provided to United States consumers, and for other purposes.
Introduced October 6, 2025 by Bernardo Moreno · Last progress October 6, 2025
Creates a new excise tax on payments to foreign persons for activities the bill defines as "outsourcing payments," disallows related deductions, and strengthens reporting and penalty rules for failure to pay. Revenues from the new tax and related penalties flow into a new "Domestic Workforce Fund" in Treasury to finance Department of Labor workforce development, retraining, apprenticeship, and state grants aimed at communities with high job displacement from outsourcing. Changes apply to payments made after December 31, 2025.