[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2816 Introduced in Senate (IS)]
107th CONGRESS
2d Session
S. 2816
To amend the Internal Revenue Code of 1986 to improve tax equity for
military personnel, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 29, 2002
Mr. Baucus (for himself, Mr. Grassley, Mr. McCain, Mr. DeWine, Ms.
Landrieu, Mr. Johnson, Mrs. Carnahan, Mr. Hatch, Mr. Rockefeller, Mrs.
Lincoln, Mr. Torricelli, Mr. Durbin, Mr. Murkowski, and Mr. Kerry)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to improve tax equity for
military personnel, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Foreign and Armed
Services Tax Fairness Act of 2002''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; etc.
Sec. 2. Restoration of full exclusion from gross income of death
gratuity payment.
Sec. 3. Special rule for members of uniformed services and Foreign
Service in determining exclusion of gain
from sale of principal residence.
Sec. 4. Qualified military base realignment and closure fringe benefit.
Sec. 5. Extension of tax filing delay provisions to military personnel
serving in contingency operations.
Sec. 6. Deduction of certain expenses of members of the reserve
component.
Sec. 7. Modification of membership requirement for exemption from tax
for veterans' organizations.
Sec. 8. Clarification of the treatment of dependent care assistance
programs sponsored by the Department of
Defense for members of the Armed Forces of
the United States.
SEC. 2. RESTORATION OF FULL EXCLUSION FROM GROSS INCOME OF DEATH
GRATUITY PAYMENT.
(a) In General.--Subsection (b)(3) of section 134 (relating to
certain military benefits) is amended by adding at the end the
following new subparagraph:
``(C) Exception for death gratuity adjustments made
by law.--Subparagraph (A) shall not apply to any
adjustment to the amount of death gratuity payable
under chapter 75 of title 10, United States Code, which
is pursuant to a provision of law enacted after
September 9, 1986.''.
(b) Conforming Amendment.--Subparagraph (A) of section 134(b)(3) is
amended by striking ``subparagraph (B)'' and inserting ``subparagraphs
(B) and (C)''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to deaths occurring after September 10, 2001.
SEC. 3. SPECIAL RULE FOR MEMBERS OF UNIFORMED SERVICES AND FOREIGN
SERVICE IN DETERMINING EXCLUSION OF GAIN FROM SALE OF
PRINCIPAL RESIDENCE.
(a) In General.--Subsection (d) of section 121 (relating to
exclusion of gain from sale of principal residence) is amended by
adding at the end the following new paragraph:
``(9) Members of uniformed services and foreign service.--
``(A) In general.--At the election of an individual
with respect to a property, the running of the 5-year
period described in subsection (a) with respect to such
property shall be suspended during any period that such
individual or such individual's spouse is serving on
qualified official extended duty as a member of the
uniformed services or of the Foreign Service.
``(B) Maximum period of suspension.--The 5-year
period described in subsection (a) shall not be
extended more than 5 years by reason of subparagraph
(A).
``(C) Qualified official extended duty.--For
purposes of this paragraph--
``(i) In general.--The term `qualified
official extended duty' means any extended duty
while serving at a duty station which is at
least 50 miles from such property or while
residing under Government orders in Government
quarters.
``(ii) Uniformed services.--The term
`uniformed services' has the meaning given such
term by section 101(a)(5) of title 10, United
States Code, as in effect on the date of the
enactment of this paragraph.
``(iii) Foreign service of the united
states.--The term `member of the Foreign
Service' has the meaning given the term `member
of the Service' by paragraph (1), (2), (3),
(4), or (5) of section 103 of the Foreign
Service Act of 1980.
``(iv) Extended duty.--The term `extended
duty' means any period of duty pursuant to a
call or order to such duty for a period in
excess of 90 days or for an indefinite period.
``(D) Special rules relating to election.--
``(i) Election limited to 1 property at a
time.--An election under subparagraph (A) with
respect to any property may not be made if such
an election is in effect with respect to any
other property.
``(ii) Revocation of election.--An election
under subparagraph (A) may be revoked at any
time.''.
(b) Effective Date.--The amendment made by this section shall apply
to elections made after the date of the enactment of this Act for
suspended periods under section 121(d)(9) of the Internal Revenue Code
of 1986 (as added by this section) beginning after such date.
SEC. 4. QUALIFIED MILITARY BASE REALIGNMENT AND CLOSURE FRINGE BENEFIT.
(a) In General.--Section 132(a) (relating to the exclusion from
gross income of certain fringe benefits) is amended by striking ``or''
at the end of paragraph (6), by striking the period at the end of
paragraph (7) and inserting ``, or'' and by adding at the end the
following new paragraph:
``(8) qualified military base realignment and closure
fringe.''.
