Supply Chain Security Act
This bill allows a taxpayer to make an election, without regard to specified Treasury regulations, for purposes of determining whether any Western Hemisphere tax is an income, war profits, or excess profits tax. A Western Hemisphere tax is any tax paid to any U.S. possession or any foreign country (other than Cuba or Venezuela) that is located in North, Central, or South America (including the West Indies).
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4029 Introduced in House (IH)]
<DOC>
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.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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