[Congressional Record Volume 153, Number 171 (Tuesday, November 6, 2007)]
[House]
[Pages H12752-H12764]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2007

  Mr. McDERMOTT. Madam Speaker, I move to suspend the rules and pass 
the bill (H.R. 3997) to amend the Internal Revenue Code of 1986 to 
provide earnings assistance and tax relief to members of the uniformed 
services, volunteer firefighters, and Peace Corps volunteers, and for 
other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

[[Page H12753]]

                               H.R. 3997

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

     SECTION 1. SHORT TITLE, ETC.

       (a) Short Title.--This Act may be cited as the ``Heroes 
     Earnings Assistance and Relief Tax Act of 2007''.
       (b) Reference.--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.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title, etc.

       TITLE I--BENEFITS FOR MILITARY AND VOLUNTEER FIREFIGHTERS

Sec. 101. Election to include combat pay as earned income for purposes 
              of earned income tax credit.
Sec. 102. Modification of mortgage revenue bonds for veterans.
Sec. 103. Survivor and disability payments with respect to qualified 
              military service.
Sec. 104. Treatment of differential military pay as wages.
Sec. 105. Exclusion from income for benefits provided to volunteer 
              firefighters and emergency medical responders.
Sec. 106. Special period of limitation when uniformed services retired 
              pay is reduced as a result of award of disability 
              compensation.
Sec. 107. Distributions from retirement plans to individuals called to 
              active duty.
Sec. 108. Disclosure of return information relating to veterans 
              programs made permanent.
Sec. 109. Contributions of military death gratuities to Roth IRAs and 
              Education Savings Accounts.
Sec. 110. Suspension of 5-year period during service with the Peace 
              Corps.

         TITLE II--IMPROVEMENTS IN SUPPLEMENTAL SECURITY INCOME

Sec. 201. Treatment of uniformed service cash remuneration as earned 
              income.
Sec. 202. State annuities for certain veterans to be disregarded in 
              determining supplemental security income benefits.
Sec. 203. Exclusion of AmeriCorps benefits for purposes of determining 
              supplemental security income eligibility and benefit 
              amounts.
Sec. 204. Effective date.

                     TITLE III--REVENUE PROVISIONS

Sec. 301. Modification of penalty for failure to file partnership 
              returns.
Sec. 302. Penalty for failure to file S corporation returns.
Sec. 303. Increase in information return penalties.
Sec. 304. Increase in minimum penalty on failure to file a return of 
              tax.

       TITLE I--BENEFITS FOR MILITARY AND VOLUNTEER FIREFIGHTERS

     SEC. 101. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR 
                   PURPOSES OF EARNED INCOME TAX CREDIT.

       (a) In General.--Clause (vi) of section 32(c)(2)(B) 
     (defining earned income) is amended to read as follows:
       ``(vi) a taxpayer may elect to treat amounts excluded from 
     gross income by reason of section 112 as earned income.''.
       (b) Sunset Not Applicable.--Section 105 of the Working 
     Families Tax Relief Act of 2004 (relating to application of 
     EGTRRA sunset to this title) shall not apply to section 
     104(b) of such Act.
       (c) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after December 31, 2007.

     SEC. 102. MODIFICATION OF MORTGAGE REVENUE BONDS FOR 
                   VETERANS.

       (a) Qualified Mortgage Bonds Used To Finance Residences for 
     Veterans Without Regard to First-Time Homebuyer 
     Requirement.--Subparagraph (D) of section 143(d)(2) (relating 
     to exceptions) is amended by striking ``and before January 1, 
     2008''.
       (b) Increase in Bond Limitation for Alaska, Oregon, and 
     Wisconsin.--Clause (ii) of section 143(l)(3)(B) (relating to 
     State veterans limit) is amended by striking ``$25,000,000'' 
     each place it appears and inserting ``$100,000,000''.
       (c) Definition of Qualified Veteran.--Paragraph (4) of 
     section 143(l) (defining qualified veteran) is amended to 
     read as follows:
       ``(4) Qualified veteran.--For purposes of this subsection, 
     the term `qualified veteran' means any veteran who--
       ``(A) served on active duty, and
       ``(B) applied for the financing before the date 25 years 
     after the last date on which such veteran left active 
     service.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after December 31, 2007.

     SEC. 103. SURVIVOR AND DISABILITY PAYMENTS WITH RESPECT TO 
                   QUALIFIED MILITARY SERVICE.

       (a) Plan Qualification Requirement for Death Benefits Under 
     USERRA-Qualified Active Military Service.--Subsection (a) of 
     section 401 (relating to requirements for qualification) is 
     amended by inserting after paragraph (36) the following new 
     paragraph:
       ``(37) Death benefits under userra-qualified active 
     military service.--A trust shall not constitute a qualified 
     trust unless the plan provides that, in the case of a 
     participant who dies while performing qualified military 
     service (as defined in section 414(u)), the survivors of the 
     participant are entitled to any additional benefits (other 
     than benefit accruals relating to the period of qualified 
     military service) provided under the plan had the participant 
     resumed and then terminated employment on account of 
     death.''.
       (b) Treatment in the Case of Death or Disability Resulting 
     From Active Military Service for Benefit Accrual Purposes.--
     Subsection (u) of section 414 (relating to special rules 
     relating to veterans' reemployment rights under USERRA) is 
     amended by redesignating paragraphs (9) and (10) as 
     paragraphs (10) and (11), respectively, and by inserting 
     after paragraph (8) the following new paragraph:
       ``(9) Treatment in the case of death or disability 
     resulting from active military service.--
       ``(A) In general.--For benefit accrual purposes, an 
     employer sponsoring a retirement plan may treat an individual 
     who dies or becomes disabled (as defined under the terms of 
     the plan) while performing qualified military service with 
     respect to the employer maintaining the plan as if the 
     individual has resumed employment in accordance with the 
     individual's reemployment rights under chapter 43 of title 
     38, United States Code, on the day preceding death or 
     disability (as the case may be) and terminated employment on 
     the actual date of death or disability. In the case of any 
     such treatment, and subject to subparagraphs (B) and (C), any 
     full or partial compliance by such plan with respect to the 
     benefit accrual requirements of paragraph (8) with respect to 
     such individual shall be treated for purposes of paragraph 
     (1) as if such compliance were required under such chapter 
     43.
       ``(B) Nondiscrimination requirement.--Subparagraph (A) 
     shall apply only if all individuals performing qualified 
     military service with respect to the employer maintaining the 
     plan (as determined under subsections (b), (c), (m), and (o)) 
     who die or became disabled as a result of performing 
     qualified military service prior to reemployment by the 
     employer are credited with service and benefits on reasonably 
     equivalent terms.
       ``(C) Determination of benefits.--The amount of employee 
     contributions and the amount of elective deferrals of an 
     individual treated as reemployed under subparagraph (A) for 
     purposes of applying paragraph (8)(C) shall be determined on 
     the basis of the individual's average actual employee 
     contributions or elective deferrals for the lesser of--
       ``(i) the 12-month period of service with the employer 
     immediately prior to qualified military service, or
       ``(ii) if service with the employer is less than such 12-
     month period, the actual length of continuous service with 
     the employer.''.
       (c) Conforming Amendments.--
       (1) Section 404(a)(2) is amended by striking ``and (31)'' 
     and inserting ``(31), and (37)''.
       (2) Section 403(b) is amended by adding at the end the 
     following new paragraph:
       ``(14) Death benefits under userra-qualified active 
     military service.--This subsection shall not apply to an 
     annuity contract unless such contract meets the requirements 
     of section 401(a)(37).''.
       (3) Section 457(g) is amended by adding at the end the 
     following new paragraph:
       ``(4) Death benefits under userra-qualified active military 
     service.--A plan described in paragraph (1) shall not be 
     treated as an eligible deferred compensation plan unless such 
     plan meets the requirements of section 401(a)(37).''.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to deaths and disabilities occurring on or 
     after January 1, 2007.
       (2) Provisions relating to plan amendments.--
       (A) In general.--If this subparagraph applies to any plan 
     or contract amendment, such plan or contract shall be treated 
     as being operated in accordance with the terms of the plan 
     during the period described in subparagraph (B)(iii).
       (B) Amendments to which subparagraph (A) applies.--
       (i) In general.--Subparagraph (A) shall apply to any 
     amendment to any plan or annuity contract which is made--

       (I) pursuant to the amendments made by subsection (a) or 
     pursuant to any regulation issued by the Secretary of the 
     Treasury under subsection (a), and
       (II) on or before the last day of the first plan year 
     beginning on or after January 1, 2009.

     In the case of a governmental plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this clause 
     shall be applied by substituting ``2011'' for ``2009'' in 
     subclause (II).
       (ii) Conditions.--This paragraph shall not apply to any 
     amendment unless--

       (I) the plan or contract is operated as if such plan or 
     contract amendment were in effect for the period described in 
     clause (iii), and
       (II) such plan or contract amendment applies retroactively 
     for such period.

       (iii) Period described.--The period described in this 
     clause is the period--

       (I) beginning on the effective date specified by the plan, 
     and

[[Page H12754]]

       (II) ending on the date described in clause (i)(II) (or, if 
     earlier, the date the plan or contract amendment is adopted).

     SEC. 104. TREATMENT OF DIFFERENTIAL MILITARY PAY AS WAGES.

       (a) Income Tax Withholding on Differential Wage Payments.--
       (1) In general.--Section 3401 (relating to definitions) is 
     amended by adding at the end the following new subsection:
       ``(h) Differential Wage Payments to Active Duty Members of 
     the Uniformed Services.--
       ``(1) In general.--For purposes of subsection (a), any 
     differential wage payment shall be treated as a payment of 
     wages by the employer to the employee.
       ``(2) Differential wage payment.--For purposes of paragraph 
     (1), the term `differential wage payment' means any payment 
     which--
       ``(A) is made by an employer to an individual with respect 
     to any period during which the individual is performing 
     service in the uniformed services (as defined in chapter 43 
     of title 38, United States Code) while on active duty for a 
     period of more than 30 days, and
       ``(B) represents all or a portion of the wages the 
     individual would have received from the employer if the 
     individual were performing service for the employer.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to remuneration paid after December 31, 2007.
       (b) Treatment of Differential Wage Payments for Retirement 
     Plan Purposes.--
       (1) Pension plans.--
       (A) In general.--Section 414(u) (relating to special rules 
     relating to veterans' reemployment rights under USERRA), as 
     amended by section 103(b), is amended by adding at the end 
     the following new paragraph:
       ``(12) Treatment of differential wage payments.--
       ``(A) In general.--Except as provided in this paragraph, 
     for purposes of applying this title to a retirement plan to 
     which this subsection applies--
       ``(i) an individual receiving a differential wage payment 
     shall be treated as an employee of the employer making the 
     payment,
       ``(ii) the differential wage payment shall be treated as 
     compensation, and
       ``(iii) the plan shall not be treated as failing to meet 
     the requirements of any provision described in paragraph 
     (1)(C) by reason of any contribution or benefit which is 
     based on the differential wage payment.
       ``(B) Special rule for distributions.--
       ``(i) In general.--Notwithstanding subparagraph (A)(i), for 
     purposes of section 401(k)(2)(B)(i)(I), 403(b)(7)(A)(ii), 
     403(b)(11)(A), or 457(d)(1)(A)(ii), an individual shall be 
     treated as having been severed from employment during any 
     period the individual is performing service in the uniformed 
     services described in section 3401(h)(2)(A).
       ``(ii) Limitation.--If an individual elects to receive a 
     distribution by reason of clause (i), the plan shall provide 
     that the individual may not make an elective deferral or 
     employee contribution during the 6-month period beginning on 
     the date of the distribution.
       ``(C) Nondiscrimination requirement.--Subparagraph (A)(iii) 
     shall apply only if all employees of an employer (as 
     determined under subsections (b), (c), (m), and (o)) 
     performing service in the uniformed services described in 
     section 3401(h)(2)(A) are entitled to receive differential 
     wage payments on reasonably equivalent terms and, if eligible 
     to participate in a retirement plan maintained by the 
     employer, to make contributions based on the payments on 
     reasonably equivalent terms. For purposes of applying this 
     subparagraph, the provisions of paragraphs (3), (4), and (5) 
     of section 410(b) shall apply.
       ``(D) Differential wage payment.--For purposes of this 
     paragraph, the term `differential wage payment' has the 
     meaning given such term by section 3401(h)(2).''.
       (B) Conforming amendment.--The heading for section 414(u) 
     is amended by inserting ``and to Differential Wage Payments 
     to Members on Active Duty'' after ``USERRA''.
       (2) Differential wage payments treated as compensation for 
     individual retirement plans.--Section 219(f)(1) (defining 
     compensation) is amended by adding at the end the following 
     new sentence: ``The term compensation includes any 
     differential wage payment (as defined in section 
     3401(h)(2)).''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2007.
       (c) Provisions Relating to Plan Amendments.--
       (1) In general.--If this subsection applies to any plan or 
     annuity contract amendment, such plan or contract shall be 
     treated as being operated in accordance with the terms of the 
     plan or contract during the period described in paragraph 
     (2)(B)(i).
       (2) Amendments to which section applies.--
       (A) In general.--This subsection shall apply to any 
     amendment to any plan or annuity contract which is made--
       (i) pursuant to any amendment made by subsection (b)(1), 
     and
       (ii) on or before the last day of the first plan year 
     beginning on or after January 1, 2009.

