[Congressional Record Volume 154, Number 83 (Tuesday, May 20, 2008)]
[House]
[Pages H4160-H4171]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008
Mr. RANGEL. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 6081) to amend the Internal Revenue Code of 1986 to provide
benefits for military personnel, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 6081
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 2008''.
(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
Sec. 101. Recovery rebate provided to military families.
Sec. 102. Election to include combat pay as earned income for purposes
of earned income tax credit.
Sec. 103. Modification of mortgage revenue bonds for veterans.
Sec. 104. Survivor and disability payments with respect to qualified
military service.
Sec. 105. Treatment of differential military pay as wages.
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. Authority to disclose return information for certain 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.
Sec. 111. Credit for employer differential wage payments to employees
who are active duty members of the uniformed services.
Sec. 112. State payments to service members treated as qualified
military benefits.
Sec. 113. Permanent exclusion of gain from sale of a principal
residence by certain employees of the intelligence
community.
Sec. 114. Special disposition rules for unused benefits in health
flexible spending arrangements of individuals called to
active duty.
Sec. 115. Technical correction related to exclusion of certain property
tax rebates and other benefits provided to volunteer
firefighters and emergency medical responders.
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. Revision of tax rules on expatriation.
Sec. 302. Certain domestically controlled foreign persons performing
services under contract with United States Government
treated as American employers.
Sec. 303. Increase in minimum penalty on failure to file a return of
tax.
TITLE IV--PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH
BENEFITS
Sec. 401. Parity in the application of certain limits to mental health
benefits.
TITLE I--BENEFITS FOR MILITARY
SEC. 101. RECOVERY REBATE PROVIDED TO MILITARY FAMILIES.
(a) In General.--Subsection (h) of section 6428 (relating
to identification number requirement) is amended by adding at
the end the following new paragraph:
``(3) Special rule for members of the armed forces.--
Paragraph (1) shall not apply to a joint return where at
least 1 spouse was a member of the Armed Forces of the United
States at any time during the taxable year.''.
(b) Effective Date.--The amendments made by this section
shall take effect as if included in the amendments made by
section 101 of the Economic Stimulus Act of 2008.
SEC. 102. 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) Conforming Amendment.--Paragraph (4) of section 6428(e)
is amended by striking ``except that--'' and all that follows
through ``(B) such term shall'' and inserting ``except that
such term shall''.
(c) 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.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years ending after December 31, 2007.
SEC. 103. 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.
(e) Transition Rule.--In the case of any bond issued after
December 31, 2007, and before the date of the enactment of
this Act, subparagraph (B) of section 143(l)(4) of the
Internal Revenue Code of 1986, as amended by this section,
shall be applied by substituting ``30 years'' for ``25
years''.
SEC. 104. 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
[[Page H4161]]
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, 2010.
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 ``2012'' for ``2010'' 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
(II) ending on the date described in clause (i)(II) (or, if
earlier, the date the plan or contract amendment is adopted).
SEC. 105. 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, 2008.
(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, 2008.
(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, 2010.
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 ``2012'' for
``2010'' 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. 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 for credit or refund filed after the
date of the enactment of this Act.
[[Page H4162]]
(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. AUTHORITY TO DISCLOSE RETURN INFORMATION FOR
CERTAIN VETERANS PROGRAMS MADE PERMANENT.
(a) In General.--Paragraph (7) of section 6103(l) is
amended by striking the last sentence thereof.
(b) Conforming Amendment.--Section 6103(l)(7)(D)(viii)(III)
is amended by striking ``sections 1710(a)(1)(I), 1710(a)(2),
1710(b), and 1712(a)(2)(B)'' and inserting ``sections
1710(a)(2)(G), 1710(a)(3), and 1710(b)''.
(c) Effective Date.--The amendment made by subsection (a)
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.
SEC. 111. CREDIT FOR EMPLOYER DIFFERENTIAL WAGE PAYMENTS TO
EMPLOYEES WHO ARE ACTIVE DUTY MEMBERS OF THE
UNIFORMED SERVICES.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business credits) is amended by adding
at the end the following new section:
``SEC. 45P. EMPLOYER WAGE CREDIT FOR EMPLOYEES WHO ARE ACTIVE
DUTY MEMBERS OF THE UNIFORMED SERVICES.
``(a) General Rule.--For purposes of section 38, in the
case of an eligible small business employer, the differential
wage payment credit for any taxable year is an amount equal
to 20 percent of the sum of the eligible differential wage
payments for each of the qualified employees of the taxpayer
during such taxable year.
``(b) Definitions.--For purposes of this section--
``(1) Eligible differential wage payments.--The term
`eligible differential wage payments' means, with respect to
each qualified employee, so much of the differential wage
payments (as defined in section 3401(h)(2)) paid to such
employee for the taxable year as does not exceed $20,000.
[[Page H4163]]
``(2) Qualified employee.--The term `qualified employee'
means a person who has been an employee of the taxpayer for
the 91-day period immediately preceding the period for which
any differential wage payment is made.
``(3) Eligible small business employer.--
``(A) In general.--The term `eligible small business
employer' means, with respect to any taxable year, any
employer which--
``(i) employed an average of less than 50 employees on
business days during such taxable year, and
``(ii) under a written plan of the employer, provides
eligible differential wage payments to every qualified
employee of the employer.
``(B) Controlled groups.--For purposes of subparagraph (A),
all persons treated as a single employer under subsection
(b), (c), (m), or (o) of section 414 shall be treated as a
single employer.
``(c) Coordination With Other Credits.--The amount of
credit otherwise allowable under this chapter with respect to
compensation paid to any employee shall be reduced by the
credit determined under this section with respect to such
employee.
``(d) Disallowance for Failure To Comply With Employment or
Reemployment Rights of Members of the Reserve Components of
the Armed Forces of the United States.--No credit shall be
allowed under subsection (a) to a taxpayer for--
``(1) any taxable year, beginning after the date of the
enactment of this section, in which the taxpayer is under a
final order, judgment, or other process issued or required by
a district court of the United States under section 4323 of
title 38 of the United States Code with respect to a
violation of chapter 43 of such title, and
``(2) the 2 succeeding taxable years.
``(e) Certain Rules to Apply.--For purposes of this
section, rules similar to the rules of subsections (c), (d),
and (e) of section 52 shall apply.
``(f) Termination.--This section shall not apply to any
payments made after December 31, 2009.''.
(b) Credit Treated as Part of General Business Credit.--
Section 38(b) (relating to general business credit) is
amended by striking ``plus'' at the end of paragraph (31), by
striking the period at the end of paragraph (32) and
inserting ``, plus'', and by adding at the end of following
new paragraph:
``(33) the differential wage payment credit determined
under section 45P(a).''.
(c) No Deduction for Compensation Taken Into Account for
Credit.--Section 280C(a) (relating to rule for employment
credits) is amended by inserting ``45P(a),'' after
``45A(a),''.
(d) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1 is amended by
adding at the end the following new item:
``Sec. 45P. Employer wage credit for employees who are active duty
members of the uniformed services.''.
(e) Effective Date.--The amendments made by this section
shall apply to amounts paid after the date of the enactment
of this Act.
SEC. 112. STATE PAYMENTS TO SERVICE MEMBERS TREATED AS
QUALIFIED MILITARY BENEFITS.
(a) In General.--Section 134(b) (defining qualified
military benefit) is amended by adding at the end the
following new paragraph:
``(6) Certain state payments.--The term `qualified military
benefit' includes any bonus payment by a State or political
subdivision thereof to any member or former member of the
uniformed services of the United States or any dependent of
such member only by reason of such member's service in an
combat zone (as defined in section 112(c)(2), determined
without regard to the parenthetical).''.
(b) Effective Date.--The amendment made by this section
shall apply to payments made before, on, or after the date of
the enactment of this Act.
SEC. 113. PERMANENT EXCLUSION OF GAIN FROM SALE OF A
PRINCIPAL RESIDENCE BY CERTAIN EMPLOYEES OF THE
INTELLIGENCE COMMUNITY.
(a) In General.--Paragraph (9) of section 121(d) is amended
by striking subparagraph (E).
(b) Duty Station May Be Inside United States.--Section
121(d)(9)(C) (defining qualified official extended duty) is
amended by striking clause (vi).
(c) Effective Date.--The amendments made by this section
shall apply to sales or exchanges after the date of the
enactment of this Act.
