[Congressional Record Volume 140, Number 103 (Monday, August 1, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: August 1, 1994]


 
                         ADDITIONAL STATEMENTS

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             TAX DEDUCTIBILITY OF FLIGHT TRAINING EXPENSES

 Mr. BROWN. Mr. President, I am pleased to introduce S. 2338, a 
bill which will restore some fairness to our current tax system. 
Approximately 200 veteran pilots throughout the country are currently 
unable to obtain refunds from the Internal Revenue Service [IRS] for 
taxes they paid which the IRS later ruled were unnecessary. This bill 
would create a 1-year grace period during which veteran pilots would be 
able to file for tax refunds.
  In 1980, the IRS issued a rule, Revenue Rule 80-173, which 
retroactively repealed a provision which had been enforced since 1962. 
The IRS issued this rule against veteran pilots who had previously been 
allowed to receive educational benefits from the Department of Veteran 
Affairs and to claim a deduction for tuition expenses. The result of 
the IRS reversing its own ruling retroactively was that veteran pilots 
were charged back taxes, interest, and penalties. It seems unfair to me 
to apply a revenue ruling retroactively to the detriment of taxpayers 
who took a deduction as instructed.
  An 11th Circuit Court decision allowed for some veteran pilots to 
successfully receive refunds of the tax they had been required to pay. 
However, 200 pilots throughout this country have not been as fortunate 
because they do not fall within the geographic jurisdiction of the 11th 
Circuit Court. There is no provision under the law which would allow 
the IRS to cancel the tax and refund the overpayment because claims for 
refund or credit must be filed within 3 years of the due date of the 
return or 2 years from the date the tax was paid, whichever is later. 
This legislation would enable the remaining 200 veteran pilots a 1-year 
opportunity to file for a refund.
  These pilots are frustrated by this inequity and it is time to 
provide them the opportunity to settle this matter with the Federal 
Government.
  Similar legislation--H.R. 642--has been introduced in the House of 
Representatives by Representative Sundquist. The issue is fairness. I 
hope my colleagues will agree and cosponsor this important bill.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2338

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. TREATMENT OF CERTAIN REIMBURSED FLIGHT TRAINING 
                   EXPENSES.

       (a) In General.--In the case of a taxable year beginning 
     before January 1, 1980, the determination of whether a 
     deduction is allowable under section 162(a) of the Internal 
     Revenue Code of 1954 for flight training expenses shall be 
     made without regard to whether the taxpayer was reimbursed 
     for any portion of such expenses under section 1677(b) of 
     title 38, United States Code (as in effect before its repeal 
     by Public Law 97-35).
       (b) Statute of Limitations.--If refund or credit of any 
     overpayment of tax resulting from the application of 
     subsection (a) 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), refund or credit of such 
     overpayment (to the extent attributable to the application of 
     subsection (a)) may, nevertheless, be made or allowed if 
     claim therefor is filed before the close of such 1-year 
     period.

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