I 
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 deter-
mine 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 Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Supply Chain Security 
Act’’. 
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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 sub-
section, the determination of whether any Western Hemi-
sphere tax paid or accrued by such taxpayer is an income, 
war profits, or excess profits tax for purposes of any provi-
sion of the Internal Revenue Code of 1986 shall be made 
without regard to any specified regulation. 
(b) SEPARATE ELECTION WITH RESPECT TO ALLO-
CATION
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 applica-
tion 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 deter-
mined after the application of subsection (a) of this 
section) paid or accrued by reason of any remittance 
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made by such entity to such owner during the appli-
cable period, any items of foreign gross income in-
cluded 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 dis-
regarded 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 apply-
ing 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 coun-
try referred to in subparagraph (B), and 
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(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 Rev-
enue 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 share-
holders 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 Hemi-
sphere 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, Cen-
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