[Congressional Record Volume 141, Number 1 (Wednesday, January 4, 1995)]
[Extensions of Remarks]
[Pages E20-E21]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


       INTRODUCTION OF POLICE AND FIREFIGHTERS TAX CLARIFICATION

                                 ______


                        HON. BARBARA B. KENNELLY

                             of connecticut

                    in the house of representatives

                       Wednesday, January 4, 1995
  Mrs. KENNELLY. Mr. Speaker, I rise today to introduce legislation 
that is of vital interest to police and firefighters in Connecticut.
  [[Page E21]] This legislation would simply clear up a situation where 
erroneous State law has caused benefits that were intended to be 
treated as workmen's compensation to be brought into income on audit. 
In several States, including Connecticut, the State law providing these 
benefits for police and firefighters included an irrebuttable 
presumption that heart and hypertension conditions were the result of 
hazardous work conditions.
  In Connecticut the State law has been corrected so that while there 
is a presumption that such conditions are the result of hazardous work, 
the State or municipality involved could require medical proof. This 
change satisfies the IRS definition of workmen's compensation. 
Therefore, all this legislation would do is exempt from income those 
payments received by these individuals as a result of faulty State law 
but only for the past 3 years--1989, 1990 and 1991. From January 1, 
1992 forward those already receiving these benefits would have to meet 
the standard IRS test.
  The importance of this legislation is that these individuals believed 
that they followed State law. The cities and towns involved believed 
that they followed State law and therefore all parties involved 
believed that these benefits were not subject to tax. However, the IRS 
currently has an audit project ongoing in Connecticut and has deemed 
these benefits taxable. All this legislation says is that all parties 
involved made a good faith effort to comply with what they thought the 
law was. The State was in error. That error has been rectified but 
those individuals on disability should not be required to pay 3 years 
back taxes plus interest and penalties.
  This legislation has passed the House previously. It was included in 
H.R. 11, the Revenue Act of 1992 which was subsequently vetoed by 
President Bush. I hope that the 104th Congress can act expeditiously on 
this important legislation.


                          ____________________