[Congressional Record Volume 149, Number 159 (Wednesday, November 5, 2003)]
[House]
[Pages H10367-H10373]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 MILITARY FAMILY TAX RELIEF ACT OF 2003

  Mr. SAM JOHNSON of Texas. Mr. Speaker, I move to suspend the rules 
and concur in the Senate amendments to the bill (H.R. 3365) 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.
  The Clerk read as follows:

       Senate amendments:
       Strike out all after the enacting clause and insert:

     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.--

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

[[Page H10368]]

     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

[[Page H10369]]

     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''.
         Amend the title so as to read: ``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.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Sam Johnson) and the gentleman from New York (Mr. McNulty) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Texas (Mr. Sam Johnson).
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I am proud to stand before the House today in support of 
the Military Family Tax Relief Act.
  I want to start out today by saying how extremely proud I am of the 
men and women who serve in our military. No matter where I go, I have 
absolute rapt attention from everyone when I talk about the members of 
our Armed Forces. I hope our troops know that. All across the Nation, 
citizens are proud of the work our troops do and Americans are grateful 
for the sacrifices that they and their families make for the defense of 
our Nation.
  This bill doubles the military death benefit gratuity to $12,000 and 
excludes from taxation that whole amount. Just last week we passed this 
concept for the third time. This will be the last time this Congress 
will need to vote on this bill because this version has been approved 
by our colleagues on the Senate side of the Capitol, and we will be 
passing the exact bill so that President Bush can sign it into law.
  This bill is also retroactive to September 11, 2001, so that all of 
our men and women who have died in service of their country since that 
day will receive this benefit. This is what a grateful country does for 
the families of those servicemembers. I am proud that we will be fixing 
the problem of having

[[Page H10370]]

a knock at the door by the military chaplain which will no longer be 
followed by a knock at the door from the tax man. This bill does that 
and more.
  It will also make taxes a smaller problem for active military and 
reserves. The Military Families Tax Relief Act provides reasonable 
accommodations to members of the military so that they too can benefit 
from the current $500,000 exclusion from capital gains on the sale of a 
home. To get this exclusion, a family must live in a home for at least 
2 of the previous 5 years. This is generally a reasonable requirement, 
but for those serving in the military such a requirement is out of 
their control when orders ship them to any of the four corners of the 
Earth.
  As a 29-year veteran of the Air Force, my wife and I moved many 
times. In the last 7 years we had seven different moves. So I know 
firsthand about being transferred. And sometimes you live in base 
housing, and sometimes you live in your own home.