(b) Qualified Military Base Realignment and Closure Fringe.--
Section 132 is amended by redesignating subsection (n) as subsection
(o) and by inserting after subsection (m) the following new subsection:
``(n) Qualified Military Base Realignment and Closure Fringe.--For
purposes of this section, the term `qualified military base realignment
and closure fringe' means 1 or more payments under the authority of
section 1013 of the Demonstration Cities and Metropolitan Development
Act of 1966 (42 U.S.C. 3374) to offset the adverse effects on housing
values as a result of a military base realignment or closure.''.
(c) Effective Date.--The amendments made by this section shall
apply to payments made after the date of the enactment of this Act.
SEC. 5. EXTENSION OF TAX FILING DELAY PROVISIONS TO MILITARY PERSONNEL
SERVING IN CONTINGENCY OPERATIONS.
(a) In General.--Section 7508(a) (relating to time for performing
certain acts postponed by reason of service in combat zone) is
amended--
(1) by inserting ``or when deployed outside the United
States away from the individual's permanent duty station while
participating in an operation designated by the Secretary of
Defense as a contingency operation (as defined in section
101(a)(13) of title 10, United States Code) or which became
such a contingency operation by operation of law'' after
``section 112'',
(2) by inserting in the first sentence ``or at any time
during the period of such contingency operation'' after ``for
purposes of such section'',
(3) by inserting ``or operation'' after ``such an area'',
and
(4) by inserting ``or operation'' after ``such area''.
(b) Conforming Amendments.--
(1) Section 7508(d) is amended by inserting ``or
contingency operation'' after ``area''.
(2) The heading for section 7508 is amended by inserting
``or contingency operation'' after ``combat zone''.
(3) The item relating to section 7508 in the table of
sections for chapter 77 is amended by inserting ``or
contingency operation'' after ``combat zone''.
(c) Effective Date.--The amendments made by this section shall
apply to any period for performing an act which has not expired before
the date of the enactment of this Act.
SEC. 6. DEDUCTION OF CERTAIN EXPENSES OF MEMBERS OF THE RESERVE
COMPONENT.
(a) Deduction Allowed.--Section 162 (relating to certain trade or
business expenses) is amended by redesignating subsection (p) as
subsection (q) and inserting after subsection (o) the following new
subsection:
``(p) Treatment of Expenses of Members of Reserve Component of
Armed Forces of the United States.--For purposes of subsection (a), in
the case of an individual who performs services as a member of a
reserve component of the Armed Forces of the United States at any time
during the taxable year, such individual shall be deemed to be away
from home in the pursuit of a trade or business during any period for
which such individual is away from home in connection with such
service.''.
(b) Deduction Allowed Whether or Not Taxpayer Elects To Itemize.--
Section 62(a)(2) (relating to certain trade and business deductions of
employees) is amended by adding at the end the following new
subparagraph:
``(E) Certain expenses of members of reserve
components of the armed forces of the united states.--
The deductions allowed by section 162 which consist of
expenses, in amounts not in excess of the rates for
travel expenses (including per diem in lieu of
subsistence) authorized for employees of agencies under
subchapter I of chapter 57 of title 5, United States
Code, paid or incurred by the taxpayer in connection
with the performance of services by such taxpayer as a
member of a reserve component of the Armed Forces of
the United States.''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after
December 31, 2001.
SEC. 7. MODIFICATION OF MEMBERSHIP REQUIREMENT FOR EXEMPTION FROM TAX
FOR VETERANS' ORGANIZATIONS.
(a) In General.--Subparagraph (B) of section 501(c)(19) (relating
to list of exempt organizations) is amended by striking ``or widowers''
and inserting ``, widowers, or ancestors or lineal descendants''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 8. CLARIFICATION OF THE TREATMENT OF DEPENDENT CARE ASSISTANCE
PROGRAMS SPONSORED BY THE DEPARTMENT OF DEFENSE FOR
MEMBERS OF THE ARMED FORCES OF THE UNITED STATES.
(a) In General.--Section 134(b) (defining qualified military
benefit) is amended by adding at the end the following new paragraph:
``(4) Clarification of certain benefits.--For purposes of
paragraph (1), such term includes any dependent care assistance
program sponsored by the Department of Defense for members of
the Armed Forces of the United States.''.
(b) Conforming Amendments.--
(1) Section 3121(a)(18) is amended by striking ``or 129''
and inserting ``, 129, or 134(b)(4)''.
(2) Section 3306(b)(13) is amended by striking ``or 129''
and inserting ``, 129, or 134(b)(4)''.
(3) Section 3401(a)(18) is amended by striking ``or 129''
and inserting ``, 129, or 134(b)(4)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
(d) No Inference.--No inference may be drawn from the amendments
made by this section with respect to the tax treatment of any amounts
under the program described in section 134(b)(4) of the Internal
Revenue Code of 1986 (as added by this section) for any taxable year
beginning before January 1, 2002.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S7498-7499)
Read twice and referred to the Committee on Finance. (text of measure as introduced: CR S7499-7500)
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