Military Personnel Pay and Benefits Act of 1991

Military Personnel Pay and Benefits Act of 1991 - Title I: Military Personnel and Compensation Matters - Repeals current provisions prohibiting the payment of imminent danger pay and a family separation allowance during times of war or national emergency declared by the Congress.

Establishes a monthly family separation allowance of $100 in lieu of $60. Authorizes the payment of such allowance to either spouse when both are members of the armed forces and have no other dependents.

Requires the payment of a basic allowance for quarters to reserve members without dependents called to active duty who are unable to occupy their primary residence owned or rented by such members because of such active duty.

Expands eligibility for the payment of foreign duty special pay to include both officers and enlisted personnel (currently, only enlisted personnel) and specifies the amount of such special monthly pay, which increases for each higher enlisted or officer pay grade.

Makes survivors eligible for the payment of all accrued leave of members who die while on active duty.

Provides that a retired member ordered to active duty and who serves such active duty in a grade higher than his retired grade is entitled, upon release from such new duty, to be advanced on the retired list to the highest grade satisfactorily served on active duty for not less than three years, as determined by the Secretary concerned. Authorizes the President to waive such three-year requirement in individual cases.

Removes the ceiling on savings deposits for servicemembers carried in a missing person status during the Persian Gulf conflict.

Establishes a standard death gratuity rate of $6,000 for members of all grades.

Requires foreign language proficiency pay for members assigned to duty in connection with operations in the Persian Gulf who meet all eligibility criteria for such pay except that they have not been certified by the Secretary concerned to be proficient in a foreign language necessary for national defense purposes.

Expresses the sense of the Congress that the President should request the Government of Germany to contribute medical care to persons living in Germany who are dependents of members of U.S. armed forces in order to replace military medical personnel and equipment deployed to the Persian Gulf region to treat casualties resulting from military operations there.

Title II: Internal Revenue Matters - Extends the time allowed for performing certain acts relating to income tax liability under the Internal Revenue Code by reason of service in a combat zone for individuals who performed Desert Shield or Desert Storm services. Includes as such service: (1) any period of hospitalization outside the United States for an injury received during the Persian Gulf conflict; and (2) the period during which an individual so entitled to such extension is in a missing status.

Amends the Internal Revenue Code to allow, as part of the permitted time allowed before tax liability is recognized on the rollover of gain from a principal residence, an additional one-year period from the time in which a reserve member of the armed forces is released from active duty pursuant to a call or order.

Title III: Student Loan Deferments - Makes eligible for repayment deferment of certain student loans granted under the Higher Education Act of 1965 a member of the armed forces called or ordered to active duty in connection with operations in the Persian Gulf. States that such period of deferment shall not be counted against the grace period normally available to individuals with respect to such loans.