                              {time}  1200

  It was a part of the job then and it still is today, and I think it 
is a reasonable accommodation for the tax code to hold them harmless 
for those times when they are not living in their homes. As long as the 
servicemember or his or her family have lived in the home for 2 years, 
the tax code will hold them harmless for years away from home at 
distant postings. Servicemembers are not going to be able to become 
real estate moguls by buying properties all over the country and 
getting this treatment for each. Only one property at a time is 
eligible for this exclusion.
  I am glad to report that another provision I have been working on has 
also been included. It will permit students at our Nation's military 
academies to be treated as being on scholarship for purposes of Section 
529 education savings accounts. It is only the United States military 
academy students who are not eligible for this benefit. Serving this 
country is a noble profession. Congress will now encourage, not 
discourage, young people to join our Armed Forces, especially today.
  I think when hardworking, patriotic young Americans are rewarded with 
an appointment to a service academy we should not turn around and 
impose a 10 percent penalty on their parents who saved for their 
children's education. We should provide the same penalty-free 
withdrawals for the plebe, the middy and the cadet as we provide for 
those who play sports, earn an academic scholarship or pay for school 
through ROTC.
  This is a great bill. It is long overdue. It has been a long time 
since 9/11, and we are trying to take care of our military, and this is 
retroactive back to that point.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McNULTY. Mr. Speaker, I yield myself such time as I may consume.
  I am pleased to be back on the floor this week to discuss an expanded 
version of the bill that we talked about last week. I am thankful to 
the gentleman from New York (Mr. Rangel) for again designating me to 
manage the bill on the Democratic side, and it is always a great honor 
to be on the floor with a true American hero like the gentleman from 
Texas (Mr. Sam Johnson).
  Last week when we discussed this bill, we were talking about how it 
was so inadequate compared to the tremendous sacrifices made by the men 
and women in uniform serving our country. So I am very happy to be 
discussing a bill which is expanded in its scope, and will, in addition 
to the initial provisions, provide a number of new elements of tax 
relief for the men and women of our Armed Forces. These include: 
special rules for the sale of a principal residence, tax-free 
assistance payments for dependent care and homeownership, liberalized 
tax return filing requirements, and deductions for overnight travel 
expenses of the National Guard and Reserve. There is also a provision 
in The Bill to provide tax relief for the families of our shuttle 
Columbia heroes.
  So I would again state to my colleague from Texas and to the Speaker 
and all of the Members that I still think, even with its additions, it 
is a very, very modest bill for the members of our Armed Forces. I 
thank our colleagues for their unanimous support last week, and I hope 
they give us that same support today.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I reserve my time.
  Mr. McNULTY. Mr. Speaker, I am pleased to yield 3 minutes to the 
gentleman from Maryland (Mr. Cardin), a member of the committee.
  Mr. CARDIN. Mr. Speaker, let me thank my friend from New York for 
yielding me this time and also thank my friend from Texas for his 
service to our country and for this bill coming before us.
  This is an important bill. It contains many provisions that will be 
important for the people who are affected by the changes that are made, 
our military families that have served our Nation so well. They deserve 
the consideration of this legislation, and I encourage my colleagues to 
support it.
  As the gentleman from Texas (Mr. Sam Johnson) pointed out, this is 
either the fourth or fifth time that we have been taking this bill up 
in this body, and at last, it looks like we are going to be able to get 
this bill to the President for signature, and I think that is good news 
for military families.
  I think we should learn the lesson, though, that the other body put 
in offsets, revenue offsets, so that there will be no net impact on the 
deficit as a result of passage of this legislation. That is as a result 
of adding Customs fees, user fees to the legislation. That is a good 
thing to do. We have a large deficit. We should try to pay for what we 
do here, and I am encouraged about what we have done on this 
legislation. And I hope we will use it as an example for other 
legislation that has come out of the committee I serve on, but is not 
paid for. And I expect it is going to have a much more difficult time 
in the other body, until we also figure out a way to find offsets for 
tax changes that we bring forward.
  As I pointed out, Mr. Speaker, this is a bill that contains many 
important provisions for the military families that will be affected by 
it. We have mentioned the death benefit. Obviously, this is the least 
that we can do.
  We mentioned some of the tax impacts of certain benefits that are 
changed by this. The home sale tax relief, that is very important for 
military families that are often called upon to sell their homes, to 
make it a little bit easier for them to handle the tax consequences of 
a move.
  The overnight expenses for our National Guard and Reservists, above-
the-line deduction of $500. It is a modest amount, but I think it 
recognizes the fact that our National Guard and Reservists are a very 
important part of our national defense and homeland security needs. 
That became particularly apparent in our current efforts on fighting 
terrorism in Iraq. We have called upon our Reservists. We have called 
upon our National Guard. We should recognize the fact that they have 
additional expenses that should be treated fairly in our tax code, and 
I hope as my friend, the gentleman from New York (Mr. McNulty) pointed 
out, I hope the provisions in this bill are a starting point, not an 
ending point for dealing with these tax issues. So we can try to 
provide some appropriate relief to our military families.
  Let me last mention the point that the gentleman from Texas (Mr. Sam 
Johnson) raised about those in our military academies that have been 
discriminated against under Section 529, the educational savings 
accounts. I am glad that we finally are able to correct that error in 
the law. I have the honor of representing the jurisdiction that 
includes the United States Naval Academy, and we have been contacted by 
families that felt that was terribly unfair, and they were right. Now, 
we have listened to them, and we have corrected that. It is another 
reason why I hope that we will unanimously support this very important 
legislation.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I appreciate the gentleman 
from Maryland's (Mr. Cardin) remarks. I yield such time as he may 
consume to the gentleman from New York (Mr. Houghton), our 
distinguished subcommittee chairman on the Committee on Ways and Means.
  Mr. HOUGHTON. Mr. Speaker, I thank the gentleman very much for those 
kind words. I will not take a lot of time because so much has been 
said, and much of it is felt even though the

[[Page H10371]]

