[Congressional Record Volume 143, Number 1 (Tuesday, January 7, 1997)]
[Extensions of Remarks]
[Pages E54-E55]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     INTRODUCTION OF LEGISLATION TO ASSIST CONNECTICUT POLICE AND 
                              FIREFIGHTERS

                                 ______
                                 

                        HON. BARBARA B. KENNELLY

                             of connecticut

                    in the house of representatives

                        Tuesday, January 7, 1997

  Mrs. KENNELLY of Connecticut. Mr. Speaker, I rise today to introduce 
legislation on the single most important tax issue to roughly 1100 
families in Connecticut.
  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 fire fighters included an irrebuttable presumption that 
heart and hypertension conditions were the result of hazardous work 
conditions.
  In Connecticut, at least, 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 three years--1989, 1990 and 1991. 
From January 1, 1992 forward those already receiving these benefits 
would have to meet the standard IRS test.

[[Page E55]]

  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 CT 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. Yet the interest and penalties 
on this tax continue to increase each day and are quite beyond the 
means of most of these families where the primary breadwinner is 
disabled.
  This provision was reported by the Ways and Means Committee in 1992, 
passed the House on the suspension calendar, included in H.R. 11 and 
vetoed by then President Bush. This provision enjoys the bipartisan 
support of the entire Connecticut Congressional delegation. I hope that 
the House will see fit to provide these Connecticut families with the 
tax relief they need most.

                          ____________________