SEC. 114. SPECIAL DISPOSITION RULES FOR UNUSED BENEFITS IN
HEALTH FLEXIBLE SPENDING ARRANGEMENTS OF
INDIVIDUALS CALLED TO ACTIVE DUTY.
(a) In General.--Section 125 (relating to cafeteria plans)
is amended by redesignating subsections (h) and (i) as
subsection (i) and (j), respectively, and by inserting after
subsection (g) the following new subsection:
``(h) Special Rule for Unused Benefits in Health Flexible
Spending Arrangements of Individuals Called to Active Duty.--
``(1) In general.--For purposes of this title, a plan or
other arrangement shall not fail to be treated as a cafeteria
plan or health flexible spending arrangement merely because
such arrangement provides for qualified reservist
distributions.
``(2) Qualified reservist distribution.--For purposes of
this subsection, the term `qualified reservist distribution'
means, any distribution to an individual of all or a portion
of the balance in the employee's account under such
arrangement if--
``(A) such individual was (by reason of being a member of a
reserve component (as defined in section 101 of title 37,
United States Code)) ordered or called to active duty for a
period in excess of 179 days or for an indefinite period, and
``(B) such distribution is made during the period beginning
on the date of such order or call and ending on the last date
that reimbursements could otherwise be made under such
arrangement for the plan year which includes the date of such
order or call.''.
(b) Effective Date.--The amendment made by this section
shall apply to distributions made after the date of the
enactment of this Act.
SEC. 115. TECHNICAL CORRECTION RELATED TO EXCLUSION OF
CERTAIN PROPERTY TAX REBATES AND OTHER BENEFITS
PROVIDED TO VOLUNTEER FIREFIGHTERS AND
EMERGENCY MEDICAL RESPONDERS.
(a) Social Security Taxes.--
(1) Section 3121(a) (relating to definition of wages) is
amended by striking ``or'' at the end of paragraph (21), by
striking the period at the end of paragraph (22) and
inserting ``; or'', and by inserting after paragraph (22) the
following new paragraph:
``(23) any benefit or payment which is excludable from the
gross income of the employee under section 139B(b).''.
(2) Section 209(a) of the Social Security Act is amended by
striking ``or'' at the end of paragraph (18), by striking the
period at the end of paragraph (19) and inserting ``; or'',
and by inserting after paragraph (19) the following new
paragraph:
``(20) Any benefit or payment which is excludable from the
gross income of the employee under section 139B(b) of the
Internal Revenue Code of 1986).''.
(b) Unemployment Taxes.--Section 3306(b) (relating to
definition of wages) is amended by striking ``or'' at the end
of paragraph (18), by striking the period at the end of
paragraph (19) and inserting ``; or'', and by inserting after
paragraph (19) the following new paragraph:
``(20) any benefit or payment which is excludable from the
gross income of the employee under section 139B(b).''.
(c) Wage Withholding.--Section 3401(a) (defining wages) is
amended by striking ``or'' at the end of paragraph (21), by
striking the period at the end of paragraph (22) and
inserting ``; or'', and by inserting after paragraph (22) the
following new paragraph:
``(23) for any benefit or payment which is excludable from
the gross income of the employee under section 139B(b).''.
(d) Effective Date.--The amendments made by this section
shall take effect as if included in section 5 of the Mortgage
Forgiveness Debt Relief Act of 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 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
[[Page H4164]]
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. REVISION OF TAX RULES ON EXPATRIATION.
(a) In General.--Subpart A of part II of subchapter N of
chapter 1 is amended by inserting after section 877 the
following new section:
``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.
``(a) General Rules.--For purposes of this subtitle--
``(1) Mark to market.--All property of a covered expatriate
shall be treated as sold on the day before the expatriation
date for its fair market value.
``(2) Recognition of gain or loss.--In the case of any sale
under paragraph (1)--
``(A) notwithstanding any other provision of this title,
any gain arising from such sale shall be taken into account
for the taxable year of the sale, and
``(B) any loss arising from such sale shall be taken into
account for the taxable year of the sale to the extent
otherwise provided by this title, except that section 1091
shall not apply to any such loss.
ZProper adjustment shall be made in the amount of any gain or
loss subsequently realized for gain or loss taken into
account under the preceding sentence, determined without
regard to paragraph (3).
``(3) Exclusion for certain gain.--
``(A) In general.--The amount which would (but for this
paragraph) be includible in the gross income of any
individual by reason of paragraph (1) shall be reduced (but
not below zero) by $600,000.
``(B) Adjustment for inflation.--
``(i) In general.--In the case of any taxable year
beginning in a calendar year after 2008, the dollar amount in
subparagraph (A) shall be increased by an amount equal to--
``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting `calendar year 2007' for
`calendar year 1992' in subparagraph (B) thereof.
``(ii) Rounding.--If any amount as adjusted under clause
(i) is not a multiple of $1,000, such amount shall be rounded
to the nearest multiple of $1,000.
``(b) Election To Defer Tax.--
``(1) In general.--If the taxpayer elects the application
of this subsection with respect to any property treated as
sold by reason of subsection (a), the time for payment of the
additional tax attributable to such property shall be
extended until the due date of the return for the taxable
year in which such property is disposed of (or, in the case
of property disposed of in a transaction in which gain is not
recognized in whole or in part, until such other date as the
Secretary may prescribe).
``(2) Determination of tax with respect to property.--For
purposes of paragraph (1), the additional tax attributable to
any property is an amount which bears the same ratio to the
additional tax imposed by this chapter for the taxable year
solely by reason of subsection (a) as the gain taken into
account under subsection (a) with respect to such property
bears to the total gain taken into account under subsection
(a) with respect to all property to which subsection (a)
applies.
``(3) Termination of extension.--The due date for payment
of tax may not be extended under this subsection later than
the due date for the return of tax imposed by this chapter
for the taxable year which includes the date of death of the
expatriate (or, if earlier, the time that the security
provided with respect to the property fails to meet the
requirements of paragraph (4), unless the taxpayer corrects
such failure within the time specified by the Secretary).
``(4) Security.--
``(A) In general.--No election may be made under paragraph
(1) with respect to any property unless adequate security is
provided with respect to such property.
``(B) Adequate security.--For purposes of subparagraph (A),
security with respect to any property shall be treated as
adequate security if--
``(i) it is a bond which is furnished to, and accepted by,
the Secretary, which is conditioned on the payment of tax
(and interest thereon), and which meets the requirements of
section 6325, or
``(ii) it is another form of security for such payment
(including letters of credit) that meets such requirements as
the Secretary may prescribe.
``(5) Waiver of certain rights.--No election may be made
under paragraph (1) unless the taxpayer makes an irrevocable
waiver of any right under any treaty of the United States
which would preclude assessment or collection of any tax
imposed by reason of this section.
``(6) Elections.--An election under paragraph (1) shall
only apply to property described in the election and, once
made, is irrevocable.
``(7) Interest.--For purposes of section 6601, the last
date for the payment of tax shall be determined without
regard to the election under this subsection.
``(c) Exception for Certain Property.--Subsection (a) shall
not apply to--
``(1) any deferred compensation item (as defined in
subsection (d)(4)),
``(2) any specified tax deferred account (as defined in
subsection (e)(2)), and
``(3) any interest in a nongrantor trust (as defined in
subsection (f)(3)).
``(d) Treatment of Deferred Compensation Items.--
``(1) Withholding on eligible deferred compensation
items.--
``(A) In general.--In the case of any eligible deferred
compensation item, the payor shall deduct and withhold from
any taxable payment to a covered expatriate with respect to
such item a tax equal to 30 percent thereof.
``(B) Taxable payment.--For purposes of subparagraph (A),
the term `taxable payment' means with respect to a covered
expatriate any payment to the extent it would be includible
in the gross income of the covered expatriate if such
expatriate continued to be subject to tax as a citizen or
resident of the United States. A deferred compensation item
shall be taken into account as a payment under the preceding
sentence when such item would be so includible.
