109 HR 1102 IH: Patriot Penalty Elimination Act of 2005 U.S. House of Representatives 2005-03-03 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 1st Session H. R. 1102 IN THE HOUSE OF REPRESENTATIVES March 3, 2005 Mr. Israel introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Armed Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend title 10, United States Code, to protect the financial condition of members of the reserve components of the Armed Forces who are ordered to long-term active duty in support of a contingency operation, and for other purposes.

1.

Short title

This Act may be cited as the Patriot Penalty Elimination Act of 2005.

2.

Income preservation pay for reserves serving on active duty in support of a contingency operation

(a)

Authority

Chapter 1209 of title 10, United States Code, is amended by inserting after section 12316 the following new section:

12316a.

Reserves: income preservation pay

(a)

Requirement to pay

The Secretary of the military department concerned shall pay income preservation pay under this section to an eligible member of a reserve component of the armed forces in connection with the member’s active-duty service as described in subsection (b). (b)

Eligible member

A member is eligible for income preservation pay if— (1)the member is called or ordered to active duty (other than voluntarily) under a provision of law referred to in section 101(a)(13)(B) of this title; (2)pursuant to such call or order, the member serves on active duty outside the United States during at least 6 out of 12 consecutive months; and (3)with respect to such active-duty service, the amount of the member’s preservice earned income determined under subparagraph (A) of subsection (c)(1) exceeds the amount of the member’s military service income determined under subparagraph (B) of such subsection. (c)

Amount

(1)Subject to paragraph (2), the amount payable under this section to a member in connection with active-duty service is the amount equal to the excess (if any) of— (A)the amount computed by multiplying— (i)the preservice average monthly earned income of the member, by (ii)the total number of the member’s service months for such active-duty service, over (B)the amount computed by multiplying— (i)the military service average monthly income of the member, by (ii)the total number of months determined under subparagraph (A)(ii). (2)The total amount of income preservation pay that is paid to a member under this section may not exceed $50,000. (d)

Preservice average monthly earned income

For the purposes of this section, the preservice average monthly earned income of a member who serves on active duty as described in subsection (b) shall be computed by dividing 12 into the total amount of the member’s earned income for the 12 months immediately preceding the member’s first service month of the period for which income preservation pay is to be paid to the member under this section. (e)

Military service average monthly income

For the purposes of this section, the military service average monthly income of a member who serves on active duty as described in subsection (b) is the amount determined by dividing— (1)the sum of the total amount of the member’s earned income (other than basic pay) and the total amount of the member’s basic pay (under section 204 of title 37) for the member’s service months for such active-duty service, by (2)the total number of such months. (f)

Time and manner of payment

(1)Subject to paragraph (2), the total amount of income preservation pay that is payable under this section to a member in connection with service on active duty is due and payable, in one lump sum, not later than 30 days after the date on which the member is released from the active duty. (2)The Secretary concerned may make advance payment of income preservation pay in whole or in part under this section to a member, under such terms and conditions as the Secretary determines appropriate, if it is clear from the circumstances that it is likely that the member’s active-duty service will satisfy the requirements of subsection (b). In any case in which advance payment is made to a member whose period of such active-duty service does not satisfy such requirements, the Secretary concerned may waive recoupment of the advance payment if the Secretary determines that recoupment would be against equity and good conscience or would be contrary to the best interests of the United States. (g)

Definitions

In this section: (1)The term earned income has the meaning given such term in section 32(c)(2) of the Internal Revenue Code of 1986. (2)The term service month, with respect to service of a member of a reserve component of the armed forces on active duty, means a month during any part of which the member serves on active duty.

. (b)

Recharacterization of existing Section on payment of certain reserves on active duty

The heading of section 12316 of title 10, United States Code, is amended to read as follows:

12316.

Reserves: payment of other entitlement instead of pay and allowances

. (c)

Clerical amendment

The table of sections at the beginning of chapter 1209 of title 10, United States Code, is amended by striking the item relating to section 12316 and inserting the following new items: 12316. Reserves: payment of other entitlement instead of pay and allowances 12316a. Reserves: income preservation pay. (d)

Effective date

Section 12316a of title 10, United States Code (as added by subsection (a)), shall take effect as of January 1, 2004, and shall apply with respect to active-duty service that begins on or after such date.

3.

Ready Reserve-National Guard employee credit

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business-related credits) is amended by inserting after section 45I the following new section:

45J.

Ready Reserve-National Guard employee credit

(a)

General rule

For purposes of section 38, the Ready Reserve-National Guard employee credit determined under this section for any taxable year with respect to each Ready Reserve-National Guard employee of the taxpayer is an amount equal to 50 percent of the lesser of— (1)the actual compensation amount with respect to such employee for such taxable year, or (2)$30,000. (b)

Definition of actual compensation amount

For purposes of this section, the term actual compensation amount means the amount of compensation paid or incurred by a taxpayer with respect to a Ready Reserve-National Guard employee on any day when the employee was absent from employment for the purpose of performing qualified active duty. (c)

Limitations

No credit shall be allowed with respect to any day that a Ready Reserve-National Guard employee who performs qualified active duty was not scheduled to work (for reason other than to participate in qualified active duty). (d)

Definitions and special rules

For purposes of this section— (1)

Qualified active duty

The term qualified active duty means— (A)active duty outside the United States under an order or call for a period in excess of 179 days or for an indefinite period, other than the training duty specified in section 10147 of title 10, United States Code (relating to training requirements for the Ready Reserve), or section 502(a) of title 32, United States Code (relating to required drills and field exercises for the National Guard), in connection with which an employee is entitled to reemployment rights and other benefits or to a leave of absence from employment under chapter 43 of title 38, United States Code, and (B)hospitalization incident to such duty. (3)

Compensation

The term compensation means any remuneration for employment, whether in cash or in kind, which is paid or incurred by a taxpayer and which is deductible from the taxpayer’s gross income under section 162(a)(1). (4)

Ready Reserve-National Guard employee

The term Ready Reserve-National Guard employee means an employee who is a member of the Ready Reserve of a reserve component of an Armed Force of the United States as described in sections 10142 and 10101 of title 10, United States Code. (5)

Certain rules to apply

Rules similar to the rules of section 52 shall apply.

. (b)

Credit to be part of general business credit

Subsection (b) of section 38 of the Internal Revenue Code of 1986 (relating to general business credit) is amended by striking plus at the end of paragraph (18), by striking the period at the end of paragraph (19) and inserting , plus, and by adding at the end the following: (20)the Ready Reserve-National Guard employee credit determined under section 45J(a).. (c)

Denial of double benefit

Section 280C(a) of the Internal Revenue Code of 1986 (relating to rule for employment credits) is amended by inserting 45J(a), after 45A(a),. (d)

Conforming amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 45I the following: Sec. 45J. Ready Reserve-National Guard employee credit. (e)

Effective date

The amendments made by this section shall apply to amounts paid or incurred after December 31, 2004, in taxable years ending after such date.