[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3365 Enrolled Bill (ENR)]

        H.R.3365

                       One Hundred Eighth Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

          Begun and held at the City of Washington on Tuesday,
           the seventh day of January, two thousand and three


                                 An Act


 
To amend title 10, United States Code, and the Internal Revenue Code of 
  1986 to increase the death gratuity payable with respect to deceased 
  members of the Armed Forces and to exclude such gratuity from gross 
income, to provide additional tax relief for members of the Armed Forces 
               and their families, 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 ``Military Family 
Tax Relief Act of 2003''.
    (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.

          TITLE I--IMPROVING TAX EQUITY FOR MILITARY PERSONNEL

Sec. 101. Exclusion of gain from sale of a principal residence by a 
          member of the uniformed services or the Foreign Service.
Sec. 102. Treatment of death gratuities payable with respect to deceased 
          members of the Armed Forces.
Sec. 103. Exclusion for amounts received under Department of Defense 
          homeowners assistance program.
Sec. 104. Expansion of combat zone filing rules to contingency 
          operations.
Sec. 105. Modification of membership requirement for exemption from tax 
          for certain veterans' organizations.
Sec. 106. Clarification of the treatment of certain dependent care 
          assistance programs.
Sec. 107. Clarification relating to exception from additional tax on 
          certain distributions from qualified tuition programs, etc., 
          on account of attendance at military academy.
Sec. 108. Suspension of tax-exempt status of terrorist organizations.
Sec. 109. Above-the-line deduction for overnight travel expenses of 
          National Guard and Reserve members.
Sec. 110. Tax relief and assistance for families of Space Shuttle 
          Columbia heroes.

                       TITLE II--REVENUE PROVISION

Sec. 201. Extension of customs user fees.

          TITLE I--IMPROVING TAX EQUITY FOR MILITARY PERSONNEL

SEC. 101. EXCLUSION OF GAIN FROM SALE OF A PRINCIPAL RESIDENCE BY A 
              MEMBER OF THE UNIFORMED SERVICES OR THE FOREIGN SERVICE.

    (a) In General.--Subsection (d) of section 121 (relating to 
exclusion of gain from sale of principal residence) is amended by 
redesignating paragraph (9) as paragraph (10) and by inserting after 
paragraph (8) 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 subsections (a) and (c)(1)(B) and paragraph (7) of 
        this subsection 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 of the United States.
            ``(B) Maximum period of suspension.--The 5-year period 
        described in subsection (a) shall not be extended more than 10 
        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 of the United States' 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, as in effect on the date of 
            the enactment of this paragraph.
                ``(iv) Extended duty.--The term `extended duty' means 
            any period of active 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; Special Rule.--
        (1) Effective date.--The amendments made by this section shall 
    take effect as if included in the amendments made by section 312 of 
    the Taxpayer Relief Act of 1997.
        (2) Waiver of limitations.--If refund or credit of any 
    overpayment of tax resulting from the amendments made by this 
    section is prevented at any time before the close of the 1-year 
    period beginning on the date of the enactment of this Act by the 
    operation of any law or rule of law (including res judicata), such 
    refund or credit may nevertheless be made or allowed if claim 
    therefor is filed before the close of such period.

SEC. 102. TREATMENT OF DEATH GRATUITIES PAYABLE WITH RESPECT TO 
              DECEASED MEMBERS OF THE ARMED FORCES.

    (a) Increase in Amount of Death Gratuity.--
        (1) In general.--Section 1478(a) of title 10, United States 
    Code, is amended by striking ``$6,000'' and inserting ``$12,000''.
        (2) Effective date.--The amendment made by this subsection 
    shall take effect as of September 11, 2001, and shall apply with 
    respect to deaths occurring on or after that date.
    (b) Exclusion From Gross Income.--
        (1) 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.''.
        (2) Conforming amendment.--Subparagraph (A) of section 
    134(b)(3) is amended by striking ``subparagraph (B)'' and inserting 
    ``subparagraphs (B) and (C)''.
        (3) Effective date.--The amendments made by this subsection 
    shall apply with respect to deaths occurring after September 10, 
    2001.

SEC. 103. EXCLUSION FOR AMOUNTS RECEIVED UNDER DEPARTMENT OF DEFENSE 
              HOMEOWNERS ASSISTANCE PROGRAM.

    (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--
        ``(1) In general.--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) (as in effect 
    on the date of the enactment of this subsection) to offset the 
    adverse effects on housing values as a result of a military base 
    realignment or closure.
        ``(2) Limitation.--With respect to any property, such term 
    shall not include any payment referred to in paragraph (1) to the 
    extent that the sum of all of such payments related to such 
    property exceeds the maximum amount described in clause (1) of 
    subsection (c) of such section (as in effect on such date).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payments made after the date of the enactment of this Act.