``(2) Other deferred compensation items.--In the case of
any deferred compensation item which is not an eligible
deferred compensation item--
``(A)(i) with respect to any deferred compensation item to
which clause (ii) does not apply, an amount equal to the
present value of the covered expatriate's accrued benefit
shall be treated as having been received by such individual
on the day before the expatriation date as a distribution
under the plan, and
``(ii) with respect to any deferred compensation item
referred to in paragraph (4)(D), the rights of the covered
expatriate to such item shall be treated as becoming
transferable and not subject to a substantial risk of
forfeiture on the day before the expatriation date,
``(B) no early distribution tax shall apply by reason of
such treatment, and
``(C) appropriate adjustments shall be made to subsequent
distributions from the plan to reflect such treatment.
``(3) Eligible deferred compensation items.--For purposes
of this subsection, the term `eligible deferred compensation
item' means any deferred compensation item with respect to
which--
``(A) the payor of such item is--
``(i) a United States person, or
``(ii) a person who is not a United States person but who
elects to be treated as a United States person for purposes
of paragraph (1) and meets such requirements as the Secretary
may provide to ensure that the payor will meet the
requirements of paragraph (1), and
``(B) the covered expatriate--
``(i) notifies the payor of his status as a covered
expatriate, and
``(ii) makes an irrevocable waiver of any right to claim
any reduction under any treaty with the United States in
withholding on such item.
``(4) Deferred compensation item.--For purposes of this
subsection, the term `deferred compensation item' means--
``(A) any interest in a plan or arrangement described in
section 219(g)(5),
``(B) any interest in a foreign pension plan or similar
retirement arrangement or program,
``(C) any item of deferred compensation, and
``(D) any property, or right to property, which the
individual is entitled to receive in connection with the
performance of services to the extent not previously taken
into account under section 83 or in accordance with section
83.
``(5) Exception.--Paragraphs (1) and (2) shall not apply to
any deferred compensation item to the extent attributable to
services performed outside the United States while the
covered expatriate was not a citizen or resident of the
United States.
``(6) Special rules.--
``(A) Application of withholding rules.--Rules similar to
the rules of subchapter B of chapter 3 shall apply for
purposes of this subsection.
``(B) Application of tax.--Any item subject to the
withholding tax imposed under paragraph (1) shall be subject
to tax under section 871.
``(C) Coordination with other withholding requirements.--
Any item subject to withholding under paragraph (1) shall not
be subject to withholding under section 1441 or chapter 24.
``(e) Treatment of Specified Tax Deferred Accounts.--
[[Page H4165]]
``(1) Account treated as distributed.--In the case of any
interest in a specified tax deferred account held by a
covered expatriate on the day before the expatriation date--
``(A) the covered expatriate shall be treated as receiving
a distribution of his entire interest in such account on the
day before the expatriation date,
``(B) no early distribution tax shall apply by reason of
such treatment, and
``(C) appropriate adjustments shall be made to subsequent
distributions from the account to reflect such treatment.
``(2) Specified tax deferred account.--For purposes of
paragraph (1), the term `specified tax deferred account'
means an individual retirement plan (as defined in section
7701(a)(37)) other than any arrangement described in
subsection (k) or (p) of section 408, a qualified tuition
program (as defined in section 529), a Coverdell education
savings account (as defined in section 530), a health savings
account (as defined in section 223), and an Archer MSA (as
defined in section 220).
``(f) Special Rules for Nongrantor Trusts.--
``(1) In general.--In the case of a distribution (directly
or indirectly) of any property from a nongrantor trust to a
covered expatriate--
``(A) the trustee shall deduct and withhold from such
distribution an amount equal to 30 percent of the taxable
portion of the distribution, and
``(B) if the fair market value of such property exceeds its
adjusted basis in the hands of the trust, gain shall be
recognized to the trust as if such property were sold to the
expatriate at its fair market value.
``(2) Taxable portion.--For purposes of this subsection,
the term `taxable portion' means, with respect to any
distribution, that portion of the distribution which would be
includible in the gross income of the covered expatriate if
such expatriate continued to be subject to tax as a citizen
or resident of the United States.
``(3) Nongrantor trust.--For purposes of this subsection,
the term `nongrantor trust' means the portion of any trust
that the individual is not considered the owner of under
subpart E of part I of subchapter J. The determination under
the preceding sentence shall be made immediately before the
expatriation date.
``(4) Special rules relating to withholding.--For purposes
of this subsection--
``(A) rules similar to the rules of subsection (d)(6) shall
apply, and
``(B) the covered expatriate shall be treated as having
waived any right to claim any reduction under any treaty with
the United States in withholding on any distribution to which
paragraph (1)(A) applies unless the covered expatriate agrees
to such other treatment as the Secretary determines
appropriate.
``(5) Application.--This subsection shall apply to a
nongrantor trust only if the covered expatriate was a
beneficiary of the trust on the day before the expatriation
date.
``(g) Definitions and Special Rules Relating to
Expatriation.--For purposes of this section--
``(1) Covered expatriate.--
``(A) In general.--The term `covered expatriate' means an
expatriate who meets the requirements of subparagraph (A),
(B), or (C) of section 877(a)(2).
``(B) Exceptions.--An individual shall not be treated as
meeting the requirements of subparagraph (A) or (B) of
section 877(a)(2) if--
``(i) the individual--
``(I) became at birth a citizen of the United States and a
citizen of another country and, as of the expatriation date,
continues to be a citizen of, and is taxed as a resident of,
such other country, and
``(II) has been a resident of the United States (as defined
in section 7701(b)(1)(A)(ii)) for not more than 10 taxable
years during the 15-taxable year period ending with the
taxable year during which the expatriation date occurs, or
``(ii)(I) the individual's relinquishment of United States
citizenship occurs before such individual attains age 18\1/
2\, and
``(II) the individual has been a resident of the United
States (as so defined) for not more than 10 taxable years
before the date of relinquishment.
``(C) Covered expatriates also subject to tax as citizens
or residents.--In the case of any covered expatriate who is
subject to tax as a citizen or resident of the United States
for any period beginning after the expatriation date, such
individual shall not be treated as a covered expatriate
during such period for purposes of subsections (d)(1) and (f)
and section 2801.
``(2) Expatriate.--The term `expatriate' means--
``(A) any United States citizen who relinquishes his
citizenship, and
``(B) any long-term resident of the United States who
ceases to be a lawful permanent resident of the United States
(within the meaning of section 7701(b)(6)).
``(3) Expatriation date.--The term `expatriation date'
means--
``(A) the date an individual relinquishes United States
citizenship, or
``(B) in the case of a long-term resident of the United
States, the date on which the individual ceases to be a
lawful permanent resident of the United States (within the
meaning of section 7701(b)(6)).
``(4) Relinquishment of citizenship.--A citizen shall be
treated as relinquishing his United States citizenship on the
earliest of--
``(A) the date the individual renounces his United States
nationality before a diplomatic or consular officer of the
United States pursuant to paragraph (5) of section 349(a) of
the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
``(B) the date the individual furnishes to the United
States Department of State a signed statement of voluntary
relinquishment of United States nationality confirming the
performance of an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the Immigration
and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
``(C) the date the United States Department of State issues
to the individual a certificate of loss of nationality, or
``(D) the date a court of the United States cancels a
naturalized citizen's certificate of naturalization.
Subparagraph (A) or (B) shall not apply to any individual
unless the renunciation or voluntary relinquishment is
subsequently approved by the issuance to the individual of a
certificate of loss of nationality by the United States
Department of State.
``(5) Long-term resident.--The term `long-term resident'
has the meaning given to such term by section 877(e)(2).
``(6) Early distribution tax.--The term `early distribution
tax' means any increase in tax imposed under section 72(t),
220(e)(4), 223(f)(4), 409A(a)(1)(B), 529(c)(6), or 530(d)(4).
``(h) Other Rules.--
``(1) Termination of deferrals, etc.--In the case of any
covered expatriate, notwithstanding any other provision of
this title--
``(A) any time period for acquiring property which would
result in the reduction in the amount of gain recognized with
respect to property disposed of by the taxpayer shall
terminate on the day before the expatriation date, and
``(B) any extension of time for payment of tax shall cease
to apply on the day before the expatriation date and the
unpaid portion of such tax shall be due and payable at the
time and in the manner prescribed by the Secretary.
``(2) Step-up in basis.--Solely for purposes of determining
any tax imposed by reason of subsection (a), property which
was held by an individual on the date the individual first
became a resident of the United States (within the meaning of
section 7701(b)) shall be treated as having a basis on such
date of not less than the fair market value of such property
on such date. The preceding sentence shall not apply if the
individual elects not to have such sentence apply. Such an
election, once made, shall be irrevocable.