     In the case of a governmental plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this 
     subparagraph shall be applied by substituting ``2011'' for 
     ``2009'' in clause (ii).
       (B) Conditions.--This subsection shall not apply to any 
     plan or annuity contract amendment unless--
       (i) during the period beginning on the date the amendment 
     described in subparagraph (A)(i) takes effect and ending on 
     the date described in subparagraph (A)(ii) (or, if earlier, 
     the date the plan or contract amendment is adopted), the plan 
     or contract is operated as if such plan or contract amendment 
     were in effect, and
       (ii) such plan or contract amendment applies retroactively 
     for such period.

     SEC. 105. EXCLUSION FROM INCOME FOR BENEFITS PROVIDED TO 
                   VOLUNTEER FIREFIGHTERS AND EMERGENCY MEDICAL 
                   RESPONDERS.

       (a) In General.--Part III of subchapter B of chapter 1 
     (relating to items specifically excluded from gross income) 
     is amended by inserting after section 139A the following new 
     section:

     ``SEC. 139B. BENEFITS PROVIDED TO VOLUNTEER FIREFIGHTERS AND 
                   EMERGENCY MEDICAL RESPONDERS.

       ``(a) In General.--In the case of any member of a qualified 
     volunteer emergency response organization, gross income shall 
     not include--
       ``(1) any qualified State and local tax benefit, and
       ``(2) any qualified payment.
       ``(b) Denial of Double Benefits.--In the case of any member 
     of a qualified volunteer emergency response organization--
       ``(1) the deduction under 164 shall be determined with 
     regard to any qualified State and local tax benefit, and
       ``(2) expenses paid or incurred by the taxpayer in 
     connection with the performance of services as such a member 
     shall be taken into account under section 170 only to the 
     extent such expenses exceed the amount of any qualified 
     payment excluded from gross income under subsection (a).
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualified state and local tax benefit.--The term 
     `qualified state and local tax benefit' means any reduction 
     or rebate of a tax described in paragraph (1), (2), or (3) of 
     section 164(a) provided by a State or political division 
     thereof on account of services performed as a member of a 
     qualified volunteer emergency response organization.
       ``(2) Qualified payment.--
       ``(A) In general.--The term `qualified payment' means any 
     payment (whether reimbursement or otherwise) provided by a 
     State or political division thereof on account of the 
     performance of services as a member of a qualified volunteer 
     emergency response organization.
       ``(B) Applicable dollar limitation.--The amount determined 
     under subparagraph (A) for any taxable year shall not exceed 
     $30 multiplied by the number of months during such year that 
     the taxpayer performs such services.
       ``(3) 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 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 or emergency 
     medical services in such State or political subdivision.''.
       (b) Clerical Amendment.--The table of sections for such 
     part is amended by inserting after the item relating to 
     section 139A the following new item:

``Sec. 139B. Benefits provided to volunteer firefighters and emergency 
              medical responders.''.
       (c) 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. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED 
                   SERVICES RETIRED PAY IS REDUCED AS A RESULT OF 
                   AWARD OF DISABILITY COMPENSATION.

       (a) In General.--Subsection (d) of section 6511 (relating 
     to special rules applicable to income taxes) is amended by 
     adding at the end the following new paragraph:
       ``(8) Special rules when uniformed services retired pay is 
     reduced as a result of award of disability compensation.--
       ``(A) Period of limitation on filing claim.--If the claim 
     for credit or refund relates to an overpayment of tax imposed 
     by subtitle A on account of--
       ``(i) the reduction of uniformed services retired pay 
     computed under section 1406 or 1407 of title 10, United 
     States Code, or
       ``(ii) the waiver of such pay under section 5305 of title 
     38 of such Code,

     as a result of an award of compensation under title 38 of 
     such Code pursuant to a determination by the Secretary of 
     Veterans Affairs, the 3-year period of limitation prescribed 
     in subsection (a) shall be extended, for purposes of 
     permitting a credit or refund based upon the amount of such 
     reduction or waiver, until the end of the 1-year period 
     beginning on the date of such determination.
       ``(B) Limitation to 5 taxable years.--Subparagraph (A) 
     shall not apply with respect to any taxable year which began 
     more than 5 years before the date of such determination.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to claims

[[Page H12755]]

     for credit or refund filed after the date of the enactment of 
     this Act.
       (c) Transition Rules.--In the case of a determination 
     described in paragraph (8) of section 6511(d) of the Internal 
     Revenue Code of 1986 (as added by this section) which is made 
     by the Secretary of Veterans Affairs after December 31, 2000, 
     and before the date of the enactment of this Act, such 
     paragraph--
       (1) shall not apply with respect to any taxable year which 
     began before January 1, 2001, and
       (2) shall be applied by substituting for ``the date of such 
     determination'' in subparagraph (A) thereof.

     SEC. 107. DISTRIBUTIONS FROM RETIREMENT PLANS TO INDIVIDUALS 
                   CALLED TO ACTIVE DUTY.

       (a) In General.--Clause (iv) of section 72(t)(2)(G) is 
     amended by striking ``, and before December 31, 2007''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to individuals ordered or called to active duty 
     on or after December 31, 2007.

     SEC. 108. DISCLOSURE OF RETURN INFORMATION RELATING TO 
                   VETERANS PROGRAMS MADE PERMANENT.

       (a) In General.--Subparagraph (D) of section 6103(l)(7) 
     (relating to disclosure of return information to Federal, 
     State, and local agencies administering certain programs 
     under the Social Security Act, the Food Stamp Act of 1977, or 
     title 38, United States Code or certain housing assistance 
     programs) is amended by striking the last sentence.
       (b) Effective Date.--The amendments made by this section 
     shall apply to requests made after September 30, 2008.

     SEC. 109. CONTRIBUTIONS OF MILITARY DEATH GRATUITIES TO ROTH 
                   IRAS AND EDUCATION SAVINGS ACCOUNTS.

       (a) Provision in Effect Before Pension Protection Act.--
     Subsection (e) of section 408A (relating to qualified 
     rollover contribution), as in effect before the amendments 
     made by section 824 of the Pension Protection Act of 2006, is 
     amended to read as follows:
       ``(e) Qualified Rollover Contribution.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified rollover 
     contribution' means a rollover contribution to a Roth IRA 
     from another such account, or from an individual retirement 
     plan, but only if such rollover contribution meets the 
     requirements of section 408(d)(3). Such term includes a 
     rollover contribution described in section 402A(c)(3)(A). For 
     purposes of section 408(d)(3)(B), there shall be disregarded 
     any qualified rollover contribution from an individual 
     retirement plan (other than a Roth IRA) to a Roth IRA.
       ``(2) Military death gratuity.--
       ``(A) In general.--The term `qualified rollover 
     contribution' includes a contribution to a Roth IRA 
     maintained for the benefit of an individual made before the 
     end of the 1-year period beginning on the date on which such 
     individual receives an amount under section 1477 of title 10, 
     United States Code, or section 1967 of title 38 of such Code, 
     with respect to a person, to the extent that such 
     contribution does not exceed--
       ``(i) the sum of the amounts received during such period by 
     such individual under such sections with respect to such 
     person, reduced by
       ``(ii) the amounts so received which were contributed to a 
     Coverdell education savings account under section 530(d)(9).
       ``(B) Annual limit on number of rollovers not to apply.--
     Section 408(d)(3)(B) shall not apply with respect to amounts 
     treated as a rollover by subparagraph (A).
       ``(C) Application of section 72.--For purposes of applying 
     section 72 in the case of a distribution which is not a 
     qualified distribution, the amount treated as a rollover by 
     reason of subparagraph (A) shall be treated as investment in 
     the contract.''.
       (b) Provision in Effect After Pension Protection Act.--
     Subsection (e) of section 408A, as in effect after the 
     amendments made by section 824 of the Pension Protection Act 
     of 2006, is amended to read as follows:
       ``(e) Qualified Rollover Contribution.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified rollover 
     contribution' means a rollover contribution--
       ``(A) to a Roth IRA from another such account,
       ``(B) from an eligible retirement plan, but only if--
       ``(i) in the case of an individual retirement plan, such 
     rollover contribution meets the requirements of section 
     408(d)(3), and
       ``(ii) in the case of any eligible retirement plan (as 
     defined in section 402(c)(8)(B) other than clauses (i) and 
     (ii) thereof), such rollover contribution meets the 
     requirements of section 402(c), 403(b)(8), or 457(e)(16), as 
     applicable.