SEC. 104. EXPANSION OF COMBAT ZONE FILING RULES TO 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. 105. MODIFICATION OF MEMBERSHIP REQUIREMENT FOR EXEMPTION FROM TAX 
              FOR CERTAIN 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, 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. 106. CLARIFICATION OF THE TREATMENT OF CERTAIN DEPENDENT CARE 
              ASSISTANCE PROGRAMS.

    (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 (as in effect on the date of the enactment of this 
    paragraph) for any individual described in paragraph (1)(A).''.
    (b) Conforming Amendments.--
        (1) Section 134(b)(3)(A), as amended by section 102, is amended 
    by inserting ``and paragraph (4)'' after ``subparagraphs (B) and 
    (C)''.
        (2) Section 3121(a)(18) is amended by striking ``or 129'' and 
    inserting ``, 129, or 134(b)(4)''.
        (3) Section 3306(b)(13) is amended by striking ``or 129'' and 
    inserting ``, 129, or 134(b)(4)''.
        (4) 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, 2002.
    (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, 2003.

SEC. 107. CLARIFICATION RELATING TO EXCEPTION FROM ADDITIONAL TAX ON 
              CERTAIN DISTRIBUTIONS FROM QUALIFIED TUITION PROGRAMS, 
              ETC., ON ACCOUNT OF ATTENDANCE AT MILITARY ACADEMY.

    (a) In General.--Subparagraph (B) of section 530(d)(4) (relating to 
exceptions from additional tax for distributions not used for 
educational purposes) is amended by striking ``or'' at the end of 
clause (iii), by redesignating clause (iv) as clause (v), and by 
inserting after clause (iii) the following new clause:
                ``(iv) made on account of the attendance of the 
            designated beneficiary at the United States Military 
            Academy, the United States Naval Academy, the United States 
            Air Force Academy, the United States Coast Guard Academy, 
            or the United States Merchant Marine Academy, to the extent 
            that the amount of the payment or distribution does not 
            exceed the costs of advanced education (as defined by 
            section 2005(e)(3) of title 10, United States Code, as in 
            effect on the date of the enactment of this section) 
            attributable to such attendance, or''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 108. SUSPENSION OF TAX-EXEMPT STATUS OF TERRORIST ORGANIZATIONS.

    (a) In General.--Section 501 (relating to exemption from tax on 
corporations, certain trusts, etc.) is amended by redesignating 
subsection (p) as subsection (q) and by inserting after subsection (o) 
the following new subsection:
    ``(p) Suspension of Tax-Exempt Status of Terrorist Organizations.--
        ``(1) In general.--The exemption from tax under subsection (a) 
    with respect to any organization described in paragraph (2), and 
    the eligibility of any organization described in paragraph (2) to 
    apply for recognition of exemption under subsection (a), shall be 
    suspended during the period described in paragraph (3).
        ``(2) Terrorist organizations.--An organization is described in 
    this paragraph if such organization is designated or otherwise 
    individually identified--
            ``(A) under section 212(a)(3)(B)(vi)(II) or 219 of the 
        Immigration and Nationality Act as a terrorist organization or 
        foreign terrorist organization,
            ``(B) in or pursuant to an Executive order which is related 
        to terrorism and issued under the authority of the 
        International Emergency Economic Powers Act or section 5 of the 
        United Nations Participation Act of 1945 for the purpose of 
        imposing on such organization an economic or other sanction, or
            ``(C) in or pursuant to an Executive order issued under the 
        authority of any Federal law if--
                ``(i) the organization is designated or otherwise 
            individually identified in or pursuant to such Executive 
            order as supporting or engaging in terrorist activity (as 
            defined in section 212(a)(3)(B) of the Immigration and 
            Nationality Act) or supporting terrorism (as defined in 
            section 140(d)(2) of the Foreign Relations Authorization 
            Act, Fiscal Years 1988 and 1989); and
                ``(ii) such Executive order refers to this subsection.
        ``(3) Period of suspension.--With respect to any organization 
    described in paragraph (2), the period of suspension--
            ``(A) begins on the later of--
                ``(i) the date of the first publication of a 
            designation or identification described in paragraph (2) 
            with respect to such organization, or
                ``(ii) the date of the enactment of this subsection, 
            and
            ``(B) ends on the first date that all designations and 
        identifications described in paragraph (2) with respect to such 
        organization are rescinded pursuant to the law or Executive 
        order under which such designation or identification was made.
        ``(4) Denial of deduction.--No deduction shall be allowed under 
    any provision of this title, including sections 170, 545(b)(2), 
    556(b)(2), 642(c), 2055, 2106(a)(2), and 2522, with respect to any 
    contribution to an organization described in paragraph (2) during 
    the period described in paragraph (3).
        ``(5) Denial of administrative or judicial challenge of 
    suspension or denial of deduction.--Notwithstanding section 7428 or 
    any other provision of law, no organization or other person may 
    challenge a suspension under paragraph (1), a designation or 
    identification described in paragraph (2), the period of suspension 
    described in paragraph (3), or a denial of a deduction under 
    paragraph (4) in any administrative or judicial proceeding relating 
    to the Federal tax liability of such organization or other person.
        ``(6) Erroneous designation.--
            ``(A) In general.--If--
                ``(i) the tax exemption of any organization described 
            in paragraph (2) is suspended under paragraph (1),
                ``(ii) each designation and identification described in 
            paragraph (2) which has been made with respect to such 
            organization is determined to be erroneous pursuant to the 
            law or Executive order under which such designation or 
            identification was made, and
                ``(iii) the erroneous designations and identifications 
            result in an overpayment of income tax for any taxable year 
            by such organization,
        credit or refund (with interest) with respect to such 
        overpayment shall be made.
            ``(B) Waiver of limitations.--If the credit or refund of 
        any overpayment of tax described in subparagraph (A)(iii) is 
        prevented at any time by the operation of any law or rule of 
        law (including res judicata), such credit or refund may 
        nevertheless be allowed or made if the claim therefor is filed 
        before the close of the 1-year period beginning on the date of 
        the last determination described in subparagraph (A)(ii).
        ``(7) Notice of suspensions.--If the tax exemption of any 
    organization is suspended under this subsection, the Internal 
    Revenue Service shall update the listings of tax-exempt 
    organizations and shall publish appropriate notice to taxpayers of 
    such suspension and of the fact that contributions to such 
    organization are not deductible during the period of such 
    suspension.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to designations made before, on, or after the date of the 
enactment of this Act.

