Text: S.234 — 115th Congress (2017-2018)All Information (Except Text)

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Introduced in Senate (01/24/2017)


115th CONGRESS
1st Session
S. 234


To provide incentives for businesses to keep jobs in America.


IN THE SENATE OF THE UNITED STATES

January 24, 2017

Mr. Donnelly (for himself, Mrs. Gillibrand, and Mr. Brown) introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To provide incentives for businesses to keep jobs in America.

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

SECTION 1. Short title.

This Act may be cited as the “End Outsourcing Act”.

SEC. 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) is amended by adding at the end the following:

“(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) the following:

“SEC. 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)) by the Department of Labor.

“(b) Report.—Not later than 3 years after the date of enactment of this Act, the Comptroller General shall submit to the appropriate committees of Congress a report containing the results of the study.”.

SEC. 3. Denial of deduction for outsourcing expenses.

(a) In general.—Part IX of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

“SEC. 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’ means—

“(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’ means—

“(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’ means—

“(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’ means an affiliated group as defined in section 1504(a), determined without regard to section 1504(b)(3) and by substituting ‘more than 50 percent’ for ‘at least 80 percent’ each place it appears in section 1504(a). A partnership or any other entity (other than a corporation) shall be treated as a member of an expanded affiliated group if such entity is controlled (within the meaning of section 954(d)(3)) by members of such group (including any entity treated as a member of such group by reason of this paragraph).

“(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’ shall be treated as including each possession of the United States (including the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands).

“(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.

SEC. 4. Denial of certain deductions and accounting methods for outsourcing employers.

(a) In general.—Part IX of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

“SEC. 280J. Limitations for outsourcing employers.

“(a) In general.—During the disallowance period, an applicable taxpayer—

“(1) shall not be allowed any deduction under section 199 for any income of the taxpayer,

“(2) may not use the method provided in section 472(b) in inventorying goods,

“(3) may not use the lower of cost or market method of determining inventories for purposes of determining income, and

“(4) 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’ means a taxpayer which—

“(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 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:


“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.

SEC. 5. Recapture of credits for outsourcing employers.

(a) In general.—Part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subpart:

“subpart KRecapture of credits for outsourcing employers


“Sec. 54BB. Recapture of credits for outsourcing employers.

“SEC. 54BB. 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’ means a plant closing or mass layoff (as described in section 2(a) of the Worker Adjustment and Retraining Notification Act) in which the employment loss (excluding any part-time employees) for positions which will be moved to a country outside of the United States, as determined pursuant to the outsourcing statement (as described in paragraph (1) of such section 3(e) of such Act) served by the taxpayer during the taxable year, exceeds 50 employees.

“(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 K. 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.

SEC. 6. Credit for insourcing expenses.

(a) In general.—Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

“SEC. 45S. 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’ means—

“(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))), or

“(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’ means—

“(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’ means—

“(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’ means an affiliated group as defined in section 1504(a), determined without regard to section 1504(b)(3) and by substituting ‘more than 50 percent’ for ‘at least 80 percent’ each place it appears in section 1504(a). A partnership or any other entity (other than a corporation) shall be treated as a member of an expanded affiliated group if such entity is controlled (within the meaning of section 954(d)(3)) by members of such group (including any entity treated as a member of such group by reason of this paragraph).

“(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’ shall be treated as including each possession of the United States (including the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands).

“(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” at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting “, plus”, and by adding at the end the following new paragraph:

“(37) the insourcing expenses credit determined under section 45S(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. 45S. 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 45S of the Internal Revenue Code of 1986. Such amount shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession.

(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 45S 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 45S 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” includes the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands.

(B) MIRROR CODE TAX SYSTEM.—For purposes of this section, the term “mirror code tax system” means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States.

(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).

SEC. 7. 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 of title 10, United States Code, is amended by inserting after section 2327 the following new section:

§ 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’ means a plant closing or mass layoff (as described in section 2(a) of the Worker Adjustment and Retraining Notification Act) in which the employment loss (excluding any part-time employees) for positions which will be moved to a country outside of the United States, as determined pursuant to the outsourcing statement (as described in paragraph (1) of such section 3(e) of such Act) served by the taxpayer during the taxable year, exceeds 50 employees.

“(b) Consideration authorized.— (1) Agency contracting officers considering bids or proposals in response to a solicitation issued by the agency may take into account any disclosure made pursuant to subsection (a) in such bids and proposals.

“(2) The head of an agency may establish a negative preference of up to 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 (3), as so redesignated, by striking “paragraphs (1) and (2)” and inserting “paragraphs (1), (2), and (3)”.

(b) Other Federal contracts.—

(1) CONSIDERATION OF OUTSOURCING.—Chapter 35 of title 41, United States Code, is amended by inserting after section 3303 the following new section:

§ 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’ means a plant closing or mass layoff (as described in section 2(a) of the Worker Adjustment and Retraining Notification Act) in which the employment loss (excluding any part-time employees) for positions which will be moved to a country outside of the United States, as determined pursuant to the outsourcing statement (as described in paragraph (1) of such section 3(e) of such Act) served by the taxpayer during the taxable year, exceeds 50 employees.

“(b) Consideration authorized.— (1) Contracting officers of an executive agency considering bids or proposals in response to a solicitation issued by the executive agency may take into account any disclosure made pursuant to subsection (a) in such bids and proposals.

“(2) The head of an executive agency may establish a negative preference of up to 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),” after “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.