Rep. Scott. U.S. House bill targets tax deductions for outsourcing payments to foreign entities

The new bill authored by U.S. Rep. Austin Scott in the U.S. House aims to restrict tax deductions for companies making outsourcing payments to foreign entities, according to the U.S. Congress.

H.R.7559 was introduced on Feb. 12, 2026 during the 2026 regular session of the 119th Congress. The following is our breakdown, based on the actual bill text, and may include interpretation to clarify its provisions.

In essence, this bill amends the Internal Revenue Code of 1986 to prohibit businesses from claiming tax deductions for outsourcing payments made to foreign entities. Specifically, it defines “outsourcing payment” as any premium, fee, royalty, service charge, or other payment to a foreign person, which benefits consumers in the United States. For mixed payments involving both domestic and foreign consumers, the deductible amount is limited based on the proportion of services directed to U.S. consumers. The bill also clarifies that a “foreign person” is any individual or entity not organized under U.S. law, except for certain corporations and partnerships. The Secretary will establish regulations to implement these provisions and prevent tax avoidance. The amendments take effect for payments made after December 31, 2025.

The bill was introduced only by Rep. Austin Scott (Republican-GA-8th District).

Since the beginning of the current session, Rep. Scott has introduced another five bills.

A related bill, S.2976, was also introduced in the Senate on Oct. 6, 2025. Congressional records list it as a related bill to H.R.7559.

Congressional bills can originate in either the U.S. House of Representatives or the U.S. Senate, except for revenue-related measures, which must begin in the House. After introduction, bills are assigned to committees for review, hearings, amendments and debate before they can advance to a vote in each chamber. If both chambers approve identical versions, the legislation is sent to the president, who may sign it into law or veto it. Congress operates in two-year terms, with each term numbered sequentially and divided into two annual sessions. The legislative process and official bill records are maintained by the U.S. Congress and published through Congress.gov.

Austin Scott is a Representative from Georgia, serving in Congress since January 3, 2011. He previously served in the Georgia state house of representatives from 1997 to 2010 and holds a B.B.A. from the University of Georgia, earned in 1993.

Information in this article was obtained from the U.S. Congress. The source data can be found here.