     For purposes of section 408(d)(3)(B), there shall be 
     disregarded any qualified rollover contribution from an 
     individual retirement plan (other than a Roth IRA) to a Roth 
     IRA.
       ``(2) Military death gratuity.--
       ``(A) In general.--The term `qualified rollover 
     contribution' includes a contribution to a Roth IRA 
     maintained for the benefit of an individual made before the 
     end of the 1-year period beginning on the date on which such 
     individual receives an amount under section 1477 of title 10, 
     United States Code, or section 1967 of title 38 of such Code, 
     with respect to a person, to the extent that such 
     contribution does not exceed--
       ``(i) the sum of the amounts received during such period by 
     such individual under such sections with respect to such 
     person, reduced by
       ``(ii) the amounts so received which were contributed to a 
     Coverdell education savings account under section 530(d)(9).
       ``(B) Annual limit on number of rollovers not to apply.--
     Section 408(d)(3)(B) shall not apply with respect to amounts 
     treated as a rollover by the subparagraph (A).
       ``(C) Application of section 72.--For purposes of applying 
     section 72 in the case of a distribution which is not a 
     qualified distribution, the amount treated as a rollover by 
     reason of subparagraph (A) shall be treated as investment in 
     the contract.''.
       (c) Education Savings Accounts.--Subsection (d) of section 
     530 is amended by adding at the end the following new 
     paragraph:
       ``(9) Military death gratuity.--
       ``(A) In general.--For purposes of this section, the term 
     `rollover contribution' includes a contribution to a 
     Coverdell education savings account made before the end of 
     the 1-year period beginning on the date on which the 
     contributor receives an amount under section 1477 of title 
     10, United States Code, or section 1967 of title 38 of such 
     Code, with respect to a person, to the extent that such 
     contribution does not exceed--
       ``(i) the sum of the amounts received during such period by 
     such contributor under such sections with respect to such 
     person, reduced by
       ``(ii) the amounts so received which were contributed to a 
     Roth IRA under section 408A(e)(2) or to another Coverdell 
     education savings account.
       ``(B) Annual limit on number of rollovers not to apply.--
     The last sentence of paragraph (5) shall not apply with 
     respect to amounts treated as a rollover by the subparagraph 
     (A).
       ``(C) Application of section 72.--For purposes of applying 
     section 72 in the case of a distribution which is includible 
     in gross income under paragraph (1), the amount treated as a 
     rollover by reason of subparagraph (A) shall be treated as 
     investment in the contract.''.
       (d) Effective Dates.--
       (1) In general.--Except as provided by paragraphs (2) and 
     (3), the amendments made by this section shall apply with 
     respect to deaths from injuries occurring on or after the 
     date of the enactment of this Act.
       (2) Application of amendments to deaths from injuries 
     occurring on or after october 7, 2001, and before 
     enactment.--The amendments made by this section shall apply 
     to any contribution made pursuant to section 408A(e)(2) or 
     530(d)(5) of the Internal Revenue Code of 1986, as amended by 
     this Act, with respect to amounts received under section 1477 
     of title 10, United States Code, or under section 1967 of 
     title 38 of such Code, for deaths from injuries occurring on 
     or after October 7, 2001, and before the date of the 
     enactment of this Act if such contribution is made not later 
     than 1 year after the date of the enactment of this Act.
       (3) Pension protection act changes.--Section 408A(e)(1) of 
     the Internal Revenue Code of 1986 (as in effect after the 
     amendments made by subsection (b)) shall apply to taxable 
     years beginning after December 31, 2007.

     SEC. 110. SUSPENSION OF 5-YEAR PERIOD DURING SERVICE WITH THE 
                   PEACE CORPS.

       (a) In General.--Subsection (d) of section 121 (relating to 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(12) Peace corps.--
       ``(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 outside the United States--
       ``(i) on qualified official extended duty (as defined in 
     paragraph (9)(C)) as an employee of the Peace Corps, or
       ``(ii) as an enrolled volunteer or volunteer leader under 
     section 5 or 6 (as the case may be) of the Peace Corps Act 
     (22 U.S.C. 2504, 2505).
       ``(B) Applicable rules.--For purposes of subparagraph (A), 
     rules similar to the rules of subparagraphs (B) and (D) shall 
     apply.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2007.

         TITLE II--IMPROVEMENTS IN SUPPLEMENTAL SECURITY INCOME

     SEC. 201. TREATMENT OF UNIFORMED SERVICE CASH REMUNERATION AS 
                   EARNED INCOME.

       (a) In General.--Section 1612(a)(1)(A) of the Social 
     Security Act (42 U.S.C. 1382a(a)(1)(A)) is amended by 
     inserting ``(and, in the case of cash remuneration paid for 
     service as a member of a uniformed service (other than 
     payments described in paragraph (2)(H) of this subsection or 
     subsection (b)(20)), without regard to the limitations 
     contained in section 209(d))'' before the semicolon.
       (b) Certain Housing Payments Treated as In-Kind Support and 
     Maintenance.--Section 1612(a)(2) of such Act (42 U.S.C. 
     1382a(a)(2)) is amended--
       (1) by striking ``and'' at the end of subparagraph (F);
       (2) by striking the period at the end of subparagraph (G) 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(H) payments to or on behalf of a member of a uniformed 
     service for housing of the

[[Page H12756]]

     member (and his or her dependents, if any) on a facility of a 
     uniformed service, including payments provided under section 
     403 of title 37, United States Code, for housing that is 
     acquired or constructed under subchapter IV of chapter 169 of 
     title 10 of such Code, or any related provision of law, and 
     any such payments shall be treated as support and maintenance 
     in kind subject to subparagraph (A) of this paragraph.''.

     SEC. 202. STATE ANNUITIES FOR CERTAIN VETERANS TO BE 
                   DISREGARDED IN DETERMINING SUPPLEMENTAL 
                   SECURITY INCOME BENEFITS.

       (a) Income Disregard.--Section 1612(b) of the Social 
     Security Act (42 U.S.C. 1382a(b)) is amended--
       (1) by striking ``and'' at the end of paragraph (22);
       (2) by striking the period at the end of paragraph (23) and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(24) any annuity paid by a State to the individual (or 
     such spouse) on the basis of the individual's being a veteran 
     (as defined in section 101 of title 38, United States Code), 
     and blind, disabled, or aged.''.
       (b) Resource Disregard.--Section 1613(a) of such Act (42 
     U.S.C. 1382b(a)) is amended--
       (1) by striking ``and'' at the end of paragraph (14);
       (2) by striking the period at the end of paragraph (15) and 
     inserting ``; and''; and
       (3) by inserting after paragraph (15) the following:
       ``(16) for the month of receipt and every month thereafter, 
     any annuity paid by a State to the individual (or such 
     spouse) on the basis of the individual's being a veteran (as 
     defined in section 101 of title 38, United States Code), and 
     blind, disabled, or aged.''.

     SEC. 203. EXCLUSION OF AMERICORPS BENEFITS FOR PURPOSES OF 
                   DETERMINING SUPPLEMENTAL SECURITY INCOME 
                   ELIGIBILITY AND BENEFIT AMOUNTS.

       Section 1612(b) of the Social Security Act (42 U.S.C. 
     1382a(b)), as amended by section 202(a) of this Act, is 
     amended--
       (1) in paragraph (23), by striking ``and'' at the end;
       (2) in paragraph (24), by striking the period and inserting 
     ``; and''; and
       (3) by adding at the end the following:
       ``(25) any benefit (whether cash or in-kind) conferred upon 
     (or paid on behalf of) a  participant in an AmeriCorps 
     position approved by the Corporation for  National and 
     Community Service under section 123 of the National and 
     Community Service Act of 1990 (42 U.S.C. 12573).''.

     SEC. 204. EFFECTIVE DATE.

       The amendments made by this title shall be effective with 
     respect to benefits payable for months beginning after 60 
     days after the date of the enactment of this Act.

                     TITLE III--REVENUE PROVISIONS

     SEC. 301. MODIFICATION OF PENALTY FOR FAILURE TO FILE 
                   PARTNERSHIP RETURNS.

       (a) Extension of Time Limitation.--Subsection (a) of 
     section 6698 (relating to general rule) is amended by 
     striking ``5 months'' and inserting ``12 months''.
       (b) Increase in Penalty Amount.--Paragraph (1) of section 
     6698(b) is amended by striking ``$50'' and inserting 
     ``$100''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed after the date of 
     the enactment of this Act.

     SEC. 302. PENALTY FOR FAILURE TO FILE S CORPORATION RETURNS.

       (a) In General.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by adding at 
     the end the following new section:

     ``SEC. 6699. FAILURE TO FILE S CORPORATION RETURN.

       ``(a) General Rule.--In addition to the penalty imposed by 
     section 7203 (relating to willful failure to file return, 
     supply information, or pay tax), if any S corporation 
     required to file a return under section 6037 for any taxable 
     year--
       ``(1) fails to file such return at the time prescribed 
     therefor (determined with regard to any extension of time for 
     filing), or
       ``(2) files a return which fails to show the information 
     required under section 6037,

     such S corporation shall be liable for a penalty determined 
     under subsection (b) for each month (or fraction thereof) 
     during which such failure continues (but not to exceed 12 
     months), unless it is shown that such failure is due to 
     reasonable cause.
       ``(b) Amount Per Month.--For purposes of subsection (a), 
     the amount determined under this subsection for any month is 
     the product of--
       ``(1) $100, multiplied by
       ``(2) the number of persons who were shareholders in the S 
     corporation during any part of the taxable year.
       ``(c) Assessment of Penalty.--The penalty imposed by 
     subsection (a) shall be assessed against the S corporation.
       ``(d) Deficiency Procedures Not to Apply.--Subchapter B of 
     chapter 63 (relating to deficiency procedures for income, 
     estate, gift, and certain excise taxes) shall not apply in 
     respect of the assessment or collection of any penalty 
     imposed by subsection (a).''.
       (b) Clerical Amendment.--The table of sections for part I 
     of subchapter B of chapter 68 is amended by adding at the end 
     the following new item:

``Sec. 6699. Failure to file S corporation return.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed after the date of 
     the enactment of this Act.

     SEC. 303. INCREASE IN INFORMATION RETURN PENALTIES.

       (a) Failure To File Correct Information Returns.--
       (1) In general.--Subsections (a)(1), (b)(1)(A), and 
     (b)(2)(A) of section 6721 are each amended by striking 
     ``$50'' and inserting ``$100''.
       (2) Aggregate annual limitation.--Subsections (a)(1), 
     (d)(1)(A), and (e)(3)(A) of section 6721 are each amended by 
     striking ``$250,000'' and inserting ``$600,000''.
       (b) Reduction Where Correction Within 30 Days.--
       (1) In general.--Subparagraph (A) of section 6721(b)(1) is 
     amended by striking ``$15'' and inserting ``$25''.
       (2) Aggregate annual limitation.--Subsections (b)(1)(B) and 
     (d)(1)(B) of section 6721 are each amended by striking 
     ``$75,000'' and inserting ``$200,000''.
       (c) Reduction Where Correction on or Before August 1.--
       (1) In general.--Subparagraph (A) of section 6721(b)(2) is 
     amended by striking ``$30'' and inserting ``$60''.
       (2) Aggregate annual limitation.--Subsections (b)(2)(B) and 
     (d)(1)(C) of section 6721 are each amended by striking 
     ``$150,000'' and inserting ``$400,000''.
       (d) Aggregate Annual Limitations for Persons With Gross 
     Receipts of Not More Than $5,000,000.--Paragraph (1) of 
     section 6721(d) is amended--
       (1) by striking ``$100,000'' in subparagraph (A) and 
     inserting ``$250,000'',
       (2) by striking ``$25,000'' in subparagraph (B) and 
     inserting ``$75,000'', and
       (3) by striking ``$50,000'' in subparagraph (C) and 
     inserting ``$150,000''.
       (e) Penalty in Case of Intentional Disregard.--Paragraph 
     (2) of section 6721(e) is amended by striking ``$100'' and 
     inserting ``$250''.
       (f) Failure To Furnish Correct Payee Statements.--
       (1) In general.--Subsection (a) of section 6722 is amended 
     by striking ``$50'' and inserting ``$100''.
       (2) Aggregate annual limitation.--Subsections (a) and 
     (c)(2)(A) of section 6722 are each amended by striking 
     ``$100,000'' and inserting ``$600,000''.
       (3) Penalty in case of intentional disregard.--Paragraph 
     (1) of section 6722(c) is amended by striking ``$100'' and 
     inserting ``$250''.
       (g) Failure To Comply With Other Information Reporting 
     Requirements.--Section 6723 is amended--
       (1) by striking ``$50'' and inserting ``$100'', and
       (2) by striking ``$100,000'' and inserting ``$600,000''.
       (h) Effective Date.--The amendments made by this section 
     shall apply with respect to information returns required to 
     be filed on or after January 1, 2008.

