[Congressional Record (Bound Edition), Volume 149 (2003), Part 7]
[House]
[Pages 9016-9020]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 ARMED FORCES TAX FAIRNESS ACT OF 2003

  Mr. THOMAS. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 1664) to amend the Internal Revenue Code of 1986 to provide 
a special rule for members of the uniformed services in determining the 
exclusion of gain from the sale of a principal residence and to restore 
the tax exempt status of death gratuity payments to members of the 
uniformed services, and for other purposes.
  The Clerk read as follows:

                               H.R. 1664

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

     SECTION 1. SHORT TITLE; REFERENCES.

       (a) Short Title.--This Act may be cited as the ``Armed 
     Forces Tax Fairness Act of 2003''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 2. SPECIAL RULE FOR MEMBERS OF UNIFORMED SERVICES AND 
                   FOREIGN SERVICE IN DETERMINING EXCLUSION OF 
                   GAIN FROM SALE OF PRINCIPAL RESIDENCE.

       (a) In General.--Subsection (d) of section 121 of the 
     Internal Revenue Code of 1986 (relating to exclusion of gain 
     from sale of principal residence) is amended by adding at the 
     end the following new paragraph:
       ``(10) Members of uniformed services and foreign service.--
       ``(A) In general.--At the election of an individual with 
     respect to a property, the running of the 5-year period 
     referred to in subsections (a) and (c)(1)(B) and paragraph 
     (7) of this subsection with respect to such property shall be 
     suspended during any period that such individual or such 
     individual's spouse is serving on qualified official extended 
     duty as a member of the uniformed services or of the Foreign 
     Service.
       ``(B) Maximum period of suspension.--Such 5-year period 
     shall not be extended more than 5 years by reason of 
     subparagraph (A).
       ``(C) Qualified official extended duty.--For purposes of 
     this paragraph--
       ``(i) In general.--The term `qualified official extended 
     duty' means any extended duty while serving at a duty station 
     which is at least 150 miles from such property or while 
     residing under Government orders in Government quarters.
       ``(ii) Uniformed services.--The term `uniformed services' 
     has the meaning given such term by section 101(a)(5) of title 
     10, United States Code, as in effect on the date of the 
     enactment of this paragraph.
       ``(iii) Foreign service.--The term `member of the Foreign 
     Service' has the meaning given the term `member of the 
     Service' by paragraph (1), (2), (3), (4), or (5) of section 
     103

[[Page 9017]]

     of the Foreign Service Act of 1980, as in effect on the date 
     of the enactment of this paragraph.
       ``(iv) Extended duty.--The term `extended duty' means any 
     period of active duty pursuant to a call or order to such 
     duty for a period in excess of 180 days or for an indefinite 
     period.
       ``(D) Special rules relating to election.--
       ``(i) Election limited to 1 property at a time.--An 
     election under subparagraph (A) with respect to any property 
     may not be made if such an election is in effect with respect 
     to any other property.
       ``(ii) Revocation of election.--An election under 
     subparagraph (A) may be revoked at any time.''.
       (b) Effective Date; Special Rule.--
       (1) Effective date.--The amendment made by this section 
     shall take effect as if included in the amendments made by 
     section 312 of the Taxpayer Relief Act of 1997.
       (2) Waiver of limitations.--If refund or credit of any 
     overpayment of tax resulting from the amendment made by this 
     section is prevented at any time before the close of the 1-
     year period beginning on the date of the enactment of this 
     Act by the operation of any law or rule of law (including res 
     judicata), such refund or credit may nevertheless be made or 
     allowed if claim therefor is filed before the close of such 
     period.

     SEC. 3. RESTORATION OF FULL EXCLUSION FROM GROSS INCOME OF 
                   DEATH GRATUITY PAYMENT.

