Deterring Adversarial Access to Americans’ Data Act

Bill Number

H.R. 7509

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Taxation

Status

Introduced

Latest Action

2026-02-11: Referred to the House Committee on Ways and Means.

Last Updated

2026-02-24T18:36:43Z

AI-Generated Summary

Purpose of the Legislation

The "Deterring Adversarial Access to Americans' Data Act" (H.R. 7509) aims to protect U.S. national security and data privacy by discouraging businesses from using technology controlled by foreign adversaries. It does this by removing certain tax benefits for companies that rely on such technology, making it financially less attractive to use products or services from countries like China, Russia, Iran, or North Korea.

Key Provisions

• Definition of Key Terms:
• "Foreign adversary-controlled technology" refers to any information and communications technology (ICT) or service—such as hardware, software, or cloud services—designed, manufactured, or provided by entities from foreign adversaries, or that depends on their components for essential functions. ICT includes tools for processing, storing, or communicating data electronically.
• Businesses using this technology are classified as "foreign-influenced entities," similar to those already restricted under tax law.
• "Prohibited foreign entities" include specified foreign adversaries or entities influenced by them.

• Tax Benefit Restrictions:
• Denies bonus depreciation (an accelerated tax deduction for new equipment) for foreign adversary-controlled technology or property owned by prohibited foreign entities.
• Prohibits full expensing (immediate deduction) of domestic research and experimental costs if related to acquiring or developing such technology, or if incurred by prohibited foreign entities.
• Excludes income, gains, deductions, or losses from foreign adversary-controlled technology or businesses owned by prohibited foreign entities when calculating adjusted taxable income for the business interest deduction (a limit on interest expense deductions).
• Denies the research and development (R&D) tax credit to taxpayers that are specified foreign entities or foreign-influenced entities.

• Implementation and Oversight:
• The Secretary of the Treasury (through the IRS) is authorized to issue regulations to enforce these rules.
• Changes apply to tax years starting at least one year after the bill's enactment.

Significant Changes to Existing Law

This bill amends the Internal Revenue Code of 1986 (IRC) in several sections:

• Section 7701(a)(51): Expands the definition of foreign-influenced entities to include those using foreign adversary-controlled technology.
• Section 168(k): Adds restrictions to bonus depreciation rules, excluding certain property from 100% expensing.
• Section 174A: Limits full expensing for R&E expenditures tied to restricted technology or entities.
• Section 163(j): Alters the business interest deduction formula to disregard items linked to restricted technology or entities.
• Section 41: Bars R&D credits for prohibited entities.

These changes build on existing tax incentives (like bonus depreciation and R&D credits) by introducing national security-based exclusions, which were not previously tied to foreign technology use.

Potential Impacts

• On Businesses and Citizens: U.S. companies, especially in tech, manufacturing, and data sectors, may face higher tax bills if they use restricted technology, potentially increasing costs for consumers or encouraging switches to U.S. or allied alternatives. This could slow innovation in affected industries but promote domestic tech development.
• On Government Agencies: The IRS will need to update forms, audits, and regulations to identify and enforce restrictions, possibly increasing administrative workload. It supports broader national security goals without direct new funding.
• On International Relations: Targets adversaries by economically penalizing their tech exports, which could strain trade ties (e.g., with China) and encourage allies to adopt similar measures. It may escalate tech decoupling but has limited direct impact on U.S. citizens' daily lives unless they own affected businesses.

Main Stakeholders Affected

• U.S. Businesses: Primary targets, including tech firms, telecom providers, and manufacturers relying on foreign hardware/software; they lose tax incentives, affecting profitability.
• Foreign Entities: Companies from or controlled by adversaries (e.g., Chinese firms like Huawei) face reduced U.S. market access as American partners avoid their tech to preserve tax benefits.
• Taxpayers and Investors: Indirectly affected through higher corporate taxes potentially passed to consumers or reduced investment in restricted sectors.
• Government: IRS and Treasury Department handle enforcement; national security agencies (e.g., via executive definitions of adversaries) influence implementation.

Notable Legal, Constitutional, or Political Implications

• Legal: Relies on Treasury regulations for definitions and enforcement, which could lead to challenges over what qualifies as "controlled" technology. It uses tax policy as a tool for security, avoiding direct bans but creating indirect restrictions enforceable through audits.
• Constitutional: No major issues anticipated, as tax incentives are optional government benefits, not entitlements; however, it could face free speech or due process claims if definitions are overly vague or discriminatory against foreign commerce.
• Political: Aligns with bipartisan national security priorities, emphasizing data protection from adversaries, but may spark debate on economic protectionism versus global supply chains. It signals U.S. intent to reduce reliance on adversarial tech without new appropriations.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Moran, Nathaniel [R-TX-1]

Recent Actions

• 2026-02-11: Referred to the House Committee on Ways and Means.
• 2026-02-11: Introduced in House
• 2026-02-11: Introduced in House

Bill Versions

• Deterring Adversarial Access to Americans’ Data Act — issued 2026-02-11 — PDF (6 pages)