     SEC. 304. INCREASE IN MINIMUM PENALTY ON FAILURE TO FILE A 
                   RETURN OF TAX.

       (a) In General.--Subsection (a) of section 6651 is amended 
     by striking ``$100'' in the last sentence and inserting 
     ``$225''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to returns the due date for the filing of which 
     (including extensions) is after December 31, 2007.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Washington (Mr. McDermott) and the gentleman from Pennsylvania (Mr. 
English) each will control 20 minutes.
  The Chair recognizes the gentleman from Washington.
  Mr. McDERMOTT. Madam Speaker, Martin Luther King said, ``Everybody 
can be great because anybody can serve. You only need a heart full of 
grace and a soul generated by love.''
  Those that volunteer to serve our country deserve our thanks and our 
support. Members of our Armed Forces make tremendous sacrifices as they 
honorably perform their duties and deserve so much in return for their 
service.
  The Heroes Earnings Assistance and Relief Act is an important piece 
of legislation that would eliminate many inequities that presently 
exist in Federal statutes affecting those performing service to our 
country.
  The bill makes several improvements in the Tax Code for 
servicemembers and their families. It includes a provision to remove 
obstacles for Americans who wish to serve our Nation overseas through 
the Peace Corps by providing relief from capital gains taxes on the 
sale of a home.
  Additionally, the bill makes several important changes to the 
Supplemental Security Income program, known as SSI. The SSI program 
provides critical benefits for servicemembers who are caring for a 
severely disabled spouse or child. This bill would change SSI's 
treatment of certain forms of military compensation when determining 
SSI eligibility and benefit amounts for military families. As a result, 
more military families will be able to benefit from this important 
safety net. This bill would remove penalties that presently exist for 
blind,

[[Page H12757]]

disabled, and elderly veterans under the SSI program.
  And, finally, the bill would end the disparate treatment of 
compensation that is paid to some AmeriCorps volunteers but not to 
others under the SSI program. This modest change would enable disabled 
Americans to serve their country and their community despite their 
disability. For some Americans, AmeriCorps can provide a pathway for 
the disabled to gain the skills to reenter the workforce.
  At this time, I would like to enter into the Record the following 
documents.

       Stories of Americans With Disabilities in National Service

       People with disabilities volunteer for the same reasons 
     that anyone else does--to give back to their communities, to 
     improve their surroundings, and to be active and engaged in 
     life. Some national service participants who have 
     disabilities volunteer with organizations that serve other 
     people with disabilities, while others focus their efforts on 
     helping to meet a wide range of critical community needs. The 
     individuals profiled here represent a small sampling of the 
     many people with disabilities involved in the Corporation for 
     National and Community Service's Senior Corps, AmeriCorps, 
     and Learn and Serve America programs.


                     americorps*state and national

       Steve Hoad, AmeriCorps Alumnus 2001, AmeriCorps*VISTA 
     Alumnus 2003 Augusta, Maine; disability: blind.
       Steve Hoad served with the Maine Conservation Corps in 
     Augusta as a coordinator of volunteers on a statewide basis. 
     The program, called SERVE--Maine (State Environmental 
     Resource Volunteer Effort for Maine), identifies volunteers 
     for outdoor or natural resource projects sponsored by 
     government agencies or nonprofit groups. As a person who is 
     blind, Steve thinks it's important for lots of organizations, 
     including the Corporation for National and Community Service, 
     to address inclusion. Steve feels his contributions are 
     important for the additional reason that, in his opinion, ``. 
     . . people with disabilities have been left on the sidelines 
     and pushed into isolation by a couple of different ideas that 
     people seem to have. One is that because maybe someone looks 
     different or acts differently or speaks differently, that 
     they're not as smart; and the other is that because someone 
     is disabled, they can't contribute anything, they need to be 
     helped. Those two ideas become very exclusionary.''


                            americorps*vista

       Dawn Facka, AmeriCorps*VISTA Alumna 2001, Anchorage, 
     Alaska; current location: Charleston, South Carolina; 
     disability: hearing impaired.
       Dawn Facka, a service-learning coordinator with 
     AmeriCorps*VISTA, advocates for people with disabilities and 
     serves as a role model for young men and women with 
     disabilities that come to serve in AmeriCorps Programs. In 
     addition, she teaches others about the importance of 
     inclusion and facilitates disability awareness and diversity 
     training to AmeriCorps*NCCC members. She strives to create a 
     work environment that is welcoming and understanding to those 
     individuals with disabilities by advocating for community 
     involvement and supporting organizations that support and 
     help individuals with disabilities. She says that ``If 
     AmeriCorps, had not opened the doors of opportunity to me, I 
     most likely would still be ashamed and embarrassed of who I 
     am and [how] society has labeled me. I would still be 
     apologizing to people who did not tolerate or accept my 
     hearing loss. I can't begin to show my gratitude . . . to 
     AmeriCorps for showing me another world.''


                            americorps*nccc

       Joe Tierney, AmeriCorps*NCCC Alumnus 2001 and 2002, 
     Charleston, South Carolina; current location: Boston, 
     Massachusetts; disability: traumatic brain injury.
       Joe Tierney dedicated two years of his life to service with 
     Americorps*NCCC. During these years he tutored children, 
     built houses, designed and built wheelchair ramps, surveyed 
     and mapped a historical graveyard, blazed trails, worked at a 
     camp for children and adults with disabilities, and much 
     more. Of his time there he writes, ``Throughout my service I 
     met some amazing individuals, traveled to some fascinating 
     locations, and learned a variety of skills, but most 
     importantly my service gave me the opportunity to recover, 
     the ability to experience life with a smile. I made the 
     decision to join AmeriCorps because I felt an obligation to 
     give back, I understood that I was very fortunate to have 
     recovered and that I would have never done it without the 
     help of many thoughtful, committed, competent individuals.''


                        learn and serve america

       Jared (not his real name), Learn and Serve America Alumnus 
     2002, Hampshire, Massachusetts; current location: Hampshire, 
     Massachusetts; disability: significant disabilities.
       Jared (not his real name), a high school student with 
     significant disabilities, participated fully in a water 
     quality testing initiative though a school-based service-
     learning project in Western Massachusetts. During the 
     project, Jared spoke of all that he learned about water 
     quality and the effects on the environment. His family and 
     teachers were impressed with the project because it provided 
     Jared with a meaningful experience to give back to his 
     community as well as taught him vital life skills. His mother 
     speaks of the project as being one of the few opportunities 
     Jared has had to mingle with other students outside of 
     special education.


                                  rsvp

       Dean Homerick, RSVP Volunteer, current location: Lexington, 
     Ohio; disability: debilitating arthritis.
       Dean Homerick began service as an RSVP volunteer as soon as 
     he became eligible--the day he turned 55. He is involved in 
     environmental issues and emergency operations. He volunteers 
     regularly at the Columbus Zoo, participating in education 
     programs to teach children about animals, as well as 
     volunteering at a local nature center and at the Ohio Bird 
     Sanctuary, where he edits a monthly newsletter. He also 
     volunteers for the American Red Cross and is the volunteer 
     coordinator for the Richland County Emergency Operations 
     Center, charged with alerting volunteers in the event of an 
     emergency.


             corporation for national and community service

       The Corporation for National and Community Service provides 
     opportunities for Americans of all ages and backgrounds to 
     serve their communities and country through three programs: 
     Senior Corps, AmeriCorps, and Learn and Serve America. This 
     year, more than 1.6 million individuals will participate in 
     the Corporation's programs, helping thousands of nonprofit 
     organizations, faith- based groups, schools, and government 
     agencies build their capacity to meet critical local needs in 
     education, the environment, public safety, disaster relief, 
     and other areas. Together with the USA Freedom Corps, the 
     Corporation is working to build a culture of citizenship, 
     service, and responsibility in America.
                                  ____


   Delaware Man Honored With President's Volunteer Service Award at 
     National Disability Inclusion and National Service Conference

       On December 9, Claude Allen, Assistant to the President for 
     Domestic Policy, spoke at the National Disability Inclusion 
     and National Service Conference. At the conclusion of his 
     remarks, Allen honored outstanding volunteer Emmanuel Jenkins 
     with the President's Volunteer Service Award.
       Jenkins, who suffers from Cerebral Palsy, has volunteered 
     for nearly ten years and recently graduated from his second 
     term as an AmeriCorps member. His primary reason for 
     participation in AmeriCorps was to help people. Emmanuel, now 
     21, started volunteering with children when he was only 11 
     years old. He ran a computer lab for the Boys and Girls Club 
     as well as a program called Ticket to the Future, which 
     taught students how to set and attain life goals. As a junior 
     staff member, he assisted with a program called Family Day 
     and tutored children in math. Emmanuel talks about the 
     importance of encouraging students and always tells them, 
     ``You can do that because a winner never stops trying.''
       Emmanuel currently lives in Dover, Delaware and volunteers 
     with his local school district mentoring a local at-risk 
     youth. His motivation stems from a public service 
     announcement he saw on TV that said, ``You can be part of the 
     problem or part of the solution.'' He strives to be part of 
     the solution. Emmanuel is also a certified motivational 
     speaker and his message is to challenge others with the 
     quote, ``When you give, you get!''
       The President's Volunteer Service Award was created at the 
     President's direction by the President's Council on Service 
     and Civic Participation. The Award is available to youth ages 
     14 and under who have completed 50 or more hours of volunteer 
     service; to individuals 15 and older who have completed 100 
     or more hours; and to families or groups who have completed 
     200 or more hours. For more information about the Award, 
     please visit http://www.presidentialserviceawards
.gov.
 The 2005 National Conference on Disability Inclusion and 
     National Service provided a forum for the national service 
     and disability communities to come together and identify, 
     develop, and share, new innovations that ensure a meaningful 
     opportunity for all Americans to engage in volunteer service. 
     The conference, sponsored by the Corporation for National and 
     Community Service, brought together some 350 leaders from the 
     disability and national service communities across the 
     country to develop strategies for engaging more people with 
     disabilities in volunteering and service.

  I thank Mr. Rangel for being a champion for those that unselfishly 
serve our Nation.
  Madam Speaker, I reserve the balance of my time.

