Military Service Tax Relief Act of 2007

Military Service Tax Relief Act of 2007 - Amends the Internal Revenue Code to make permanent: (1) penalty-free distributions from individual retirement plans to individuals called or ordered to active military duty; and (2) the taxpayer election to include combat zone compensation as earned income for purposes of computing the earned income tax credit.

[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4085 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 4085

   To amend the Internal Revenue Code of 1986 to make permanent the 
penalty-free distributions from retirement plans to individuals called 
to active duty and the election to include combat pay as earned income 
             for purposes of the earned income tax credit.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            November 6, 2007

Mr. Klein of Florida introduced the following bill; which was referred 
                   to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to make permanent the 
penalty-free distributions from retirement plans to individuals called 
to active duty and the election to include combat pay as earned income 
             for purposes of the earned income tax credit.

    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 ``Military Service Tax Relief Act of 
2007''.

SEC. 2. DISTRIBUTIONS FROM RETIREMENT PLANS TO INDIVIDUALS CALLED TO 
              ACTIVE DUTY.

    (a) In General.--Clause (iv) of section 72(t)(2)(G) is amended by 
striking ``, and before December 31, 2007''.
    (b) Effective Date.--The amendment made by this section shall apply 
to individuals ordered or called to active duty on or after December 
31, 2007.

SEC. 3. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR PURPOSES OF 
              EARNED INCOME TAX CREDIT.

    (a) In General.--Clause (vi) of section 32(c)(2)(B) (defining 
earned income) is amended to read as follows:
                            ``(vi) a taxpayer may elect to treat 
                        amounts excluded from gross income by reason of 
                        section 112 as earned income.''.
    (b) Provision Not Subject to EGTRRA Sunset.--Section 105 of the 
Working Families Tax Relief Act of 2004 (relating to application of 
EGTRRA sunset to this title) shall not apply to section 104(b) of such 
Act.
    (c) Effective Date.--The amendment made by this section shall apply 
to taxable years ending after December 31, 2007.
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