``(3) Coordination with section 684.--If the expatriation
of any individual would result in the recognition of gain
under section 684, this section shall be applied after the
application of section 684.
``(i) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Tax on Gifts and Bequests Received by United States
Citizens and Residents From Expatriates.--
(1) In general.--Subtitle B (relating to estate and gift
taxes) is amended by inserting after chapter 14 the following
new chapter:
``CHAPTER 15--GIFTS AND BEQUESTS FROM EXPATRIATES
``Sec. 2801. Imposition of tax.
``SEC. 2801. IMPOSITION OF TAX.
``(a) In General.--If, during any calendar year, any United
States citizen or resident receives any covered gift or
bequest, there is hereby imposed a tax equal to the product
of--
``(1) the highest rate of tax specified in the table
contained in section 2001(c) as in effect on the date of such
receipt (or, if greater, the highest rate of tax specified in
the table applicable under section 2502(a) as in effect on
the date), and
``(2) the value of such covered gift or bequest.
``(b) Tax To Be Paid by Recipient.--The tax imposed by
subsection (a) on any covered gift or bequest shall be paid
by the person receiving such gift or bequest.
``(c) Exception for Certain Gifts.--Subsection (a) shall
apply only to the extent that the value of covered gifts and
bequests received by any person during the calendar year
exceeds the dollar amount in effect under section 2503(b) for
such calendar year.
``(d) Tax Reduced by Foreign Gift or Estate Tax.--The tax
imposed by subsection (a) on any covered gift or bequest
shall be reduced by the amount of any gift or estate tax paid
to a foreign country with respect to such covered gift or
bequest.
``(e) Covered Gift or Bequest.--
``(1) In general.--For purposes of this chapter, the term
`covered gift or bequest' means--
``(A) any property acquired by gift directly or indirectly
from an individual who, at the time of such acquisition, is a
covered expatriate, and
``(B) any property acquired directly or indirectly by
reason of the death of an individual who, immediately before
such death, was a covered expatriate.
``(2) Exceptions for transfers otherwise subject to estate
or gift tax.--Such term shall not include--
``(A) any property shown on a timely filed return of tax
imposed by chapter 12 which is a taxable gift by the covered
expatriate, and
``(B) any property included in the gross estate of the
covered expatriate for purposes of
[[Page H4166]]
chapter 11 and shown on a timely filed return of tax imposed
by chapter 11 of the estate of the covered expatriate.
``(3) Exceptions for transfers to spouse or charity.--Such
term shall not include any property with respect to which a
deduction would be allowed under section 2055, 2056, 2522, or
2523, whichever is appropriate, if the decedent or donor were
a United States person.
``(4) Transfers in trust.--
``(A) Domestic trusts.--In the case of a covered gift or
bequest made to a domestic trust--
``(i) subsection (a) shall apply in the same manner as if
such trust were a United States citizen, and
``(ii) the tax imposed by subsection (a) on such gift or
bequest shall be paid by such trust.
``(B) Foreign trusts.--
``(i) In general.--In the case of a covered gift or bequest
made to a foreign trust, subsection (a) shall apply to any
distribution attributable to such gift or bequest from such
trust (whether from income or corpus) to a United States
citizen or resident in the same manner as if such
distribution were a covered gift or bequest.
``(ii) Deduction for tax paid by recipient.--There shall be
allowed as a deduction under section 164 the amount of tax
imposed by this section which is paid or accrued by a United
States citizen or resident by reason of a distribution from a
foreign trust, but only to the extent such tax is imposed on
the portion of such distribution which is included in the
gross income of such citizen or resident.
``(iii) Election to be treated as domestic trust.--Solely
for purposes of this section, a foreign trust may elect to be
treated as a domestic trust. Such an election may be revoked
with the consent of the Secretary.
``(f) Covered Expatriate.--For purposes of this section,
the term `covered expatriate' has the meaning given to such
term by section 877A(g)(1).''.
(2) Clerical amendment.--The table of chapters for subtitle
B is amended by inserting after the item relating to chapter
14 the following new item:
``Chapter 15. Gifts and Bequests From Expatriates.''.
(c) Definition of Termination of United States
Citizenship.--
(1) In general.--Section 7701(a) is amended by adding at
the end the following new paragraph:
``(50) Termination of united states citizenship.--
``(A) In general.--An individual shall not cease to be
treated as a United States citizen before the date on which
the individual's citizenship is treated as relinquished under
section 877A(g)(4).
``(B) Dual citizens.--Under regulations prescribed by the
Secretary, subparagraph (A) shall not apply to an individual
who became at birth a citizen of the United States and a
citizen of another country.''.
(2) Conforming amendments.--
(A) Paragraph (1) of section 877(e) is amended to read as
follows:
``(1) In general.--Any long-term resident of the United
States who ceases to be a lawful permanent resident of the
United States (within the meaning of section 7701(b)(6))
shall be treated for purposes of this section and sections
2107, 2501, and 6039G in the same manner as if such resident
were a citizen of the United States who lost United States
citizenship on the date of such cessation or commencement.''.
(B) Paragraph (6) of section 7701(b) is amended by adding
at the end the following flush sentence:
``An individual shall cease to be treated as a lawful
permanent resident of the United States if such individual
commences to be treated as a resident of a foreign country
under the provisions of a tax treaty between the United
States and the foreign country, does not waive the benefits
of such treaty applicable to residents of the foreign
country, and notifies the Secretary of the commencement of
such treatment.''.
(C) Section 7701 is amended by striking subsection (n) and
by redesignating subsections (o) and (p) as subsections (n)
and (o), respectively.
(d) Termination of Section 877.--Section 877 is amended by
adding at the end the following new subsection:
``(h) Termination.--This section shall not apply to any
individual whose expatriation date (as defined in section
877A(g)(3)) is on or after the date of the enactment of this
subsection.''.
(e) Information Returns.--Section 6039G is amended--
(1) by inserting ``or 877A'' after ``section 877(b)'' in
subsection (a), and
(2) by inserting ``or 877A'' after ``section 877(a)'' in
subsection (d).
(f) Clerical Amendment.--The table of sections for subpart
A of part II of subchapter N of chapter 1 is amended by
inserting after the item relating to section 877 the
following new item:
``Sec. 877A. Tax responsibilities of expatriation.''.
(g) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendments made by this section shall apply to any individual
whose expatriation date (as so defined) is on or after the
date of the enactment of this Act.
(2) Gifts and bequests.--Chapter 15 of the Internal Revenue
Code of 1986 (as added by subsection (b)) shall apply to
covered gifts and bequests (as defined in section 2801 of
such Code, as so added) received on or after the date of the
enactment of this Act from transferors (or from the estates
of transferors) whose expatriation date is on or after such
date of enactment.
SEC. 302. CERTAIN DOMESTICALLY CONTROLLED FOREIGN PERSONS
PERFORMING SERVICES UNDER CONTRACT WITH UNITED
STATES GOVERNMENT TREATED AS AMERICAN
EMPLOYERS.
(a) FICA Taxes.--Section 3121 (relating to definitions) is
amended by adding at the end the following new subsection:
``(z) Treatment of Certain Foreign Persons as American
Employers.--
``(1) In general.--If any employee of a foreign person is
performing services in connection with a contract between the
United States Government (or any instrumentality thereof) and
any member of any domestically controlled group of entities
which includes such foreign person, such foreign person shall
be treated for purposes of this chapter as an American
employer with respect to such services performed by such
employee.
``(2) Domestically controlled group of entities.--For
purposes of this subsection--
``(A) In general.--The term `domestically controlled group
of entities' means a controlled group of entities the common
parent of which is a domestic corporation.
``(B) Controlled group of entities.--The term `controlled
group of entities' means a controlled group of corporations
as defined in section 1563(a)(1), except that--
``(i) `more than 50 percent' shall be substituted for `at
least 80 percent' each place it appears therein, and
``(ii) the determination shall be made without regard to
subsections (a)(4) and (b)(2) of section 1563.
A partnership or any other entity (other than a corporation)
shall be treated as a member of a controlled group of
entities if such entity is controlled (within the meaning of
section 954(d)(3)) by members of such group (including any
entity treated as a member of such group by reason of this
sentence).