words have not been there, but it is clear when I stand up here, I am 
going to support this bill, and I encourage everyone else who knows 
anything about the issues here to support it.
  We started this bill back in July of last year, and it has finally 
come to the finish line after many trips back and forth between here 
and the Senate. What the bill does is, as I am sure as has already been 
spoken, provides a number of tax benefits for the active military, as 
well as the Reservists. Also, we made modest improvements to help the 
families of the members of the military who have given the supreme 
sacrifice.
  I am not going to go into the details, Mr. Speaker, of this bill. We 
have discussed these over the past year. We have discussed them ad 
infinitum. So those are really behind us, and furthermore, the most 
important thing is the bill is paid for.
  I was in Iraq several weeks ago, and it was an impressive time for a 
variety of reasons, not the least of which is the fact that I met 
people from not only my own district but from other districts, and with 
all the problem of the greed and the discussion about the economic 
system here, here these people are laying their lives on the line, they 
are getting underpaid, they are tired, they go out in this absolutely 
crushing heat. The only thing they asked of us when we were there was 
are you with us, are you supportive of us, and this is one small thing 
I can do to say, yes, we are.
  Mr. McNULTY. Mr. Speaker, I yield 3 minutes to the gentleman from 
Massachusetts (Mr. McGovern), a friend who was an author of one of the 
original bills to increase the tax free benefits for service personnel.
  Mr. McGOVERN. Mr. Speaker, I thank my colleague from New York (Mr. 
McNulty) for yielding me the time and for all of his great leadership 
on this and so many other issues that impact military families.
  I also want to pay my respects and acknowledge the great leadership 
of the gentleman from Texas (Mr. Sam Johnson) for all he has done.
  Mr. Speaker, I rise in strong support of H.R. 3365. Among other 
things, this legislation, as has been mentioned, includes several 
provisions that my colleague from Arizona (Mr. Renzi) and I have been 
working on for some time. This bill doubles the military death gratuity 
from $6,000 to $12,000, makes it tax exempt, and makes those changes 
are retroactive to September 11, 2001. Currently, the gratuity is 
$6,000, of which about $3,000 is subject to Federal taxes.
  The death gratuity is a lump-sum payment to the surviving spouse of a 
military servicemember killed in the line of duty or to the children of 
the servicemember in equal shares if there is no spouse. The purpose of 
the benefit is to provide cash quickly to the survivors in order to 
help them meet immediate needs.
  Mr. Speaker, I am also pleased that this bill contains a number of 
other provisions that were part of the Armed Forces Tax Fairness Act 
which will benefit the brave men and women serving our Nation overseas. 
As we have seen just this week, the loss of life continues for our men 
and women in uniform serving in Iraq and Afghanistan.
  All of us are united in expressing our condolences for the families 
left behind. We are also united in wanting to ensure that the surviving 
families' most pressing needs are met. This bill takes a small but 
important step in that direction, and it is the right thing to do.
  Mr. Speaker, I want to commend the tireless work of the gentleman 
from Texas (Mr. Edwards), who has been an incredible leader on this 
whole issue, as well as the gentleman from North Carolina (Mr. Jones). 
They were pioneers on this issue and so many other benefits that are 
important to our military and their families.
  I also want to acknowledge the gentleman from Missouri (Mr. Skelton), 
my good friend and colleague, the ranking member of the House Committee 
on Armed Services, for ensuring that language to increase the death 
gratuity and make it retroactive to September 11, 2001 would be 
included in the Defense authorization conference report.
  Mr. Speaker, as has been said, this bill contains other benefits for 
our uniformed men and women, and while I believe we need to do much, 
much more in order for the actions of this House to meet up with its 
rhetoric, nonetheless these are important steps in the right direction. 
They are a symbol that we respect the men and women who serve our 
country and who serve in our military.
  Mr. Speaker, this bill is long, long, long overdue, and I am pleased 
that both the House and the Senate have come together to send this 
legislation to the President's desk. I urge my colleagues to vote yes 
on H.R. 3365, and I call upon President Bush to sign it quickly.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield such time as he may 
consume to the gentleman from Arizona (Mr. Renzi) who is an author of 
some of this bill.
  Mr. RENZI. Mr. Speaker, I want to begin by thanking those people who 
have worked across party lines to help bring together this substantial 
piece of legislation and the many elements that make it up. A good deal 
of thanks goes to the gentleman from Texas (Mr. DeLay) for helping us 
to move through the logjam.
  The gentleman from North Carolina (Mr. Jones), one of the innovators, 
as well as the gentleman from Massachusetts (Mr. McGovern), and in the 
final days, the gentleman from California (Mr. Thomas) of the Committee 
on Ways and Means all deserve an immense amount of credit, as well as 
our great leader here, the gentleman from Texas (Mr. Sam Johnson).
  I want to focus on a couple of elements of the bill that I think need 
to be communicated. First of all, to our soldiers in Afghanistan and 
Bosnia, to our soldiers out there in Iraq, on the tip of the spear, 
defending our sacred liberties and freedoms, when they do come home, we 
want them to know that we worked on a bipartisan basis to provide them 
with tax relief and an increase in benefits.
  I had the duty to go up and see Lori Piestewa's family up on the Hopi 
reservation when we lost the first Native American woman in battle in 
Iraq, and we had a discussion of the benefits that came to that family. 
She left behind two children, a boy and a girl, and the Hopi 
reservation is a tough place. Poverty is immense. The housing 
conditions there are tough, and Lori's children are going to be okay. 
They are left with a beautiful grandmother in Perci Piestewa, but to 
think we were going to provide a $6,000 death gratuity benefit and come 
back in and tax it on the initial $3,000 was unconscionable.
  That began the initiative with the gentleman from North Carolina (Mr. 
Jones) that allows us to look at some of the key legislation that many 
of our friends across both aisles have offered for so long.
  I would also like to point out to the American people that part of 
this tax package and benefit includes the ability to now shut down the 
nonprofit organizations that were developed by the al Qaeda network, 
those Wahabists, those extreme fundamental Islamic organizations that 
existed in the United States that were set up in order for high-wealth 
sheiks to donate money into, those organizations that were set up in 
order to be a channel for illegal contributions that were gained 
through the sale of stolen goods both in America and in South America.

