[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4029 Introduced in House (IH)]

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118th CONGRESS
  1st Session
                                H. R. 4029

   To secure the supply chain by providing an election to determine 
  foreign income taxes paid or incurred to certain Western Hemisphere 
            countries without regard to certain regulations.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 12, 2023

  Mr. Hern (for himself, Mr. Estes, Mrs. Miller of West Virginia, Ms. 
 Tenney, Mr. Ferguson, Mr. Schweikert, Mr. Smith of Nebraska, and Mr. 
  Feenstra) introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
   To secure the supply chain by providing an election to determine 
  foreign income taxes paid or incurred to certain Western Hemisphere 
            countries without regard to certain regulations.

    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 ``Supply Chain Security Act''.

SEC. 2. ELECTION TO DETERMINE FOREIGN INCOME TAXES PAID OR INCURRED TO 
              CERTAIN WESTERN HEMISPHERE COUNTRIES WITHOUT REGARD TO 
              CERTAIN REGULATIONS.

    (a) Election With Respect to Determining Certain Foreign Income 
Taxes.--In the case of any taxpayer which elects (at such time and in 
such manner as the Secretary may provide) the application of this 
subsection, the determination of whether any Western Hemisphere tax 
paid or accrued by such taxpayer is an income, war profits, or excess 
profits tax for purposes of any provision of the Internal Revenue Code 
of 1986 shall be made without regard to any specified regulation.
    (b) Separate Election With Respect to Allocation and Apportionment 
of Foreign Income Taxes Relating to Disregarded Payments From Certain 
Disregarded Entities.--
            (1) In general.--If the owner of any specified disregarded 
        entity elects (at such time and in such manner as the Secretary 
        may provide) the application of this subsection with respect to 
        such entity, then for purposes of allocating and apportioning 
        any foreign income taxes (as defined in section 986(a)(4) of 
        the Internal Revenue Code of 1986 and determined after the 
        application of subsection (a) of this section) paid or accrued 
        by reason of any remittance made by such entity to such owner 
        during the applicable period, any items of foreign gross income 
        included by reason of the receipt of such remittance shall be 
        assigned to a category based on current and accumulated 
        earnings and profits of such entity (in lieu of being assigned 
        on the basis of the tax book value method described in a 
        specified regulation).
            (2) Specified disregarded entity.--For purposes of this 
        subsection, the term ``specified disregarded entity'' means any 
        entity (including any trade or business) if--
                    (A) such entity is disregarded as an entity 
                separate from its owner for purposes of applying 
                chapter 1 of the Internal Revenue Code of 1986,
                    (B) such entity is created or organized in a 
                possession of the United States or a foreign country 
                described in subsection (d)(1)(B),
                    (C) at all times after December 31, 2019 (or, if 
                later, the date on which such entity is created or 
                organized), substantially all of the income of such 
                entity is derived from trades or businesses conducted 
                in the possession or country referred to in 
                subparagraph (B), and
                    (D) at all times after the date on which such 
                entity is created or organized, such entity maintains 
                separate books and records.
    (c) Application to Deemed Paid Credit.--In the case of any tax paid 
or accrued by a controlled foreign corporation and deemed to have been 
paid by a United States shareholder under section 960 of the Internal 
Revenue Code of 1986--
            (1) any election under subsection (a) or (b) shall be made 
        by such controlled foreign corporation and shall be binding on 
        all United States shareholders of such controlled foreign 
        corporation, and
            (2) the applicable period under subsection (d) shall be 
        determined with respect to the taxable years of such controlled 
        foreign corporation.
    (d) Western Hemisphere Tax.--For purposes of this section--
            (1) In general.--The term ``Western Hemisphere tax'' means 
        any tax which is paid or accrued for a taxable year which is in 
        the applicable period to--
                    (A) any possession of the United States, or
                    (B) any foreign country (other than Cuba and 
                Venezuela) which is located in North, Central, or South 
                America (including the West Indies).
            (2) Applicable period.--The term ``applicable period'' 
        means--
                    (A) in the case of any election made under 
                subsection (a), all taxable years beginning after 
                December 31, 2021, and before January 1, 2027, and
                    (B) in the case of any election made under 
                subsection (b), all taxable years beginning after 
                December 31, 2019, and before January 1, 2027.
            (3) Determination based on taxable year for which tax 
        actually paid or accrued.--The determination of the taxable 
        year for which any tax is paid or accrued for purposes of 
        determining whether a foreign tax is paid or accrued for a 
        taxable year which is in the applicable period shall be made 
        without regard to any taxable year with respect to which such 
        tax is deemed to have been paid under section 904(c) or 960 of 
        the Internal Revenue Code of 1986.
    (e) Specified Regulation.--For purposes of this section, the term 
``specified regulation'' means--
            (1) Treasury Regulations relating to ``Guidance Related to 
        the Foreign Tax Credit; Clarification of Foreign-Derived 
        Intangible Income'' (87 Fed. Reg. 276; published on January 4, 
        2022),
            (2) proposed Treasury Regulations relating to ``Guidance 
        Related to the Foreign Tax Credit'' (87 Fed. Reg. 71271; 
        published on November 22, 2022), and
            (3) any regulation or other guidance published after 
        January 4, 2022, to the extent that such regulation or other 
        guidance is substantially similar to, or predicated upon, any 
        portion of the regulations referred to in paragraph (1) or (2).
In the case of any regulation or other guidance which is published 
after the date of the enactment of this Act and any portion of which is 
described in paragraph (3), the Secretary shall identify such 
regulation or guidance (or portion thereof) as not applying with 
respect to taxpayers which have elected the application of subsection 
(a) or (b), as the case may be.
    (f) Secretary.--For purposes of this section, the term 
``Secretary'' means the Secretary of the Treasury or the Secretary's 
delegate.
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