``(3) Liability of common parent.--In the case of a foreign
person who is a member of any domestically controlled group
of entities, the common parent of such group shall be jointly
and severally liable for any tax under this chapter for which
such foreign person is liable by reason of this subsection,
and for any penalty imposed on such person by this title with
respect to any failure to pay such tax or to file any return
or statement with respect to such tax or wages subject to
such tax. No deduction shall be allowed under this title for
any liability imposed by the preceding sentence.
``(4) Provisions preventing double taxation.--
``(A) Agreements.--Paragraph (1) shall not apply to any
services which are covered by an agreement under subsection
(l).
``(B) Equivalent foreign taxation.--Paragraph (1) shall not
apply to any services if the employer establishes to the
satisfaction of the Secretary that the remuneration paid by
such employer for such services is subject to a tax imposed
by a foreign country which is substantially equivalent to the
taxes imposed by this chapter.
``(5) Cross reference.--For relief from taxes in cases
covered by certain international agreements, see sections
3101(c) and 3111(c).''.
(b) Social Security Benefits.--Subsection (e) of section
210 of the Social Security Act (42 U.S.C. 410(e)) is
amended--
(1) by striking ``(e) The term'' and inserting ``(e)(1) The
term'',
(2) by redesignating clauses (1) through (6) as clauses (A)
through (F), respectively, and
(3) by adding at the end the following new paragraph:
``(2)(A) If any employee of a foreign person is performing
services in connection with a contract between the United
States Government (or any instrumentality thereof) and any
member of any domestically controlled group of entities which
includes such foreign person, such foreign person shall be
treated as an American employer with respect to such services
performed by such employee.
``(B) For purposes of this paragraph--
``(i) The term `domestically controlled group of entities'
means a controlled group of entities the common parent of
which is a domestic corporation.
``(ii) The term `controlled group of entities' means a
controlled group of corporations as defined in section
1563(a)(1) of the Internal Revenue Code of 1986, except
that--
``(I) `more than 50 percent' shall be substituted for `at
least 80 percent' each place it appears therein, and
``(II) the determination shall be made without regard to
subsections (a)(4) and (b)(2) of section 1563 of such Code.
A partnership or any other entity (other than a corporation)
shall be treated as a member of a controlled group of
entities if such entity is controlled (within the meaning of
section 954(d)(3) of such Code) by members of such group
(including any entity treated as a member of such group by
reason of this sentence).
``(C) Subparagraph (A) shall not apply to any services to
which paragraph (1) of section 3121(z) of the Internal
Revenue Code of 1986 does not apply by reason of paragraph
(4) of such section.''.
(c) Effective Date.--The amendment made by this section
shall apply to services
[[Page H4167]]
performed in calendar months beginning more than 30 days
after the date of the enactment of this Act.
SEC. 303. 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
``$135''.
(b) Effective Date.--The amendment made by this section
shall apply to returns required to be filed after December
31, 2008.
TITLE IV--PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH
BENEFITS
SEC. 401. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO
MENTAL HEALTH BENEFITS.
(a) Internal Revenue Code of 1986.--Subsection (f) of
section 9812 is amended--
(1) by striking ``and'' at the end of paragraph (2), and
(2) by striking paragraph (3) and inserting the following
new paragraphs:
``(3) on or after January 1, 2008, and before the date of
the enactment of the Heroes Earnings Assistance and Relief
Tax Act of 2008, and
``(4) after December 31, 2008.''.
(b) Employee Retirement Income Security Act of 1974.--
Subsection (f) of section 712 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1185a(f)) is amended
by striking ``services furnished after December 31, 2007''
and inserting ``services furnished--
``(1) on or after January 1, 2008, and before the date of
the enactment of the Heroes Earnings Assistance and Relief
Tax Act of 2008, and
``(2) after December 31, 2008.''.
(c) Public Health Service Act.--Subsection (f) of section
2705 of the Public Health Service Act (42 U.S.C. 300gg-5(f))
is amended by striking ``services furnished after December
31, 2007'' and inserting ``services furnished--
``(1) on or after January 1, 2008, and before the date of
the enactment of the Heroes Earnings Assistance and Relief
Tax Act of 2008, and
``(2) after December 31, 2008.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New
York (Mr. Rangel) and the gentleman from Louisiana (Mr. McCrery) each
will control 20 minutes.
The Chair recognizes the gentleman from New York.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, the bill before us has been passed before, and they call
it the HEART bill, Heroes Earnings Assistance and Relief Tax Act of
2008. I would prefer to call it the ``Thank You'' bill. Thank you for
the tens of thousands of American men and women who have come to
America's call to fight this war and to place themselves at risk
because our Commander in Chief and our Nation have called them.
It is very difficult for me to think of any people that we should be
saying ``thank you'' more to than this group, who are not Democrats and
Republicans, are not politicians, but people whom America has depended
on since its very beginning, and, that is, people who are willing to
make the ultimate sacrifice because their country asked them to do it.
We have recently passed a bill which is the equivalent, if not
expanded, the GI Bill, so that those that do get back, many of them
without limbs, many of them without jobs, would be able to get a decent
education. This kind of enhances the ability for them to get their
pensions, to get homes, and to remove the impediments that these brave
people deserve. And one of the things that we're proudest of is that we
have removed some type of impediment that will allow our fighting
soldiers to be able to get the benefits of some of our tax laws even
though they have married immigrants. So it is something that I am
certain that everyone in this House and most all Americans would be
supporting.
What a great honor it is for me to yield the balance of my time in
support of this bill to Admiral Joe Sestak from the Seventh District of
Pennsylvania. It's so easy for all of us to talk about sacrifices and
so seldom that we find someone who has dedicated 31 years of his very
young life for the defense of this great Nation of ours.
He has been the commander of an aircraft carrier of 30 U.S. and
allied ships, over 15,000 sailors, 100 aircrafts; and this is only part
of what the three-star Admiral in the United States Navy has done. How
lucky we are in this Nation and, more specifically, in this Congress to
have this distinguished Member speak in support of this bill, one who
probably knows more about the needs of our service people than most of
us ever hope to find out.
So with the Speaker's permission and unanimous consent of this body,
I ask you to allow me to yield the balance of my time for purposes of
picking other speakers to Congressman/Representative/Admiral Joe Sestak
of the Seventh District of Pennsylvania.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from New York?
There was no objection.
Mr. McCRERY. Mr. Speaker, I rise in support of H.R. 6081, the Heroes
Earnings Assistance and Relief Tax Act of 2008, and I yield myself such
time as I may consume.
Mr. Speaker, first I want to commend the chairman of the Ways and
Means Committee, Mr. Rangel, for bringing this bill to the floor today.
It's certainly a bill that has bipartisan support, bicameral support,
and I will talk a little bit more about that in my remarks.
People watching this on C-SPAN may think they have gone into reruns.
We haven't. This bill has been discussed on the floor of the House
before and, in fact, passed through the House before. Unfortunately,
though, we never could get the Senate version and the House version
reconciled and get a bill to the President. So here we are again
starting this process in the House, passing a bill today, hoping to get
finally some agreement so that we can get this bill to the President
and we can give some relief to our soldiers in the military.
This bill provides certain tax benefits to members of the military.
It provides tax credits to housing projects for low-income families.
But the specific thing that it fixes is, with respect to low-income
housing and the eligibility for that, when testing to see if a family's
income makes them eligible, current law excludes the value of a section
8 voucher provided by HUD. But a family's income does include the value
of a base housing allowance provided to members of the Armed Forces.
This bill, for whatever reason, doesn't address this issue. In the past
other versions of this legislation have. Congressman Moran of Kansas
and Senator Roberts of Kansas have tried to address this problem in
legislation, and the other body has included it. And that's one of the
things that led to last year's deadlock. I personally wish that this
provision were included, and I hope before the end of the process, we
can address that.
But there are many good things in the bill before the House today,
including provisions to ensure that combat pay does not diminish the
earned income credit. The bill also contains important language
allowing active-duty Reservists to make penalty-free withdrawals from
retirement plans and permits contributions of military death benefit
gratuities into a Roth IRA or education savings account without regard
to annual contribution limits. Other provisions in the bill amend the
Supplemental Security Income program to expand eligibility for, and
increase SSI benefit payments to, certain military families, veterans,
and AmeriCorps participants.
This bill does contain one other change from the bill debated last
year that merits mentioning today. It allows stimulus checks to be
mailed to families in which one spouse is a member of the military and
the other does not have a valid Social Security number. I understand
the reasons for this provision, and I'm sure as this bill works its way
through the process, we will have an opportunity to examine this
provision further to make sure that it's administrable and workable.