                              {time}  1215

  When the terrorist organizations are now identified, this bill allows 
us to go in and shut down those nonprofit organizations so terrorist 
organizations do not continue to get tax breaks while our military 
families do not. This provides the ability and the tools for the 
Department of Justice to go in there and shut those organizations down.
  Finally, let me speak to the fact that the veterans service 
organizations who have carried the mantle and the banner for so long on 
behalf of our veterans also benefit from this bill. As a member of the 
Committee on Veterans' Affairs on the Republican side, we have worked 
with many of our colleagues on the Democratic side to come up with 
language that allows an expansion of linear dependence to be included 
toward the classification of that nonprofit organization. At a time 
when we are losing 1,400 to 1,500 of our greatest veterans from World 
War II, this allows the ability for their sons and daughters of the 
American Legion, for delinear descendants to be included and counted as 
members within the organization so

[[Page H10372]]

those VSOs can have a future and a legacy that has been fought for by 
their fathers and mothers.
  In closing, Mr. Speaker, I want to again emphasize that the military 
men and women overseas deserve this bill. The time has come for us to 
put aside any partisan politics, any type of logjam from the past; and 
I urge my colleagues to pass this Fallen Patriots Act today.
  Mr. McNULTY. Mr. Speaker, I yield 4 minutes to the gentleman from 
Texas (Mr. Edwards).
  Mr. EDWARDS. Mr. Speaker, I have the privilege of representing over 
42,000 Army soldiers at Fort Hood, Texas. At present, 17,000 of those 
soldiers are fighting for our country in Iraq and risking their lives. 
By the end of next year, over 30,000 of my constituents will have 
served in Iraq.
  There is no way our Nation or this Congress can repay its debt of 
gratitude to those troops, to all of our servicemen and -women, any 
more than we can repay our debt of gratitude to our friend and 
colleague, the gentleman from Texas (Mr. Sam Johnson), for his service 
and sacrifice to our country during time of war. But this is a good and 
significant downpayment on that debt of; gratitude, and I commend those 
who have worked on a bipartisan basis to pass it, the gentleman from 
Texas (Mr. Sam Johnson), the gentleman from New York (Mr. McNulty), the 
gentleman from Arizona (Mr. Renzi), and the gentleman from 
Massachusetts (Mr. McGovern), who have fought for this issue, 
improvements in death gratuity payments, for so very long.
  I think the question I would like to raise in a few moments is not 
why is this good bill passing today, but why did it take so much effort 
and time to pass it over the past year. This bill, these benefits to 
our servicemen and -women, could have passed and should have passed 7 
months ago. The House passed the bill unanimously in March. Seven days 
later, on March 27 to be exact, the Senate passed the bill. It came 
back. Unfortunately, the House leadership chose to sit on the bill for 
7 months, apparently because the bill was being paid for by closing the 
tax loophole for Benedict Arnolds who turn their backs on our country 
and renounce their citizenship to keep from paying American taxes.
  Despite the good news of this bill today, I have continuing concerns 
that our veterans and servicemen and -women seem to have to work so 
hard and to beg for very meager benefits, even those in this bill. Why 
did it take the Military Officers Association running a radio ad over 
the last several weeks to get the attention of the House leadership on 
this bill? Why did it take a press conference with me and others, many 
veterans groups and military family groups, several weeks ago to get 
the attention of the House leadership to bring this bill forward?
  A Congress that passed quickly this year a $230,000 tax break for 
wealthy Americans making $1 million a year in dividend income, a 
Congress which can do that should have been able to pass this bill 
months ago.
  Mr. Speaker, it is of concern to me that we continue to have a 
disabled veterans tax, to actually, in effect, tax disabled veterans 
for their disabilities by reducing their military retirement income. We 
continue to underfund VA health care.
  I hope today is not considered a final payment, but a first payment 
on our debt of gratitude to our servicemen and -women. With the 
leadership on both sides of the aisle who played such a key role in 
this bill, I am confident that it will be. But I am going to continue 
to raise concerns in this House when our veterans have to beg for a $1 
billion benefit over 12 years, or 10 years, whereas the Committee on 
Ways and Means can pass out a $60 billion corporate tax break just last 
week and dividend tax cuts that help our wealthiest Americans.
  We need to make our servicemen and -women and their families and 