                              {time}  1130

  Mr. ENGLISH of Pennsylvania. Madam Speaker, I yield myself such time 
as I may consume.
  Madam Speaker, we cannot express enough the tremendous debt of 
gratitude we owe the brave men and women who defend our freedoms every 
day. It is with great honor that I join my colleagues on the House 
floor today and

[[Page H12758]]

help lead the debate on H.R. 3997, the Heroes Earnings Assistance and 
Relief Tax Act. This legislation is more than a simple cleanup of some 
of the disincentives, distortions and oversights that have 
disadvantaged our active duty military and veterans in the Tax Code.
  This legislation is significant because it sends a clear message that 
even as many of our best and brightest are currently in harm's way in 
theaters where they are facing hostile fire, this Congress is prepared 
to work on a bipartisan basis to consider every option and every 
opportunity to improve the lives of their families and their 
predecessors.
  The $2.3 billion tax package which was reported out of the House Ways 
and Means Committee last week will bolster tax and Social Security 
benefits for military servicemembers, veterans and volunteers. This 
important measure will allow our active military men and women to 
benefit from the earned income tax credit by allowing them to pair 
their nontaxable combat pay with their earned income.
  H.R. 3997 will ease the financial burden of losing a loved one by 
allowing survivors to put military death benefits into Roth IRAs 
without limitations. Furthermore, this legislation will ensure military 
Reservists will have the opportunity to make penalty-free withdrawals 
from their retirement plans, including 401(k) and IRA accounts. If 
deployed, these men and women will be able to provide the financial 
footing their families may depend on during their absence.
  I am also pleased that the majority, in bringing this bill to the 
floor today, included in it an amendment I offered and withdrew in 
committee. I appreciate the bipartisan support displayed on this 
critical issue. Specifically, my provision will expand Social Security 
income benefits to our aged, disabled and blind veterans.
  Under current law, the Social Security Administration counts 
annuities paid by State governments to veterans who are blind, disabled 
or aged as earned income. As a result, veterans in certain States like 
Pennsylvania, which provides paralyzed vets with an $1,800-per-year 
annuity, may be denied Federal benefits or receive a lower amount than 
veterans in States that do not provide such annuities. H.R. 3997 will 
correct this inequity in the law and ensure that annuities awarded by 
States to vets with certain disabilities are disregarded when 
determining SSI benefits.
  Madam Speaker, the dedication and bravery made by American soldiers 
have allowed us to exercise our everyday freedoms. Many have made the 
ultimate sacrifice, and it is our duty in Congress to make sure that 
veterans rights and interests are protected and served. As many of us 
prepare for this upcoming Veterans Day, this legislation reaches our 
Chamber at the proper time and includes the right incentives to help 
our men and women in uniform. Overall, this legislation is a bundle of 
commonsense changes to help those who have contributed to the defense 
of our country and the protection of our freedoms. I am proud to be a 
supporter of this initiative, and I retain the balance of my time.
  Mr. McDERMOTT. Madam Speaker, I yield 2 minutes to the gentleman from 
Massachusetts (Mr. Neal).
  Mr. NEAL of Massachusetts. Madam Speaker, I am delighted that this 
bipartisan legislation to assist our veterans is before the House 
today. It also is certainly of great assistance to our active duty 
military and Reservists and indeed their families. The bill we are 
considering today is the product of a joint hearing held last month by 
the Select Revenue Measures Subcommittee led by myself and the Ranking 
Member English and the Income Security Subcommittee led by Chairman 
McDermott and Ranking Member Weller. We heard from a number of veterans 
advocates, military families groups, the Social Security 
Administration, Members of Congress and others who discussed their 
proposals to either enhance tax provisions or reduce burdens on those 
who serve or volunteer for America.
  The bill we are considering today, which passed out of the full 
committee last week, is a product of those deliberations and will go 
far to assist those serving this country, again, emphasizing support 
for their families. This country is fortunate that so many soldiers and 
sailors have been willing to sacrifice for our defense. We must 
remember, once again, that this is a shared sacrifice. The families of 
someone serving this country can suffer financially, as well as 
emotionally, during extended tours. Congress has a responsibility to 
ensure that the Tax Code and other income security provisions do not 
create problems but, rather, solve them for military families. That is 
exactly what this bill will allow us to do.
  Mr. McDERMOTT. Madam Speaker, I ask unanimous consent to allow Mr. 
Neal to handle the rest of the time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Washington?
  There was no objection.
  Mr. ENGLISH of Pennsylvania. Madam Speaker, at this point, I would 
like to yield 2 minutes to a leader on our committee, the distinguished 
gentleman from Illinois (Mr. Weller).
  Mr. WELLER of Illinois. Madam Speaker, last month the members of the 
Ways and Means Committee heard compassionate testimony on several of 
the tax and benefit provisions for veterans, military families and 
volunteers in the bill we are considering on the floor today. Several 
provisions amend the Supplemental Security Income program that operates 
under the jurisdiction of the Ways and Means Subcommittee on Income 
Security and Family Support, which I have the privilege of serving as 
ranking member. These would effectively expand eligibility for and 
increase SSI benefit payments to certain military families, veterans 
and AmeriCorps participants. The bill also includes provisions offered 
by my friends and colleagues, Phil English of Pennsylvania and Tom 
Reynolds of New York, that would ensure comparable treatment under the 
SSI program when it comes to State annuities for blind and other 
disabled veterans.
  It is important that we look for ways to ensure that those in the 
military and their families who make sacrifices receive appropriate and 
timely support. The bill before us today will provide more help to our 
veterans, to our military families and to others who volunteer in 
service to our Nation. That is something I support, and I urge all my 
colleagues to join me in supporting our soldiers, our families and 
others who volunteer to help America by voting ``yes'' for this 
legislation.
  Mr. NEAL of Massachusetts. Madam Speaker, I yield 1 minute to the 
gentleman from Texas, a member of the Ways and Means Committee, Mr. 
Doggett.
  Mr. DOGGETT. Madam Speaker, support for our troops does not begin on 
the battlefield and it must not end there. With approval of this 
legislation, Texas veterans will be eligible for below-market home 
loans of up to $325,000. Under the previous law, this benefit was 
restricted to veterans who had served prior to 1977. Today, we close 
the gap for the many who have been our heroes in the last 30 years who 
are not currently eligible. Those who have served to keep us safe in 
our homes deserve a chance of a home of their own. That is what this 
bill does.
  We know that Veterans Day is approaching, but every day that we enjoy 
freedom bestowed by the sacrifices of those in uniform is a day that we 
should honor them. It is often said that we should honor our vets not 
only with our words but also with our deeds. Well, today we expand the 
opportunity for each vet to obtain a deed for their home. As veterans 
paid the price to build our great democracy, we can afford the price of 
building a foundation for their home ownership.
  Mr. ENGLISH of Pennsylvania. Madam Speaker, it is now my privilege to 
yield 2 minutes to another member of our committee and a strong 
advocate of the cause of veterans, the gentleman from Texas (Mr. 
Brady).
  Mr. BRADY of Texas. Madam Speaker, I rise in support of this bill on 
the floor today that will provide additional tax relief to our Nation's 
veterans, especially those who are seeking to purchase a home. This 
bill updates current law to ensure that veterans who served after 1977 
can qualify for low-interest home loans financed by the Qualified 
Veterans Mortgage Bonds.
  Back home in Texas, this bill is going to enable Texas' Veterans Land 
Board to expand its existing low-interest loan

[[Page H12759]]

program to several thousand more Texas veterans, several thousand, 
helping a new generation of veterans own a piece of the American Dream. 
Our land commissioner, Jerry Patterson, a Marine veteran himself, does 
an excellent job supervising this program and reaching out to veterans. 
This bill is going to allow him, and our State, to help more veterans 
get into a home they can afford. My thought is for all the sacrifice 
our veterans make to defend our country, it is only right that we help 
them upon their return home.
  Mr. NEAL of Massachusetts. Madam Speaker, I would like to yield 1\1/
2\ minutes to the gentleman from North Dakota and member of the Ways 
and Means Committee, Mr. Pomeroy.
  Mr. POMEROY. This is a photograph of Major Alan Johnson, his wife, 
Tori, and his daughter, Megan. This beautiful family suffered the 
tragedy of losing Major Johnson in Iraq. Last winter, we buried Major 
Johnson at Arlington Cemetery. His widow contacted me 2 weeks later to 
tell me that what had happened in the State of Washington is the 
pension plan there had simply given the money back that Alan Johnson 
had paid in as if he had terminated his employment at the time he was 
called to duty, called to deployment in his status as a Reserve 
officer.
  It brought to light a gap in the law that protects our deployed 
Reservists and Guardsmen. When they come back, this law seamlessly 
reintegrates them into the pension plan of their employer, but there 
was no provision if we tragically lose our soldiers under deployment. 
Included in this bill is the HEROES Act, introduced by Doc Hastings and 
myself, that allows for survivor benefits to be paid in this situation. 
It is a very important addition. It is terribly important that 
survivors of our soldiers who paid the ultimate price have survivors 
benefits under the pension. This law will afford that.
  Madam Speaker, I include for the Record a letter to this effect from 
Mrs. Tori Johnson.

                                                 November 5, 2007.
     Hon. Charles Rangel,
     Chairman, Committee on Ways and Means, Longworth House Office 
         Building, Washington, DC.
       Dear Chairman Rangel: I am writing to thank you for 
     introducing the Heroes Earnings Assistance and Relief Tax 
     (HEART) Act, H.R. 3997. Your bill makes many important 
     changes to the tax law that will be of great help to the men 
     and women who serve in the Reserve and the National Guard and 
     their families.
       My husband, Major Alan R. Johnson, who was killed in Iraq 
     earlier this year, was a public servant both in the Reserve 
     and in his full time job. In his civilian life, he worked for 
     fifteen years with the Yakima County Department of 
     Corrections. We were a team. He was a strong leader and he 
     depended on the strength of his family. We needed to be 
     strong so he did not need to worry about us when he was 
     serving his county in the Reserves.
       Dealing with the problems and technicalities our family had 
     to face after we learned that Alan was killed has not been 
     easy. My husband was 44 and we were planning on his 
     retirement for our future. Because his employer considered 
     Alan as an employee who had voluntarily terminated when he 
     left for his deployment, the survivor benefit under his 
     pension that we would be paid was less than the amount we 
     would have received if he was still an active employee. When 
     I asked why, I found out that in order to have his pension 
     protected under existing law he had to return to work.
       The HEART Act corrects the gap in the Uniform Services 
     Employment and Reemployment Right Act's pension protections 
     for survivors of National Guard and Reserve soldiers who are 
     killed in action and can not return to work. Our Guard and 
     Reservists should know that the families that they leave 
     behind will be able to rely on the survivor benefits that 
     they have earned in their civilian employment.
       Over 81,000 Reservist and National Guard members have 
     responded to our Nation's call to duty. They believe in our 
     country and are willing to make that ultimate sacrifice. When 
     they cannot return to their former jobs your bill will make 
     sure that their families will get the full survivor benefits 
     that they earned from their jobs at home.
       Again, I thank you for your leadership and that of 
     Congressman Pomeroy and Congressman Hastings in making sure 
     that the country that Reservists, like my husband, have 
     sacrificed everything for will take care of their families. I 
     hope that your bill, H.R. 3997, will become law soon.
           Sincerely,
                                              Victoria C. Johnson.

  Mr. ENGLISH of Pennsylvania. Madam Speaker, may I inquire how much 
time is remaining on both sides.
  The SPEAKER pro tempore. The gentleman from Pennsylvania has 14\1/2\ 
minutes remaining. The gentleman from Massachusetts has 13\1/2\ minutes 
remaining.
  Mr. ENGLISH of Pennsylvania. Madam Speaker, at this point, it would 
be my honor to yield 4 minutes to a leader in our committee who made a 
seminal contribution to the SSI component of this legislation, the 
gentleman from New York (Mr. Reynolds).
  (Mr. REYNOLDS asked and was given permission to revise and extend his 
remarks.)
  Mr. REYNOLDS. I thank the gentleman from Pennsylvania.
  I want to thank both Chairman Rangel and Ranking Member McCrery, as 
well as Chairman Neal and Chairman McDermott and Ranking Members 
English and Weller, for their outstanding leadership in crafting this 
legislation.
  Madam Speaker, we come together today not as Democrats and 
Republicans but as Americans. We are united in our respect for those 
who wear the uniform of the United States armed services. We are united 
in our desire to ensure that Federal programs within the Ways and Means 
Committee's jurisdiction, from the Tax Code to the SSI program, work 
effectively for members of the military, veterans, first responders and 
their families. I strongly urge the passage of this legislation.
  I would like to highlight two specific provisions in the bill that 
have been of particular interest to me during my time in Congress. The 
first provision, section 202, is modeled on legislation, the Blind 
Veterans Fairness Act, that I first introduced in the year 2000. My 
legislation would correct a problem in the Federal SSI rules that 
affects blind veterans in four States, New York, New Jersey, 
Pennsylvania and Massachusetts, that provide these veterans modest 
annuities in recognition of the substantial sacrifice they have made in 
service to our country.
  Regrettably, under current Federal law, these State annuities 
actually reduce any SSI payments for which blind veterans would 
otherwise be eligible. As we heard from Michelle LaRock of New York's 
Division of Veterans' Affairs at our Ways and Means Committee hearing 3 
weeks ago, this quirk in the Federal SSI rules creates a hardship not 
only for the affected veterans themselves, but for the States that 
administer these annuity programs as well.
  As in years past, the bill I have introduced in the 110th Congress, 
H.R. 649, has enjoyed bipartisan support. It has been strongly endorsed 
by the Blinded Veterans Association. I would also like to publicly 
thank Chairman Rangel, not just the Chair of our committee but the dean 
of my State's congressional delegation, for his cosponsorship of prior 
versions of this bill, and I look forward to working closely with him 
to see the proposal finally enacted into law.
  Let me turn briefly to a separate provision, section 107 of the bill, 
which will permanently allow penalty-free withdrawals from IRAs, 
401(k)'s and other retirement funds for Reservists and National 
Guardsmen called to active duty. As we all know, when Guardsmen and 
Reservists are called up, they often face significant reductions in pay 
compared to their civilian salaries, putting an economic strain on 
their families.
  To lessen this economic hardship, many of them chose to draw down on 
their retirement funds. Unfortunately, under prior law, they faced a 10 
percent early withdrawal tax when they did so, and they faced 
restrictions on making repayments to their retirement funds upon 
returning from active duty.