SEC. 109. ABOVE-THE-LINE DEDUCTION FOR OVERNIGHT TRAVEL EXPENSES OF 
              NATIONAL GUARD AND RESERVE MEMBERS.

    (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)(2), 
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 for any period during 
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, determined at a rate 
        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 
        for any period during which such individual is more than 100 
        miles away from home in connection with such services.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
December 31, 2002.

SEC. 110. TAX RELIEF AND ASSISTANCE FOR FAMILIES OF SPACE SHUTTLE 
              COLUMBIA HEROES.

    (a) Income Tax Relief.--
        (1) In general.--Subsection (d) of section 692 (relating to 
    income taxes of members of Armed Forces and victims of certain 
    terrorist attacks on death) is amended by adding at the end the 
    following new paragraph:
        ``(5) Relief with respect to astronauts.--The provisions of 
    this subsection shall apply to any astronaut whose death occurs in 
    the line of duty, except that paragraph (3)(B) shall be applied by 
    using the date of the death of the astronaut rather than September 
    11, 2001.''.
        (2) Conforming amendments.--
            (A) Section 5(b)(1) is amended by inserting ``, 
        astronauts,'' after ``Forces''.
            (B) Section 6013(f)(2)(B) is amended by inserting ``, 
        astronauts,'' after ``Forces''.
        (3) Clerical amendments.--
            (A) The heading of section 692 is amended by inserting ``, 
        astronauts,'' after ``forces''.
            (B) The item relating to section 692 in the table of 
        sections for part II of subchapter J of chapter 1 is amended by 
        inserting ``, astronauts,'' after ``Forces''.
        (4) Effective date.--The amendments made by this subsection 
    shall apply with respect to any astronaut whose death occurs after 
    December 31, 2002.
    (b) Death Benefit Relief.--
        (1) In general.--Subsection (i) of section 101 (relating to 
    certain death benefits) is amended by adding at the end the 
    following new paragraph:
        ``(4) Relief with respect to astronauts.--The provisions of 
    this subsection shall apply to any astronaut whose death occurs in 
    the line of duty.''.
        (2) Clerical amendment.--The heading for subsection (i) of 
    section 101 is amended by inserting ``or Astronauts'' after 
    ``Victims''.
        (3) Effective date.--The amendments made by this subsection 
    shall apply to amounts paid after December 31, 2002, with respect 
    to deaths occurring after such date.
    (c) Estate Tax Relief.--
        (1) In general.--Section 2201(b) (defining qualified decedent) 
    is amended by striking ``and'' at the end of paragraph (1)(B), by 
    striking the period at the end of paragraph (2) and inserting ``, 
    and'', and by adding at the end the following new paragraph:
        ``(3) any astronaut whose death occurs in the line of duty.''.
        (2) Clerical amendments.--
            (A) The heading of section 2201 is amended by inserting ``, 
        deaths of astronauts,'' after ``forces''.
            (B) The item relating to section 2201 in the table of 
        sections for subchapter C of chapter 11 is amended by inserting 
        ``, deaths of astronauts,'' after ``Forces''.
        (3) Effective date.--The amendments made by this subsection 
    shall apply to estates of decedents dying after December 31, 2002.

                      TITLE II--REVENUE PROVISION

SEC. 201. EXTENSION OF CUSTOMS USER FEES.

    Section 13031(j)(3) of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended by striking 
``March 31, 2004'' and inserting ``March 1, 2005''.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.