[Congressional Record Volume 151, Number 135 (Friday, October 21, 2005)]
[Senate]
[Pages S11744-S11745]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DODD (for himself and Mr. Smith):
  S. 1906. A bill to amend the Internal Revenue Code of 1986 to exclude 
property tax rebates and other benefits provided to volunteer 
firefighters, search

[[Page S11745]]

and rescue personnel, and emergency medical responders from income and 
employment taxes and wage withholding; to the Committee on Finance.
  Mr. DODD. Mr. President, I am pleased to rise today with my colleague 
Senator Smith to introduce bipartisan legislation to improve important 
tax relief to volunteer firefighters and emergency first responders. 
Congressman John Larson of Connecticut has introduced similar 
legislation in the House of Representatives.
  Seventy-five percent of firefighters and emergency first responders 
in our country today are volunteers. Statistics show that the number of 
volunteer firefighters and emergency first responders has declined in 
past years. Since 1983, the number of volunteer firefighters and 
emergency first responders has declined anywhere between 5 and 10 
percent. Meanwhile, the number of emergency calls made to these 
volunteer services has increased sharply.
  Many municipalities across the country, including those within the 
State of Connecticut, offer stipends and property tax abatements to 
volunteer firefighters, search and rescue personnel, emergency medical 
technicians, paramedics and ambulance drivers. These incentives have 
helped local fire departments and emergency first responder services 
recruit and retain volunteers.
  In 2002, the Internal Revenue Service, IRS, ruled that property tax 
abatements to volunteers should be treated as wages and income. This 
ruling significantly diminished the net value of tax abatements for 
volunteer firefighters and emergency first responders.
  The legislation that Senator Smith and I are introducing amends the 
Internal Revenue Code to exclude property tax abatements and stipends 
for volunteer firefighters and emergency first responders from the 
definition of income and wages. This bill would allow State and 
municipal governments to continue providing these incentives to their 
volunteer fighters and emergency first responders without any adverse 
federal tax implications.
  I have long believed that our country should do more to encourage 
Americans to volunteer in their communities. A modest tax break is not 
a large repayment for the great services that volunteer firefighters 
and emergency first responders provide to our communities. They 
literally risk their lives daily for others. The least we can do is 
allow States and municipalities to offer these modest incentives to 
serve.
  The current IRS rule--while on one level understandable--nevertheless 
complicates the good intentions and creative efforts of many states and 
municipalities. If our State and municipal governments are willing to 
forgo their local tax revenues in order to ensure that they have enough 
volunteer firefighters and emergency first responders to protect their 
communities, then our country should in my view support those State and 
local efforts. In so doing, our country will be acting to encourage and 
award volunteers.
  I hope that our colleagues will join us in supporting this bipartisan 
legislation so that our national government can join with State and 
local governments to design and implement recruiting and retention 
initiatives that benefit not only volunteer firefighters and emergency 
first responders, but also the communities they protect.
  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. 1906

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

     SECTION 1. EXCLUSION OF PROPERTY TAX REBATES AND OTHER 
                   BENEFITS PROVIDED TO VOLUNTEER FIREFIGHTERS, 
                   SEARCH AND RESCUE PERSONNEL, AND EMERGENCY 
                   MEDICAL RESPONDERS FROM INCOME AND EMPLOYMENT 
                   TAXES AND WAGE WITHHOLDING.

       (a) Exclusion From Gross Income.--
       (1) In general.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to items 
     specifically excluded from gross income) is amended by 
     redesignating section 140 as section 140A and by inserting 
     after section 139 the following new section:

     ``SEC. 140. PROPERTY TAX REBATES AND OTHER BENEFITS PROVIDED 
                   TO VOLUNTEER FIREFIGHTERS, SEARCH AND RESCUE 
                   PERSONNEL, AND EMERGENCY MEDICAL RESPONDERS.

       ``(a) Exclusion.--Gross income shall not include a 
     qualified property tax rebate or other benefit.
       ``(b) Qualified Property Tax Rebate or Other Benefit.--For 
     purposes of subsection (a)--
       ``(1) In general.--The term `qualified property tax rebate 
     or other benefit' means a rebate of real or personal property 
     taxes, or any other benefit, provided by a State or political 
     subdivision on account of services performed as a member of a 
     qualified volunteer emergency response organization.
       ``(2) Qualified volunteer emergency response 
     organization.--The term `qualified volunteer emergency 
     response organization' means any volunteer organization--
       ``(A) which is organized and operated to provide 
     firefighting, search and rescue, or emergency medical 
     services for persons in the State or political subdivision, 
     as the case may be, and
       ``(B) which is required (by written agreement) by the State 
     or political subdivision to furnish firefighting, search and 
     rescue, or emergency medical services in such State or 
     political subdivision.''.
       (2) Clerical amendment.--The table of sections for such 
     part is amended by striking the last item and inserting the 
     following new items:

``Sec. 140. Property tax rebates and other benefits provided to 
              volunteer firefighters, search and rescue personnel, and 
              emergency medical responders.
``Sec. 140A. Cross references to other Acts.''.

       (b) Exclusion From Employment Taxes.--
       (1) Social security taxes.--
       (A) Section 3121(a) of the Internal Revenue Code of 1986 
     (relating to definition of wages) is amended by striking 
     ``or'' at the end of paragraph (21), by striking the period 
     at the end of paragraph (22) and inserting ``; or'', and by 
     inserting after paragraph (22) the following new paragraph:
       ``(23) any qualified property tax rebate or other benefit 
     (as defined in section 140(b)).''.
       (B) Section 209(a) of the Social Security Act is amended by 
     striking ``or'' at the end of paragraph (18), by striking the 
     period at the end of paragraph (19) and inserting ``; or'', 
     and by inserting after paragraph (19) the following new 
     paragraph:
       ``(20) Any qualified property tax rebate or other benefit 
     (as defined in section 140(b) of the Internal Revenue Code of 
     1986).''.
       (2) Unemployment taxes.--Section 3306(b) of the Internal 
     Revenue Code of 1986 (relating to definition of wages) is 
     amended by striking ``or'' at the end of paragraph (18), by 
     striking the period at the end of paragraph (19) and 
     inserting ``; or'', and by inserting after paragraph (19) the 
     following new paragraph:
       ``(20) any qualified property tax rebate or other benefit 
     (as defined in section 140(b).''.
       (c) Wage Withholding.--Section 3401(a) of the Internal 
     Revenue Code of 1986 (defining wages) is amended by striking 
     ``or'' at the end of paragraph (21), by striking the period 
     at the end of paragraph (22) and inserting ``; or'', and by 
     inserting after paragraph (22) the following new paragraph:
       ``(23) for any qualified property tax rebate or other 
     benefit (as defined in section 140(b).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.
                                 ______