Halting International Relocation of Employment (HIRE) Act

On September 5, 2025, Senator Bernie Moreno (R-OH) announced his introduction of the Halting International Relocation of Employment (HIRE) Act. The bill is intended to disincentivize U.S. companies from offshoring work to foreign workers by imposing steep taxes on outsourced payments. The HIRE Act would have an oversized impact on industries that rely on such workers, including many IT service companies, customer support and call centers, financial services, and accounting firms.

It should be noted that there are currently two bills that have been introduced in the 119th Congress that are both referred to as the “HIRE Act,” and both deal with international worker issues. The other bill, the High-Skilled Immigration Reform for Employment Act, does not deal with any tax issues. This bill was reintroduced in late November, leading to some confusion about movement on Sen. Moreno’s HIRE Act.

Halting International Relocation of Employment Act

As drafted, the HIRE Act would create IRC Sec. 5000E, which would impose a 25% excise tax on any “outsourced payments” paid to a foreign person who performs services that benefit U.S. consumers. The tax would not be deductible under IRC Sec. 275. It would also disallow companies from deducting any of those outsourced payments under IRC Sec. 280I. Penalties to pay any excise tax would be increased to 50% a month and would not be subject to the 25% aggregate penalty limitation under IRC Sec. 6651(a).

Outsourced payments are defined under the bill as any premium, fee, royalty, service charge, or other payment made in the course of a trade or business. Notably, the bill doesn’t explicitly include wages or compensation in this definition, but it also does not explicitly exclude them either. It should be noted that Sen. Moreno’s press release does state that the bill is intended to disincentivizing companies from “chasing cheaper wages and hiring foreign workers,” which could indicate that wages are intended to be included under the “other payment” language of the bill.

Taxpayers would have to calculate the percentage of payments subject to the tax in the case of any payments that are made to foreign persons for labor or services that benefit both U.S. consumers and foreign consumers. Additionally, taxpayers would be required to report whether any payment made to a foreign person is an “outsourced payment” on an information return.

“Foreign persons” is broadly defined in the bill as any person who is not a United States person. However, the bill does not include “any corporation or partnership organized under the laws of a possession of the United States” in that definition of foreign person.

Finally, the bill would create a workforce development program, funded with the tax revenue from the excise tax and any additions to tax or penalties collected under the bill. This would fund federal workforce development and retraining programs, apprenticeships and partnerships with certain industries, and state grants for workforce development.

Future of the HIRE Act

This bill is part of the broader current push to advance an “America First” agenda. Other efforts include the imposition of tariffs, the threat of a “revenge tax” on countries that the administration deems to have discriminatory taxes on U.S. companies, and the focus on American manufacturing and business in the One Big Beautiful Big Act.

As drafted, the HIRE Act would be a seismic change for U.S. companies who make outsourced payments, but it should be noted that the bill does not appear to have significant momentum. The bill has no cosponsor, no companion bill in the House, and has not moved in the Senate Finance Committee. Instead, the bill generally appears to be a messaging bill from a freshman senator. Additionally, Congress is currently focused on other, higher-priority legislation, making it unlikely for the bill to move significantly this year. However, as we have seen over the past year, legislation can change and move quickly. We will continue to closely monitor the bill and any movement.