Finally, one other provision deserves particular mention both because
of its merits and because it's a great example of how one person's good
idea brought to the attention of a Member of Congress can make its way
to the forefront of a legislative agenda. Health care flexible spending
accounts, known as FSAs, have a use-it-or-lose-it rule. If you don't
use all the money by the end of the year, the money goes back to your
employer. Funds deposited into an FSA are put there on a pretax basis,
or a tax-free basis. So it's a very attractive benefit for employees.
This bill modifies the FSA program to allow a plan to return
deposited funds to an employee at the end of the year if that amount
remains unspent because the individual was called to active-duty
military service. This is a very, I think, fair change to the
underlying program. It's an issue that one of Mr. Barton's, Joe
Barton's, constituents raised with him, and I applaud
[[Page H4168]]
him and his lead cosponsor, the gentleman from Virginia (Mr. Boucher),
for crafting a simple solution to this problem.
Mr. Speaker, I once again want to thank the chairman and the staff of
the Ways and Means Committee for their work on this issue, and I urge
passage.
Mr. Speaker, I reserve the balance of my time.
{time} 1030
Mr. SESTAK. Mr. Speaker, I have asked the nonpartisan Joint Committee
on Taxation to make available to the public a technical explanation of
the tax provisions of H.R. 6081. The technical explanation expresses
the committee's understanding and the legislative intent behind this
important legislation. This explanation, document JCX-44-08, is
currently available on the Joint Committee's Web site.
General Leave
Mr. SESTAK. 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. 6081, as amended.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Pennsylvania?
There was no objection.
Mr. SESTAK. I yield the gentleman from Washington 2 minutes.
(Mr. McDERMOTT asked and was given permission to revise and extend
his remarks.)
Mr. McDERMOTT. Mr. Speaker, the brave men and women who are in harm's
way right now serving and defending America should not be subjected to
unfair taxes or barriers to assistance. But that is exactly what is
happening today, and this legislation will change that for members of
the military and others serving our Nation, for instance, in
AmeriCorps.
Ways and Means Chairman Charlie Rangel recognized the burden being
placed on our heroes and included provisions that will alter over a
dozen tax provisions and remove barriers to other benefit programs for
military families. It's the least we can do for those who do so much
for us. The chairman, a veteran, and I, also a veteran, are proud to
bring legislation to the floor that demonstrates the House fully and
fairly supports our soldiers.
For instance, there are provisions in the legislation that improve
how the Supplemental Security Income, or SSI program, treats military
families, veterans, and those who have served our country. Under
current law, some military families lose part of their SSI benefits
because a portion of their compensation is counted as unearned income.
This bill would stop that unfair treatment.
The Congressional Budget Office estimates this change alone would
affect about 3,000 military families with disabled children. In
addition to helping military families, the legislation would ensure
that AmeriCorps volunteers do not unfairly lose their SSI benefits.
More specifically, the bill would prevent allowances provided to
AmeriCorps participants from reducing SSI benefits.
On the tax side, the chairman included an initiative that Mr. Van
Hollen and I proposed that would remove an obstacle for some Americans
who serve in the Peace Corps. This provision ensures that overseas
service by Peace Corps volunteers does not arbitrarily remove the
exclusion for capital gains tax on a principal residence. This
protection is similar to one already provided to Americans working for
the Foreign Service.
Mr. Speaker, all of these provisions aim to ensure that service to
our Nation does not disadvantage those who serve.
The SPEAKER pro tempore. The time of the gentleman from Washington
has expired.
Mr. SESTAK. I yield the gentleman 30 additional seconds.
Mr. McDERMOTT. Because the legislation deals with arcane areas like
the Tax Code, this may not sound exciting, but it's very important.
This legislation tells our soldiers in word and deed that we thank them
for their service and we are watching out for them, just as they are
watching out for us. This small measure of fairness deserves every
Member's support.
Mr. McCRERY. At this time I yield 2 minutes to the gentlelady from
North Carolina (Ms. Foxx).
Ms. FOXX. Mr. Speaker, I too am here to support H.R. 6081, the Heroes
Earnings Assistance and Relief Tax Act, and I think that it is very,
very important that we look for every way possible to give relief to
our folks who are serving in the military.
I am pleased to say that 2 years ago, the President signed into law a
bill that I call the HERO Act, which allowed folks who earned combat
pay to use that pay to go into taking out an IRA. Again, the idea came
from an average citizen who notified our office of a concern because
his son had tried to invest his combat pay into an IRA, looking to
prepare for his future. We were able to get that bill passed through
the Ways and Means Committee 2 years ago, and that bill went through a
similar experience that this bill is going through, having passed, then
meeting problems in the Senate, then having to pass again.
But I think this bill contains so many elements that will advantage
people who are willing to serve in the military, and as Chairman Rangel
has said, these are the people who have kept us free from the beginning
of this country, and I think that anything that we can do to help them,
we need to do.
I also recommend that we do something to lower our gas prices, which
will help their families who are staying here in this country while
they may be overseas fighting for our freedom to deal with the rising
cost of gas problems. I call on the Democrat majority to come up with
their commonsense plan that they have said that they had to help us
lower gas prices, not just for our military, but for all Americans.
Mr. SESTAK. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I joined up in the military during the Vietnam conflict,
and at that time, and still today, we don't have human resource
departments in the U.S. military. You tend, as a young division
officer, to take care of the challenges that your young men and women
have, and their families yourself, whether it's an eviction notice or
whether it's a health issue, or whether it is, as thousands at that
time and through the eighties used to have to go out and get their food
stamps in order to continue their quality of life, you took care of
them.
This bill takes a significant step, I believe. As Mr. Rangel
insinuated, it's a small step, but it is a significant step. I say that
because the most moving picture I have ever seen in the Pentagon is one
that is across from the Secretary of Defense's office. It's of a young
servicemember kneeling in church and alongside of him is his wife and a
young child. And under it is this great saying from the Bible, where
God turns to Isaiah and says, ``Whom shall I send, and who will go for
us?'' and Isaiah replies, ``Here am I. Send me.''
We send them, and we need to welcome them when they come back. The
commissary bags also used to have on them, ``The hardest job in the
military is a military spouse.'' What this bill does is takes care of
the cost of life. But it also is significant that it takes care of the
cost of loss of life. Because what distinguishes this profession from
anyone else's is that it has the dignity of danger about it, where the
loss of life may occur.
So in this bill it ensures if an employer still wants to, even after
a death of a servicemember, contribute to his retirement plan, he can.
It also then permits the spouse, having lost a servicemember, can
actually then place this military gratuity benefit into an IRA without
any penalty. It does much for our servicemembers; that lets them take
combat pay, for example, and place it towards earned income so that
they can move into the middle class as an earned income tax credit.
In my mind, this is an excellent bill that has come out, and it has
bipartisan agreement. But the reason I think this is so important today
is that our servicemembers returning from overseas, 19 percent of them
have post-traumatic stress disorder, 33 percent of them have a mental
challenge, from depression to anxiety.
This war is different. In World War II, the average soldier went into
battle 182 days. He had time to rest in between major battles to get
his nerves back in shape. Our soldiers in Iraq go
[[Page H4169]]
outside the wire every day for 15 straight months into a combat-like
situation. They are a strong generation, but this war is different.
So therefore as we keep that in mind for those who say, Here am I,
send me, we should also keep in mind that what we are doing here is
when the great warriors Jonathan and David departed for the last time
in the Bible, Jonathan turned to David and said, Tomorrow there shall
be a new moon and thou shall be missed because thy seat shall be empty.
This seat should never be empty. It should be filled with a legacy of
what they have done for this Nation. This bill, in my mind, takes a
step, a small but significant step to remembering that these men and
women who have served this Nation should continue to be welcomed home
by us with a legacy of thanks that this bill does.
I reserve the balance of my time.
Mr. McCRERY. Mr. Speaker, I yield 1 minute to the distinguished
gentleman from Texas (Mr. Brady), a member of the Ways and Means
Committee.
Mr. BRADY of Texas. I appreciate Mr. McCrery's leadership on veterans
issues.