                              {time}  1145

  Last year's Pension Protection Act provided relief from this penalty 
tax and permitted unlimited repayments within 2 years after leaving 
active duty, but only for Guardsmen or Reservists called to active duty 
before December 31, 2007.
  To ensure that this important relief remains available on a permanent 
basis going forward, I introduced H.R. 867, the Guardsmen and Reservist 
Tax Fairness Act, on February 7 of this year. This legislation has also 
attracted a bipartisan group of cosponsors, as well as endorsements 
from several leading veteran service organizations. I look forward to 
seeing these commonsense changes enacted into law over the coming 
weeks.

[[Page H12760]]

  I urge a ``yes'' vote.

                                 Blinded Veterans Association,

                                 Washington, DC, February 9, 2007.
     Hon. Thomas Reynolds,
     House of Representatives,
     Washington, DC.
       Dear Representative Reynolds: On behalf of the Blinded 
     Veterans Association (BVA), the only congressionally 
     chartered Veterans Service Organization exclusively dedicated 
     to serving the needs of our Nation's blinded veterans and 
     their families we commend you for the introduction of H.R. 
     649 ``Blind Veterans Fairness Act.'' BVA is grateful to you 
     for sponsoring this bill for those blind veterans who have 
     their state annuities counted against the income levels by 
     Social Security. Cornell University Disability Statistics 
     research has found that the poverty rates for the disabled 
     working age population in 2004, ages 21-64, has risen to 3.33 
     times the rate of poverty for the non-disabled population. 
     They also found that the poverty rate for those with a 
     sensory disability in this age group was 24.6% in 2005 as 
     compared to 9.3% for the non-disability population.
       These annuities from the states are clearly meant as a 
     ``gift'' to help prevent these veterans from falling into 
     these terrible statistics and in appreciation for their 
     service to our nation. BVA appreciates that you not only 
     understand this issue, but are willing to take action to 
     correct the problems blinded veterans have had with these 
     annuities from some states being provided to them. These 
     should not be considered additional income by Social 
     Security, but instead a special disability benefit for their 
     service to our grateful nation. This penalty should be 
     removed and the annuities excluded from all income for 
     purposes of SSI for purposes of pension benefits.
       BVA strongly supports H.R. 649, and we appreciate all your 
     strong efforts in regards to this issue for blinded veterans.
           Sincerely,
                                                  Thomas Zampieri,
     Director, Government Relations.
                                  ____

                                                 Military Officers


                                       Association of America,

                                   Alexandria, VA, March 29, 2007.
     Representative Tom Reynolds,
     House of Representatives,
     Washington, DC.
       Dear Representative Reynolds: I am writing on behalf of the 
     362,000 members of the Military Officers Association of 
     America (MOAA) to thank you for your leadership in sponsoring 
     H.R. 867, the Guardsmen and Reservists' Tax Fairness Act of 
     2007.
       Your bill would make permanent a provision in law for 
     reservists to make penalty- free withdrawals from IRAs, 401ks 
     and similar retirement funds while they are on active duty of 
     at least 6 months. It would also permit them to make 
     unlimited repayments to their retirement plans within two 
     years after leaving active duty. The existing authority will 
     sunset on December 31, 2007.
       Under our nation's ``operational reserve'' policy, National 
     Guard and Reserve forces are integrated in all military 
     missions worldwide and are expected to serve on active duty 
     tours one year out of every five or six years. This policy is 
     expected to remain in place for the indefinite future. While 
     Guard and Reserve retention remains strong, it is unrealistic 
     to expect that families and employers can be expected to 
     remain committed to reserve service for the long term without 
     additional support from Congress. One simple way to help 
     Guard and Reserve service men and women is to allow them to 
     withdraw funds from their civilian retirement plans during an 
     activation and to repay those accounts on an unlimited basis 
     following deactivation for up to two years. Making the 
     existing authority permanent will help reserve families make 
     ends meet, support their future financial security, and 
     reduce the enormous stress and strain they endure in service 
     to our nation.
       MOAA strongly endorses H.R. 867 and we pledge our full 
     support for its early enactment.
        Thank you for your leadership!
           Sincerely,
                                             Norbert R. Ryan, Jr.,
      President.
                                  ____

                                                Association of the


                                           United States Army,

                                 Arlington, VA, February 12, 2007.
     Hon. Tom Reynolds,
     House of Representatives,
     Washington, DC.
       Dear Mr. Reynolds: On behalf of the more than 100,000 
     members of the Association of the United States Army, I write 
     to thank you for your leadership in sponsoring H.R. 867, the 
     Guardsmen and Reservists' Tax Fairness Act of 2007. This bill 
     would make permanent a provision in law for reservists to 
     make penalty-free withdrawals from IRAs, 401-ks, and similar 
     retirement funds while they are on active duty for at least 6 
     months. It would also permit them to make unlimited 
     repayments to their retirement plans within two years after 
     leaving active duty. The existing authority authorizing these 
     provisions will end on 31 December 2007.
       Under our nation's ``operational reserve'' policy, National 
     Guard and Reserve forces are integrated in all military 
     missions worldwide and are expected to serve on active duty 
     tours one year out of every five or six years. This policy is 
     expected to remain in place for the indefinite future. While 
     Guard and Reserve retention remains strong, it is unrealistic 
     to expect that families and employers will remain committed 
     to reserve service for the long term without additional 
     support from Congress.
       Making the existing authority permanent will help Reserve 
     Component families make ends meet, support their future 
     financial security, and reduce the enormous stress and strain 
     they endure serving our nation.
       The Association of the United States Army strongly endorses 
     H.R. 867, and we pledge our full support for its early 
     enactment.
           Sincerely,
                                               Gordon R. Sullivan,
                                            General, USA, Retired,
     President.
                                  ____



                                    Naval Reserve Association,

                                Alexandria, VA, February 12, 2007.
     Hon. Thomas M. Reynolds,
     House of Representatives,
     Washington, DC.
       Dear Congressman Reynolds: I am writing on behalf of the 
     membership of the Naval Reserve Association to thank you for 
     your leadership in sponsoring H.R. 867, the Guardsmen and 
     Reservists' Tax Fairness Act of 2007. Your bill would make 
     permanent a provision in law for reservists to make penalty-
     free withdrawals from IRAs, 401ks and similar retirement 
     funds while they are on active duty of at least 6 months. It 
     would also permit them to make unlimited repayments to their 
     retirement plans within two years after leaving active duty. 
     The existing authority will sunset on December 31, 2007.
       Under our nation's ``operational reserve'' policy, National 
     Guard and Reserve forces are integrated in all military 
     missions worldwide and are expected to serve on active duty 
     tours one year out of every five or six years. This policy is 
     expected to remain in place for the indefinite future. While 
     Guard and Reserve retention remains strong, it is unrealistic 
     to assume that families and employers can be expected to 
     remain committed to reserve service for the long term without 
     additional support from Congress.
       One simple way to help Guard and Reserve service men and 
     women is to allow them to withdraw funds from their civilian 
     retirement plans during an activation and to repay those 
     accounts on an unlimited basis following deactivation for up 
     to two years. Making the existing authority permanent will 
     help reserve families make ends meet, support their future 
     financial security, and reduce the enormous stress and strain 
     they endure in service to our nation.
       The Naval Reserve Association strongly endorses H.R. 867, 
     and we pledge our full support for its early enactment.
           Sincerely,

                                            C. Williams Coane,

                                                 RADM, USNR (Ret),
     Executive Director.
                                  ____

                                              Enlisted Association


                                        of the National Guard,

                                Alexandria, VA, February 12, 2007.
     Hon. Tom Reynolds,
     House of Representatives,
     Washington, DC.
       The Enlisted Association of the National Guard of the 
     United States (EANGUS) is the only military service 
     association that represents the interests of every enlisted 
     soldier and airmen in the Army and Air National Guard. With a 
     constituency base of over 414,000 soldiers and airmen, their 
     families, and a large retiree membership, EANGUS engages 
     Capitol Hill on behalf of courageous Guard persons across 
     this nation.
       On behalf of EANGUS, and the soldiers and airmen it 
     represents, I am writing on behalf of our membership to thank 
     you for your leadership in sponsoring H.R. 867, the Guardsmen 
     and Reservists' Tax Fairness Act of 2007. Your bill would 
     make permanent a provision in law for reservists to make 
     penalty-free withdrawals from IRA, 401k and similar 
     retirement funds while they are on active duty of at least 6 
     months. It would also permit them to make unlimited 
     repayments to their retirement plans within two years after 
     leaving active duty. The existing authority will sunset on 
     December 31, 2007.
       Under our nation's ``operational reserve'' policy, National 
     Guard and Reserve forces are integrated in all military 
     missions worldwide and are expected to serve on active duty 
     tours one year out of every five or six years. This policy is 
     expected to remain in place for the indefinite future. While 
     Guard and Reserve retention remains strong, it is unrealistic 
     to expect that families and employers can be expected to 
     remain committed to reserve service for the long term without 
     additional support from Congress. One simple way to help 
     Guard and Reserve service men and women is to allow them to 
     withdraw funds from their civilian retirement plans during 
     activation and to repay those accounts on an unlimited basis 
     following deactivation for up to two years. Making the 
     existing authority permanent will help reserve families make 
     ends meet, support their future financial security, and 
     reduce the enormous stress and strain they endure in service 
     to our nation.
       EANGUS strongly endorses H.R. 867 and we pledge our full 
     support for its early enactment.
           Working for America's Best!
                                                 Michael P. Cline,
                                               Executive Director.

  Mr. NEAL of Massachusetts. Madam Speaker, at this time I yield 2 
minutes to the gentleman from Connecticut (Mr. Larson), a member of the 
Ways and Means Committee.