America's veterans a first priority, not an afterthought. I salute the 
gentleman from Texas (Mr. Sam Johnson), the gentleman from Arizona (Mr. 
Renzi), and the gentleman from New York (Mr. McNulty) for this positive 
step forward. Let it be the first of many other steps forward in 
honoring our servicemen and -women and veterans with our words and our 
deeds.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, let me just make one comment to clear the record. The 
House did not sit on this bill, as was stated by the previous speaker. 
I think the gentleman failed to realize the Senate sent that first bill 
back July 2002. Since that time, the House has passed bill after bill 
after bill. It was passed three times this year, on April 9, June 12, 
and October 29. Then again this month we passed this bill, and the last 
one was totally clean.
  Mr. EDWARDS. Mr. Speaker, will the gentleman yield?
  Mr. SAM JOHNSON of Texas. I yield to the gentleman from Texas.
  Mr. EDWARDS. Mr. Speaker, I think it is important to keep the record 
straight. I believe the record will show that the House passed H.R. 
1307, the Armed Forces Tax Fairness Act, on March 20. The Senate passed 
it on March 27, and since that time period the bill has been sitting in 
the House. The House leadership could have brought that bill to the 
floor of the House for a vote literally months ago. We would need to 
accept the one major Senate amendment in that bill which said we ought 
to pay for tax benefits for our service men and women and their 
families by closing the loopholes on Benedict Arnolds who turn their 
backs on America and renounce their citizenship to keep from paying 
taxes.
  I think there was a delay on this bill, but my main focus today is to 
say thank you to the gentleman for his leadership in getting it to the 
floor today and on to the President for his signature. And let us work 
together better in the future to see that our veterans and service men 
and women do not have to work so hard and beg to get even meager 
benefits. And I know the gentleman with his distinguished career of 
service to our country would not disagree with that.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I do not disagree with that, 
and I think we are in accord on both sides of the aisle today. It is 
wonderful that we can support our troops in a bipartisan manner.
  Mr. EDWARDS. Mr. Speaker, I thank the gentleman from Texas for his 
leadership.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I reserve the balance of my 
time.
  Mr. McNULTY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, in closing, I am going to repeat what I said last week: 
we need to keep our priorities straight. Part of that, for me, is to 
remember that had it not been for all of the men and women who wore the 
uniform of the United States military through the years, the rest of us 
would not have the privilege of going around bragging--as I often do--
about how we live in the freest and most open democracy on the face of 
the Earth. Freedom is not free. We have paid a tremendous price for it.
  I try not to let even a single day go by without remembering with 
deepest gratitude all of those who, like my own brother, Bill McNulty, 
made the supreme sacrifice, and like those 16 young Americans who died 
in that helicopter incident just a few days ago. We should also 
remember the veterans who came back home, like the one who is managing 
this bill, a true American hero who was a prisoner of war for 7 years, 
who endured torture on our behalf, and then came home and continues to 
render outstanding service to his community, his State and his Nation.
  Mr. Speaker, these are the things that I am most grateful for today. 
All of those Americans who served before us, and people like the 
gentleman from Texas (Mr. Sam Johnson), have been, are, and will 
continue to be the reasons why when I get up in the morning the first 
two things I do are to thank God for my life and veterans for my way of 
life.
  Mr. Speaker, I yield back the balance of my time.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I appreciate the comments of the gentleman from New York 
(Mr. McNulty). I agree with the gentleman; what he says is true. I 
remember an inscription on the wall that we left over there which I 
think says it all: Freedom has a taste to those who fight and almost 
die that the protected will never know. That is what this Nation is all 
about, freedom. And, man, I

[[Page H10373]]

will tell you, America is great. This is for our service men and women 
that we pass this in a bipartisan way.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Quinn). The question is on the motion 
offered by the gentleman from Texas (Mr. Sam Johnson) that the House 
suspend the rules and concur in the Senate amendments to the bill, H.R. 
3365.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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