Mr. 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 homes. This bill ensures that our
veterans who serve their Nation after 1977, including those who have
served in Iraq and Afghanistan, can qualify for low-interest home loans
financed by Qualified Veterans Mortgage Bonds. In Texas, this is
important. This bill will enable the Texas Veterans Land Board, led by
Commissioner Jerry Patterson, to expand its existing low-interest loan
program to serve thousands of more Texas veterans.
For all the sacrifice our veterans have made to defend our country,
it's only right that we help them own a home upon returning home.
Mr. SESTAK. I yield 2 minutes to the gentleman from Illinois.
Mr. EMANUEL. About a week ago, this Congress passed the most
comprehensive update of the GI Bill of Rights for both Active Duty,
Guard and Reserve soldiers. We follow up that legislation with what we
are doing today to also update our laws as relates to active duty
soldiers and their families.
The fact is, as my colleague from the Philadelphia area said, this
war is different. We have noted the difference. We need to adjust our
policy and our legislation and our laws to the fact that this war has
gone on longer than anybody predicted, cost more in lives, treasure,
and reputation than any war in America's past.
So today we take another small step to change our laws to reflect
this different kind of war to make sure those soldiers and their
families are represented in the laws we pass today. Now many will talk
about some of the benefits, and they should. I want to talk about one
particular provision that I put in here with my colleague from Indiana,
who you will hear from later, Congressman Ellsworth, about how we pay
for this, because it doesn't add one penny to the deficit.
It closes down a tax loophole used by KBR, a company, that it set up
offshore in the Cayman Islands a subsidiary, and it never paid Social
Security taxes, Medicare taxes, unemployment insurance taxes to 10,000
workers. Never paid any of those taxes on any of those employees. This
legislation shuts that down.
Those employees were over there. And what happened? This company gave
contaminated water to our soldiers, who ended up, many of them, in the
hospital getting health care by the basic facilities we have over in
Iraq. Our soldiers got contaminated water, our taxpayers got ripped off
because they had to cover for another company what they didn't pay in
their fair share, and a company was set up offshore to do all of that.
The SPEAKER pro tempore. The time of the gentleman from Illinois has
expired.
Mr. SESTAK. I yield the gentleman an additional 30 seconds.
Mr. EMANUEL. It's ironic that it took 4 years to close this offshore
loophole. But we are shutting it down and paying for all these other
benefits to ensure that this company and other companies like it who
set up in the Cayman Islands do not go around the law of the United
States to come in under budget, knowing the fact they never paid their
fair share of taxes.
It's a small step. It also is an indication we need to start changing
the law because there is over 12,000 companies in the Cayman Islands
alone set up over there, avoiding their fair share of taxes while the
American taxpayers have to pay their portion.
So I am pleased that we are doing this, giving the benefits to the
GIs and their families, but, most importantly, closing down an
egregious loophole to do that.
Mr. McCRERY. Mr. Speaker, I yield 3 minutes to the gentleman from
Kansas (Mr. Moran).
Mr. MORAN of Kansas. Mr. Speaker, I thank the gentleman from
Louisiana for yielding me his time.
I am here to commend the Ways and Mean Committee's efforts to make
the Tax Code more equitable to our servicemembers. However, once again,
I am on the floor to express my disappointment that the bill does not
include an important provision providing more affordable housing
opportunities for our servicemembers and their families.
This fix to the Tax Code that is missing from this legislation would
prevent lower income military personnel from being discriminated
against when applying for affordable housing built under the Low Income
Housing Tax Credit program. There is a strong need for the tax bill
that we are considering today, but the Senate will not approve it
without this additional provision.
A number of military installations across the country are
experiencing housing shortages as a result of the 2005 BRAC.
{time} 1045
Fort Riley, an Army post located in the State of Kansas, is nearly
doubling its size with an influx of 30,000 soldiers, family members and
civilian workers.
When these new soldiers live outside the fort, they receive a
military housing allowance for the use in paying rent. Though the Tax
Code does not treat this housing allowance as taxable income, it is
considered income when determining a military family's eligibility to
live in facilities financed by low-income housing tax credits. The
result is that many servicemembers, particularly our enlisted ones, are
considered to earn too much income and thus are disqualified from
accessing this affordable housing program. However, comparative low-
income civilians receiving section 8 housing vouchers are more likely
to qualify for this same 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,
affordable housing, and they should be given a fair opportunity to
qualify for it. Last December the Senate acted to fix this inequality,
and the Senate included in their version of this legislation a
provision exempting military housing allowance from income eligibility
requirements when qualifying for affordable housing.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. McCRERY. I yield the gentleman 1 additional minute.
Mr. MORAN of Kansas. Under this Senate provision, the Governor of
each State would be allowed to make this exemption if he or she
determines that it is needed for a certain military installation within
that State. This Senate provision is patterned after USDA's WIC
nutrition programs for women, children and infants, and provides State
agencies a similar option for WIC eligibility. Unfortunately, the House
majority's refusal to include this provision has stalled this important
tax legislation from moving forward.
The men and women serving our Nation are waiting for us to act, and I
hope that the changes made by the Senate, which narrow the scope of the
provision, will address many of the majority's concerns and a
compromise can be reached. Until then, military families who are
applying to live in affordable housing continue to encounter this
discrimination.
While I will vote for H.R. 6081, our military men and women deserve a
better shot at affordable housing.
Mr. SESTAK. Mr. Speaker, I yield 2 minutes to my colleague from
Indiana (Mr. Ellsworth).
[[Page H4170]]
Mr. ELLSWORTH. Mr. Speaker, I thank the gentleman for yielding.
Mr. Speaker, I rise today in support of H.R. 6081, the Heroes
Earnings Assistance and Relief Tax Act of 2008. This important
legislation will provide well-deserved tax benefits to assist our
military personnel and their families, our veterans, and a group that
doesn't get nearly enough credit across our Nation, the volunteer
firefighters.
I would like to for just a minute pick up on what Congressman Emanuel
said a few minutes ago and discuss one of the offsets used to pay for
this tax relief for American heroes.
It has been reported that recently some government contractors are
using offshore tax havens to avoid paying the payroll taxes that they
owe our government. We introduced the Fair Share Act to put a stop to
this abuse, and as a Blue Dog and a believer in pay-as-you-go
budgeting, I am proud to have that legislation included as part of this
important bill today. It will end the practice of government
contractors setting up shell companies in the Cayman Islands to avoid
paying into the Social Security and Medicare payroll taxes.
The people back home in Indiana play by the rules and pay their
taxes. I don't think it is too much to ask our government contractors
to do the same. They are receiving millions of dollars, sometimes
billions in tax dollars, and I think it is time they do the same thing.
So I urge my colleagues to support this bill and send a strong
message from the Congress that it is not going to stand by and let
contractors cheat the workers, cheat the government and cheat the
American taxpayers.
Mr. McCRERY. Mr. Speaker, I ask unanimous consent that the gentleman
from Illinois (Mr. Weller), a member of the Ways and Means Committee,
be allowed to allocate the remainder of the time on our side.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Louisiana?
There was no objection.
Mr. WELLER of Illinois. Mr. Speaker, it is my understanding that we
have no additional speakers, so I will reserve the balance of my time.
Mr. SESTAK. Mr. Speaker, I yield 2 minutes to my fellow Pennsylvanian
(Mr. Altmire).
Mr. ALTMIRE. Mr. Speaker, I thank the gentleman, my friend and
colleague from the great State of Pennsylvania.
Mr. Speaker, last fall I introduced the Active Duty Military Tax
Relief Act to assist our brave men and women in uniform who are serving
our country with honor and distinction, and I am pleased that
significant provisions proposed in my bill are incorporated in their
entirety into the bill we are discussing today, the bipartisan HEART
Act.
Servicemembers are often confronted with transitional issues when
called to duty, and the bill we are debating today includes provisions
from my bill making essential tax relief for our military families
permanent by providing incentives to ensure that Reservists who are
called up for active duty do not suffer a pay cut. This bill also makes
it easier for veterans to become homeowners, and it includes other
provisions from my bill allowing recipients of the military death
benefit gratuities to make contributions of up to $100,000 into tax-
favored accounts, such as Roth IRAs and Education Savings Accounts.
Mr. Speaker, we spend a lot of time in this Congress talking about
supporting our troops, and we are providing further evidence today that
we are going to support our troops with our actions and not just our
words. The HEART Act is another sign of our commitment to our Nation's
heroes, and I encourage all of my colleagues to support this bill.