[[Page H12761]]

  (Mr. LARSON of Connecticut asked and was given permission to revise 
and extend his remarks.)
  Mr. LARSON of Connecticut. Madam Speaker, I want to extend as well 
and compliment Chairman Rangel, Chairman McDermott, and especially 
Chairman Neal, for the timely manner in which they have handled very 
important legislation that addresses veterans, but specifically to Mr. 
Neal because it was not lost on him in this piece of legislation that 
we also needed to address an important segment of our society, our 
volunteer firefighters.
  It wasn't lost on Mr. Neal that volunteer firefighters protect 
approximately 38 percent of America's population and more than 70 
percent of our land. It wasn't lost on Mr. Neal that volunteer 
firefighters save taxpayers nearly $37 billion annually with their 
efforts.
  Two-thirds of the 1.2 million firefighters in this country are in 
fact volunteers. More importantly, it wasn't lost on anyone in this 
body that it wasn't the FBI, the CIA or the Department of Defense, it 
was our front line defenders, first responders that were there at the 
World Trade Center, at the Pentagon and in the fields of Pennsylvania. 
It's to them, of course, that we owe this debt of gratitude.
  It was lost, however, on the IRS that when States like mine in 
Connecticut moved to provide a rebate on their local property taxes, 
that they sought to tax it and make it ordinary income on behalf of 
these brave volunteers. This legislation corrects that. I want to 
commend the Mitchell brothers, both John and Billy, from South Windsor, 
Connecticut, John McAuliffe of Whethersfield, and Chief Phil Crombie, 
who are the genesis of this idea and concept and brought it to my 
attention.
  Madam Speaker, I again thank Chairman Neal for making it all happen.
  Mr. ENGLISH of Pennsylvania. Madam Speaker, it is now my privilege to 
yield 3 minutes to the gentleman from North Carolina (Mr. Jones), a 
strong advocate of the cause of veterans.
  Mr. JONES of North Carolina. Madam Speaker, first, I would like to 
thank Chairman Rangel and Ranking Member McCrery for including H.R. 418 
into the Heroes Earnings Assistance and Relief Tax Act of 2007. For 
several years I have tried to get this measure to the House floor. So 
thank you, Mr. Neal, Mr. McDermott, and Mr. English.
  H.R. 418 is a bill that would permit military families who receive 
the death gratuity to invest the full amount into certain tax-favored 
accounts. As you may know, a death gratuity is a $100,000 payment paid 
to survivors of servicemembers whose death resulted from combat-related 
circumstances. Current tax law limits the amount that recipients of the 
death gratuity can place in tax-preferred accounts, such as a Roth IRA 
or a Coverdell Educational Savings Account. This legislation would 
change that to allow recipients to contribute up to the full amount of 
the gratuity payment to any of those two accounts.
  As the families of our fallen heroes try to put their lives back 
together, they need help. The death of a loved one is difficult enough, 
without having to worry about saving the death gratuity to pay for 
retirement, college or other expenses and then have the government come 
in and tax the interest on that savings.
  Madam Speaker, the need for this assistance was brought to my 
attention by Captain Michael Ceres, a constituent stationed at Marine 
Corps Air Station New River. Captain Ceres, who just returned from 
serving in Iraq and will soon be redeployed, contacted my office and 
suggested that Congress institute this change to ease the burden on 
grieving military families. We owe it to our fallen military heroes to 
expand the options to the families who receive the death gratuity, 
families who have paid the ultimate cost with the loss of their loved 
one.
  Today, I call on all my colleagues in the House to support this major 
piece of legislation, known as the Heroes Earnings Assistance and 
Relief Tax Act of 2007. With that, I want to thank the leadership on 
the Democratic side, the leadership on the Republican side for this 
comprehensive bill to help our military and their families.
  Mr. NEAL of Massachusetts. Madam Speaker, I yield 1 minute to the 
gentleman from Oregon (Mr. Blumenauer), a member of the Ways and Means 
Committee.
  Mr. BLUMENAUER. Madam Speaker, I appreciate the gentleman's courtesy 
in recognizing me and in working with us.
  For over 60 years, Oregonians have provided a benefit to our 
returning veterans of home loans that were below market rate to be able 
to help them reestablish themselves in the community and as a small 
gesture of our appreciation for their sacrifice. Unfortunately, with 
the recent flood of returning veterans from Iraq and Afghanistan, we 
found that that program has been stretched to the limit and we were 
faced with denying them access.
  Working with Mr. Neal, Chairman Rangel, the committee and 
subcommittee, we were able to make an important adjustment, a 400 
percent increase in the loan cap, so that we will be able to fully meet 
the needs of returning Oregon veterans, and along the way it will help 
people in Alaska, Wisconsin, Texas, and California. In this time of 
uncertainty in the housing market, giving these important loans to our 
veterans is an important gesture. I appreciate the work that the 
committee has done to make this a reality.
  Mr. ENGLISH of Pennsylvania. Madam Speaker, it is now my privilege to 
yield 4 minutes to the distinguished gentleman from Kansas (Mr. Moran), 
a true advocate of the veterans, as well as all of the military 
facilities in his district.
  Mr. MORAN of Kansas. I thank the gentleman from Pennsylvania for 
recognizing me.
  This, as you can hear, is an important piece of legislation that is 
widely supported and praised here on the House floor today, but I am 
disappointed that the majority in the committee rejected an amendment 
that the gentleman from Pennsylvania (Mr. English) offered.
  This amendment was a commonsense, bipartisan fix to the Tax Code to 
prevent lower-income military personnel and their families from being 
discriminated against when applying to live in affordable housing built 
under the Low Income Housing Tax Credit Program.
  A number of military installations across the country are 
experiencing housing shortages as a result of the 2005 BRAC. One of 
those facilities, Fort Riley, an Army post located in the State of 
Kansas, is nearly doubling in size and is now seeing an influx of 
30,000 soldiers, civilian workers, and others.
  When the new soldiers live off base, they receive a military housing 
allowance from the government that they use for payment of rent. Though 
the Tax Code does not treat the housing allowance as taxable income, it 
is considered income when determining a military family's eligibility 
to live in facilities financed with low-income housing tax credits. The 
result is that some servicemembers, particularly our enlisted men and 
women, are considered to earn too much income and are thus disqualified 
from living in affordable housing.
  However, comparatively low-income civilians receiving section 8 
housing vouchers from the Federal Government are more likely to qualify 
for this housing. This is because, unlike the military housing subsidy, 
the Tax Code exempts section 8 assistance from being considered income.
  Our Nation's military families deserve access to safe, decent, and 
affordable housing; and they should be given a fair opportunity to 
qualify for it. The House acted in May to exempt military housing 
allowance from income eligibility requirements when qualifying for the 
Head Start program. The USDA's WIC nutrition program for Women, Infants 
and Children also provides for this exemption. Unfortunately, the 
discrimination persists when military families apply to live in 
affordable housing and enlisted servicemembers and their families 
continue to be treated unfairly in communities across the country.
  I had hoped to offer amendment here today on the House floor to 
address this issue, but the procedure by which this bill is brought to 
the floor does not allow me that opportunity. I would urge and 
encourage my colleagues to join me in cosponsoring H.R. 1481, The

[[Page H12762]]

Military Access to Housing Act, to correct this inequality, and to 
encourage the leadership of this House to bring this measure to the 
floor for a vote.
  Mr. NEAL of Massachusetts. Madam Speaker, I yield 1 minute to the 
gentleman from New Jersey (Mr. Pascrell), also a member of the Ways and 
Means Committee.
  (Mr. PASCRELL asked and was given permission to revise and extend his 
remarks.)
  Mr. PASCRELL. Madam Speaker, I rise today in strong support of H.R. 
3997, and I want to commend Chairman Rangel, Congressman Neal, and 
Congressman English for their persistence.
  Tax changes, if done wrong, can exacerbate existing inequalities, 
hurt our moral fabric, and slow the economy; so I am glad today with 
this bill we will take up a tax measure that is not geared towards 
increasing the fortunes of the already fortunate, but instead we will 
provide a measure of relief for those brave men and women serving in 
the military and as first responders.
  In particular, I am glad to see that this bill excludes from income 
certain reimbursable expenses incurred in the line of duty by volunteer 
firefighters; and I commend my friend, Congressman Larson from 
Connecticut, who has worked on this issue for some time.
  I am truly heartened we are permanently extending combat pay in the 
calculations of the earned income tax credit. Recent law allowed 
members of the Armed Forces to exclude combat pay, which is generally 
nontaxable, for purposes of computing the earned income credit. But 
this will only last through the 2006 tax year. Many of us have worked 
for some time to make this proposal permanent. I am tremendously 
pleased that this provision has made it into the broader package that 
we are discussing today. There is no reason a member of the Armed 
Forces should lose their earned income tax credit when they are 
mobilized serving their country.
  Again, I thank the chairman and I thank Mr. Neal and Mr. English for 
their work and diligence on this critical issue.
  Mr. ENGLISH of Pennsylvania. Madam Speaker, I reserve the balance of 
my time.
  Mr. NEAL of Massachusetts. Madam Speaker, I yield 1 minute to the 
gentlewoman from Nevada (Ms. Berkley), a distinguished member of the 
Ways and Means Committee.
  Ms. BERKLEY. Madam Speaker, as Veterans Day approaches, the timing 
could not be more appropriate for Congress to be considering the HEART 
Act. This legislation will help veterans and their families, and it 
will also show them that their fellow citizens appreciate their service 
and honor their sacrifices for our country.
  Nevada has one of the fastest growing veterans populations in the 
country, and I have seen firsthand the economic hardship that extended 
military deployment in Iraq and Afghanistan have caused. The HEART Act 
will allow more families to qualify for the earned income tax credit or 
to make penalty-free withdrawals from retirement plans in time of true 
economic need to help ease the burden of deployment.
  Nevada has suffered 59 deaths during the global war on terror, 
including 46 in Iraq. I support the provisions of this bill that will 
allow the spouses of those who sacrificed their lives to be better able 
to plan for their futures and those of their children.
  As a member of both the Ways and Means Committee and the Veterans' 
Affairs Committee, I strongly support this bill. I urge my colleagues 
to vote for this bipartisan legislation.

                              {time}  1200

  Mr. NEAL of Massachusetts. Madam Speaker, I yield Mr. Altmire from 
Pennsylvania, a good friend of the veteran, 1 minute.
  Mr. ALTMIRE. I thank the chairman for including in this bill 
legislation I introduced to assist our brave men and women in uniform.
  My bill, H.R. 3827, the Active Duty Military Tax Relief Act, ensures 
that active duty military personnel will be able to treat combat pay as 
earned income when computing the earned income tax credit.
  My bill also allows Reservists called to active duty to make penalty-
free withdrawals from their retirement plans. And servicemembers who 
receive differential pay from their civilian employer will be able to 
contribute those wages to their retirement plan.
  Finally, family members of those killed in the line of duty will be 
able to contribute up to $100,000 of the military death gratuity into 
tax-favored accounts, such as Roth IRAs and education savings accounts.
  I thank the chairman for working with me to ensure that all of these 
provisions from my bill have been included in full in this legislation 
which I strongly support.
  Mr. NEAL of Massachusetts. Madam Speaker, I recognize a great friend 
of the veteran, the gentlewoman from Kansas (Mrs. Boyda) for 1 minute.
  Mrs. BOYDA of Kansas. Madam Speaker, unless we act now, over 150,000 
of our American troops and their families will pay sharply higher 
taxes. Unless Congress extends the military eligibility for the earned 
income tax credit, we will, through inaction, slash the EITC for 
hundreds of thousands of troops. It would be a tax borne solely by our 
soldiers and our military families. We call it a soldier tax.
  Our military continues to serve our country with honor and 
distinction. The last thing we need is for our soldiers and their 
families to have to worry about paying higher taxes next year. That is 
why I authored the Tax Relief for Armed Combat Families Act for 2007. 
It will permanently end the soldier tax. Our military families should 
not have to worry from year to year what funds are going to be 
available to take care of their families.
  I thank Chairman Rangel and Chairman Neal for working my language 
into today's legislation, and I call on my colleagues to pass this 
important legislation. Let's permanently end the soldier tax.
  Mr. NEAL of Massachusetts. I yield 1 minute to the gentlewoman from 
Arizona (Ms. Giffords), a friend of the veteran.
  Ms. GIFFORDS. Madam Speaker, I rise today in support of tax cuts for 
true American heroes: our combat troops, our veterans, and our 
firefighters.
  Last month I introduced H.R. 3808, the Combat Troops Tax Relief Act. 
I am very pleased that the first provision in the HEART Act is taken 
from my tax bill.
  This bill honors the patriotic commitment of military families such 
as the Heberts in southern Arizona. Army Specialist Adam Hebert is 
currently serving at Fort Huachuca. He is married with two children, 
and soon will be deployed abroad for combat service. This bill will 
give the Heberts concrete tax relief. It will permanently protect their 
eligibility for the Earned Income Tax Credit.
  In southern Arizona and across the United States, we must honor our 
heroes with true tax relief. I urge my colleagues on both sides of the 
aisle to join with me to pass H.R. 3997, the HEART Act.
  Mr. NEAL of Massachusetts. Mr. Speaker, I would like to recognize the 
gentlewoman from California (Mrs. Davis), a good friend of the American 
veteran as well, for 1 minute.
  Mrs. DAVIS of California. Mr. Speaker, I want to thank my colleagues 
from the Ways and Means Committee for including provisions from H.R. 
337 and H.R. 551 in the HEART Act. These are two important bills that I 
have been championing since I came to Congress.
  The first bill addresses a glitch in the SSI program. Because 
eligibility for SSI benefits is based on a family's income, military 
families lose benefits when additional pay is added to their income. A 
military family struggling to make ends meet loses benefits for their 
children if they receive jump pay, hazardous duty pay or a number of 
other pays considered ``unearned income.'' I think I speak for my 
colleagues when I say these pays are not unearned but hard earned.
  The second bill addresses qualified veterans mortgage bonds. And as a 
Californian, I join with other colleagues in the desire to provide 
veterans who signed up for service after 1977 with a better opportunity 
to achieve homeownership. Why should a veteran who served in Iraq be 
treated any differently than somebody who signed up before 1977? 
Correcting this flaw in current law will allow those returning from 
Iraq and Afghanistan to have

[[Page H12763]]

great opportunities towards owning a home in California's high-cost 
real estate market.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 1 minute to the 
gentleman from California (Mr. Farr), a friend of the American veteran 
as well.
  Mr. FARR. Mr. Speaker, I would like to thank the leadership of the 
Ways and Means Committee and the members because I think this bill 
takes a commonsense approach of having, as you have heard, the stories 
told about people who have had problems that just don't make sense. 
This is sort of fix the dumb-dumb in the tax law, and that is what this 
bill does for military veterans, volunteer firefighters, and eligible 
Peace Corps volunteers and others.
  I am pleased that the committee included my legislation I authorized 
to provide tax relief for thousands of military retirees whose VA 
disability claims have been delayed by dysfunctional VA claims backlog.
  The issue was brought to my attention by a constituent, Michael St. 
Germain, whose VA claim took over 8 years to process. Imagine, 8 years 
to process one VA claim. I am proud in the MilCon-VA appropriations 
bill that we have appropriated $124 million to provide 1,800 new claims 
processors to work on the 400,000 backlog of claims. I thank the 
committee for extending for another 2 years the claims adjustment.
  Mr. NEAL of Massachusetts. Mr. Speaker, I reserve the balance of my 
time.
  Mr. ENGLISH of Pennsylvania. Mr. Speaker, may I inquire of the other 
gentleman, does he have just one more speaker?
  Mr. NEAL of Massachusetts. I believe we have concluded the speakers 
who have asked for time on our side.
  Mr. ENGLISH of Pennsylvania. Mr. Speaker, I yield myself the balance 
of my time.
  In conclusion, I believe the case has been made compellingly that 
this legislation consists of many components, but they have been 
developed within the Ways and Means Committee as a benefit for our 
veterans and our active duty military.
  I don't believe there is a great controversy here. What I do believe 
is there is a lesson. When Republicans and Democrats work together on a 
bipartisan basis, when they put aside political posturing, when they 
put aside ideological poses, when they insist on procedural fairness, 
then I think we can find common ground to move forward on things that 
are genuinely important.
  I want to particularly credit the chairman of our committee, Mr. 
Rangel, and the gentleman from Massachusetts, the chairman of our 
Select Revenue Subcommittee, for having moved this legislation forward 
and having set a very high standard. And I would like to take credit 
for the fact that there has been substantial Republican participation 
in the development of this bill.
  This bill, I think, is important to move forward now, but not only 
for what it consists of, but for what it symbolizes, and that is what 
this Chamber can achieve when both parties work together.
  Mr. Speaker, I yield back the balance of my time.


                             General Leave

  Mr. NEAL of Massachusetts. Mr. Speaker, I ask unanimous consent that 
all Members may have 5 legislative days in which to revise and extend 
their remarks and include extraneous material on H.R. 3997, as amended.
  The SPEAKER pro tempore (Mr. Serrano). Is there objection to the 
request of the gentleman from Massachusetts?
  There was no objection.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself the balance of 
my time.
  First of all, I thank the gentleman from Pennsylvania (Mr. English) 
for the usual courtesy that he extends to all Members of this body, and 
particularly those of us who are on the Ways and Means Committee. I 
also wish to acknowledge Chairman Rangel and Mr. McCrery who worked to 
accommodate suggestions from several Members of the House. We thank 
those Members, both Republicans and Democrats, for generating many of 
the good ideas contained in this bipartisan bill.
  Let me describe some of the provisions in this bill. The bill makes 
permanent the current provision waiving the 10 percent withdrawal 
penalty for those called up to active duty who need to tap into 
retirement accounts.
  The bill allows families to roll over amounts received as death 
gratuity benefits into Roth IRAs or education savings accounts.
  The bill makes a number of changes related to supplemental security 
income or SSI eligibility and military service.
  And the bill makes permanent the special rule treating combat pay as 
earned income for the purposes of the earned income tax credit, or 
EITC.
  The bill also provides a number of changes to allow employers the 
flexibility to extend benefits to workers called up to duty and will 
expand certain provisions that provide mortgage assistance to veterans 
through qualified bond programs.
  The bill also includes incentives for those who volunteer their 
services Stateside, such as firefighters and emergency responders.
  And for those who had an opportunity to attend our hearing and listen 
to the moving testimony by the widow of a Reservist whose pension was 
cut in half because he did not ``return to work'' after being killed in 
action, you will be pleased to know, as all Members of the body will, 
that this bill we are considering today fixes that problem for good.
  The British leader Benjamin Disraeli noted, ``The legacy of heroes is 
the memory of a great name and the inheritance of a great example.'' 
Let us set our own example today of a Congress that responds to 
families in need. Let us show our heroes and their families that we 
acknowledge and appreciate their service.
  Not only do I encourage support for this bipartisan bill, I want to 
reiterate what was stated a few moments ago by my friend, Mr. English. 
This is a very firm example of what happens in this House of 
Representatives when Members put aside differences and proceed with the 
common principle that American veterans deserve help. So let us show 
our support for this legislation. I urge adoption of this bill.
  Mr. KIND. Mr. Speaker, I rise today in strong support of H.R. 3997, 
the Heroes Earnings Assistance and Relief Tax, HEART Act of 2007. This 
bill provides a number of much-needed and deserved tax benefits to 
members of the military, their families, and veterans. Specifically, I 
am proud that the Qualified Veterans' Mortgage Bonds, QVMB, program, 
which impacts my home State of Wisconsin, was renewed and reformed so 
that the dream of home-ownership will continue to be a reality for 
thousands of veterans.
  Under the HEART Act, the QVMB program will be expanded to allow $100 
million annually in tax-exempt bonding for the Wisconsin Department of 
Veterans Affairs, WDVA, State veterans home loan program--enough 
funding to aid about 600 State veterans in obtaining low-interest rate 
home loans. This program is more important now than ever before with 
the ongoing credit crisis in this country, and I am proud we were able 
to expand this crucial program, In Wisconsin alone, the WDVA has made 
over 54,000 home loans to veterans through this program.
  Our military servicemen and women have sacrificed a great deal to 
protect the freedoms that we so deeply cherish in this country. Their 
sacrifices and extended tours of duty in Iraq and Afghanistan, however, 
have placed greater economic hardships on their families here at home. 
The bill before us today will help alleviate some of those hardships by 
giving military families much needed and deserved tax relief and making 
permanent some of the temporary provisions that Congress has previously 
enacted.
  The HEART Act is one simple but significant way we can thank our 
troops for their service to our country. I thank Chairman Rangel and 
Ranking Member McCrery for their bipartisan leadership on this 
legislation and I urge my colleagues to support our men and women in 
the military by passing this legislation.
  Mr. BRALEY of Iowa. Mr. Speaker, I rise today in support of H.R. 
3997, the Heroes Earnings Assistance and Relief Tax Act. I am 
especially pleased that this bill includes a crucial provision from 
H.R. 3736, the Combat Pay Tax Flexibility Act, which I recently 
introduced to permanently allow members of the Armed Forces to treat 
combat pay as earned income in calculating their Earned Income Tax 
Credit (EITC).
  Because income earned while serving in a combat zone is exempt from 
income taxes, many low-income military families recently faced the loss 
or reduction of their EITC, as deployments to Iraq and Afghanistan 
shifted their income to nontaxable combat pay. While Congress acted to 
fix this problem by providing troops the option of calculating combat

[[Page H12764]]

pay for the EITC, without further Congressional action this tax credit 
will expire at the end of the year.
  I introduced the Combat Pay Tax Flexibility Act to ensure that this 
tax savings provision is always there for the military families that 
need it. Soldiers who serve in hostile places make a great sacrifice 
for our country, and the least we can do is help them make the most of 
the tax savings available to them.
  I would like to thank Chairman Rangel for working with me to 
incorporate the Combat Pay Tax Flexibility Act into the legislation 
before us today, and for moving this legislation swiftly. I urge all of 
my colleagues to vote in favor of H.R. 3997 today to ensure that our 
troops have the financial resources they need throughout the cycle of 
deployment.
  Mr. HASTINGS of Washington. Mr. Speaker, I am pleased this bill, H.R. 
3997, is being considered by the House today and specifically that it 
includes language similar to the legislation, H.R. 2540, introduced by 
myself and Congressman Pomeroy.
  Our legislation was written to assist the families of members of our 
military and National Guard who are killed while on active duty. It was 
developed after Congressman Pomeroy and I each met with Mrs. Victoria 
Johnson from my central Washington district.
  While grieving the loss of her husband, Major Alan Johnson, Victoria 
discovered that State law treated her husband as a retiree rather than 
a brave servicemember. Victoria worked to change State law, and with 
her support, Congressman Pomeroy and I introduced legislation to ensure 
that servicemembers who die protecting our Nation will have their time 
on active military duty counted into their employer's retirement 
benefits.
  This simple change ensures that the survivors of our brave 
servicemembers, like Major Johnson, receive the maximum amount of their 
loved ones' pension benefits, and are not penalized for their family 
members' volunteering to serve their country.
  This is the right thing to do and I encourage my colleagues to 
support this bill.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield back the balance of 
my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Washington (Mr. McDermott) that the House suspend the 
rules and pass the bill, H.R. 3997, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. NEAL of Massachusetts. 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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