Mr. WELLER of Illinois. Mr. Speaker, again, we have no additional
speakers, and I reserve the balance of my time.
Mr. SESTAK. Mr. Speaker, I yield 2 minutes to the gentlewoman from
California (Mrs. Davis).
Mrs. DAVIS of California. Mr. Speaker, I would like to thank Chairman
Rangel and my colleagues on the Ways and Means Committee for including
provisions from H.R. 337 and H.R. 515 in the HEART Act. Including these
two bills is particularly meaningful for me because both were inspired
by servicemembers and veterans in my district who came to me and said
we have problems needing your attention.
The first bill addresses a harmful glitch in the Supplemental
Security Income program. Because eligibility for SSI benefits is based
on income, a family struggling to get by actually loses benefits for
their children from any increase in military pay considered ``unearned
income.'' Military families do not deserve to lose the benefits they
badly need because a parent chooses to serve in the Armed Forces.
The second bill fixes a serious flaw in the CalVet Home Loan program
limiting eligibility to servicemembers who signed up prior to 1977.
This prevents many veterans from the first Gulf War and nearly all
veterans from the wars in Afghanistan and Iraq from taking advantage of
the CalVet program. H.R. 6081 removes the date of service provision,
giving servicemembers retiring in California a greater opportunity to
own a home.
Mr. WELLER of Illinois. Mr. Speaker, before yielding back my time, I
want to rise in support of H.R. 6081, the Heroes Earnings Assistance
and Relief Tax Act of 2008. I particularly want to point out that this
product that is before us today is bipartisan. It is clear that both
Republicans and Democrats want to ensure that our men and women in
uniform, those who stand and every day place their lives at risk to
defend our freedoms and the values that our Nation represents, that we
provide help for them and their families. I commend Chairman Rangel and
ranking member Mr. McCrery for their leadership in putting together
this bipartisan bill that helps our military and their families.
I urge a bipartisan ``aye'' vote.
Mr. Speaker, I yield back the balance of my time.
Mr. SESTAK. Mr. Speaker, I yield myself the remainder of my time.
When General Akhromeyev came from the Soviet Union to visit the
United States when the Soviet Union was breaking up, Admiral Crowe took
him to many places, including an aircraft carrier. When he departed the
aircraft carrier, he was asked by Admiral Crowe, Chairman of Our Joint
Chiefs of Staff, ``What most impressed you?'' He turned to him and
looked him in the eye and said, ``Your enlisted man.''
It is why General Washington, when he established the very first
ribbon in the United States Army, a piece of purple ribbon which is
today's Purple Heart, dictated that that award would only be given to
enlisted men. The enlisted servicemembers are the heart of our
military, and this bill is focused upon them. They are the ones who
say, ``Here am I. Send me.''
I commend both sides of the aisle for recognizing who most deserves
being remembered for the sacrifice to this Nation. It is the enlisted
man and woman.
Mr. RANGEL. Mr. Speaker, today, we may each have our own convictions
about this war, and no matter what those may be, I think I can safely
say that we stand united in our support for our troops and their
families.
No one here today can challenge the commitment, the dedication, or
the bravery of our men and women who have responded to this national
call.
They have made sacrifices that very few Americans have ever been
called on to make--many have paid with their lives, and many others
with the loss of limbs and mental injuries we will never be able to
comprehend.
We all know the great value of education benefits for our military. I
wil1. continue to fight for an increase that exceeds what our President
has requested in GI education benefits and in military pay for our sons
and daughters who serve in the military. Our men and women need it and
they have earned every bit of it, and more.
The bill being considered today cannot make up for the debt we owe to
these men and women and their families. We cannot make up for the loss
of life and limb and the mental anguish they will endure.
But today, we will play a small positive role that I know is
supported by every Member of this body. Today, we will vote to pass a
small token of our gratitude--a small step in the right direction.
This bill is expected to be taken up by the Senate after we pass it
here today and sent to the President this week. This is very fitting as
we leave to celebrate Memorial Day--a day of remembrance for all who
sacrificed in war for our country.
There is a provision in this bill that has been added since we passed
the bill last year. The
[[Page H4171]]
provision would ensure that a member of the military, who is married to
an immigrant spouse would qualify for the stimulus rebate payment even
if such spouse does not yet have a Social Security number.
This fix was necessary because in the zeal to impose anti-immigrant
philosophy, language was added to the legislation for the stimulus
rebate payments which now has a negative effect on some of our military
and their families, even as they are off fighting a war.
This should serve as a great lesson in caution and being circumspect
before we allow our deep-seated feelings to get the best of us.
We must learn from these lessons even as we fight to improve the
lives of those who fight for our country through improved GI education
benefits, pay increase, better health care services, and increased
disability benefits.
This bill has been a labor of love. We passed a very similar bill
(H.R. 3997) 410-0 on December 18, 2009, and had hoped to get it signed
into law before the end of last year. Yet, despite the total bipartisan
nature of this bill, we were unable to get it to the President's desk
before the end of December, 2007. So, here we are again. Persistent to
the end.
This bill is small but means a lot to many people. The Committee has
received more calls on this bill than we could have imagined. People
are calling to find out when the bill will become law.
Today gives us fresh hope--it looks like we will actually do it this
time. I am proud to be a part of this small but important effort for
our military men and women and their families who continue to give so
much to our country.
Mr. KIND. Mr. Speaker, I rise today in strong support of H.R. 6081,
the Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008. 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 it. In Wisconsin alone, the WDVA has made over 54,000 home
loans to veterans through this program.
Other important provisions in this bill include allowing combat pay
for troops to count as earned income for the Earned Income Tax Credit
and making permanent the Internal Revenue Code provision that allows
active duty reservists to make penalty-free withdrawals from their
retirement plans.
Our military service men 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. CONYERS. Mr. Speaker, today I rise in strong support of H.R.
6081, the Heroes Earnings Assistance and Relief Tax (HEART) Act of
2008. This bill provides tax relief to America's heroic servicemembers.
As a veteran of the Korean war, it is imperative that we assist the
brave men and women who put their lives at risk in defending our Nation
in any way we can.
H.R. 6081 will improve tax benefits to members of the armed services.
For example, today's legislation permanently extends the Earned Income
Tax Credit for combat pay, allows for penalty-free withdrawal from
servicemember pension plans, allows access for funds in Flexible
Savings Accounts, and lets military death benefits to roll over into a
Roth IRA or Education Savings Account. Given the crisis in the housing
market, I am particularly heartened that H.R. 6081 permanently
establishes mortgage bonds used to finance home purchases by veterans.
Mr. Speaker, this bill also extends the Economic Stimulus rebates
that are being delivered as we speak today. H.R. 6081 humanely permits
servicemembers who are married to foreigners to receive the full value
of their rebate.
Lastly, the bill will restrict government contractors who move
offshore to avoid paying Social Security and Medicare benefits. It is
shocking that government contractors receive millions, or even
billions, of taxpayer dollars and then try to avoid paying their fair
share of taxes.
We have put our Nation's finest men and women in a senseless war
without an end. The least we can do is allow their families to enjoy
the same benefits as their neighbors. Mr. Speaker, this is a
commonsense bill and I urge my colleagues to support it.
Mr. LARSON of Connecticut. Mr. Speaker, I rise today to commend the
Committee on Ways and Means for passing this important legislation, the
Heroes Earnings Assistance and Tax Relief Act. This legislation brings
necessary tax relief to members of our armed services, veterans and
their families and it also contains important technical corrections to
a law that provides tax relief to volunteer emergency first responders.
Like our men and women in the armed services, volunteer emergency
first responders provide a crucial service to our communities. They are
in the front lines in the case of fire, natural disaster or other
emergency. The majority of these brave men and women are volunteers and
give up their time out of a sense of obligation to their communities.
We owe them a debt of gratitude for their service.
This technical correction clarifies that property tax rebates and
other benefits that are made to volunteer emergency first responders
and are excluded from gross income are not subject to Social Security
tax or unemployment tax. This was the intent of the original
legislation and I appreciate the opportunity to clarify this through
HR. 6081, the Heroes Earnings Assistance and Tax Relief Act.
Mr. SESTAK. Mr. Speaker, I yield back the remainder of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from New York (Mr. Rangel) that the House suspend the rules
and pass the bill, H.R. 6081, 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. SESTAK. 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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