       (a) In General.--Paragraph (3) of section 134(b) (relating 
     to qualified military benefit) is amended by adding at the 
     end the following new subparagraph:
       ``(C) Exception for death gratuity adjustments made by 
     law.--Subparagraph (A) shall not apply to any adjustment to 
     the amount of death gratuity payable under chapter 75 of 
     title 10, United States Code, which is pursuant to a 
     provision of law enacted before December 31, 1991.''.
       (b) Conforming Amendment.--Section 134(b)(3)(A) is amended 
     by striking ``subparagraph (B)'' and inserting 
     ``subparagraphs (B) and (C)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to deaths occurring after September 
     10, 2001.

     SEC. 4. EXCLUSION FOR AMOUNTS RECEIVED UNDER DEPARTMENT OF 
                   DEFENSE HOMEOWNERS ASSISTANCE PROGRAM.

       (a) In General.--Subsection (a) of section 132 (relating to 
     certain fringe benefits) is amended by striking ``or'' at the 
     end of paragraph (6), by striking the period at the end of 
     paragraph (7) and inserting ``, or'' and by adding at the end 
     the following new paragraph:
       ``(8) qualified military base realignment and closure 
     fringe.''.
       (b) Qualified Military Base Realignment and Closure 
     Fringe.--Section 132 is amended by redesignating subsection 
     (n) as subsection (o) and by inserting after subsection (m) 
     the following new subsection:
       ``(n) Qualified Military Base Realignment and Closure 
     Fringe.--
       ``(1) In general.--For purposes of this section, the term 
     `qualified military base realignment and closure fringe' 
     means 1 or more payments under the authority of section 1013 
     of the Demonstration Cities and Metropolitan Development Act 
     of 1966 (42 U.S.C. 3374) (as in effect on the date of the 
     enactment of this subsection).
       ``(2) Limitation.--With respect to any property, such term 
     shall not include any payment referred to in paragraph (1) to 
     the extent that the sum of all such payments related to such 
     property exceeds the amount described in clause (1) of 
     subsection (c) of such section (as in effect on such 
     date).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to payments made after the date of the enactment 
     of this Act.

     SEC. 5. EXPANSION OF COMBAT ZONE FILING RULES TO CONTINGENCY 
                   OPERATIONS.

       (a) In General.--Subsection (a) of section 7508 (relating 
     to time for performing certain acts postponed by reason of 
     service in combat zone) is amended--
       (1) by inserting ``or when deployed outside the United 
     States away from the individual's permanent duty station 
     while participating in an operation designated by the 
     Secretary of Defense as a contingency operation (as defined 
     in section 101(a)(13) of title 10, United States Code) or 
     which became such a contingency operation by operation of 
     law'' after ``section 112'',
       (2) by inserting in the first sentence ``or at any time 
     during the period of such contingency operation'' after ``for 
     purposes of such section'',
       (3) by inserting ``or operation'' after ``such an area'', 
     and
       (4) by inserting ``or operation'' after ``such area''.
       (b) Conforming Amendments.--
       (1) Section 7508(d) is amended by inserting ``or 
     contingency operation'' after ``area''.
       (2) The heading for section 7508 is amended by inserting 
     ``OR CONTINGENCY OPERATION'' after ``COMBAT ZONE''.
       (3) The item relating to section 7508 in the table of 
     sections for chapter 77 is amended by inserting ``or 
     contingency operation'' after ``combat zone''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any period for performing an act which has not 
     expired before the date of the enactment of this Act.

     SEC. 6. MODIFICATION OF MEMBERSHIP REQUIREMENT FOR EXEMPTION 
                   FROM TAX FOR CERTAIN VETERANS' ORGANIZATIONS.

       (a) In General.--Subparagraph (B) of section 501(c)(19) 
     (relating to list of exempt organizations) is amended by 
     striking ``or widowers'' and inserting ``, widowers, 
     ancestors, or lineal descendants''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 7. CLARIFICATION OF THE TREATMENT OF CERTAIN DEPENDENT 
                   CARE ASSISTANCE PROGRAMS.

       (a) In General.--Subsection (b) of section 134 (defining 
     qualified military benefit) is amended by adding at the end 
     the following new paragraph:
       ``(4) Clarification of certain benefits.--For purposes of 
     paragraph (1), such term includes any dependent care 
     assistance program (as in effect on the date of the enactment 
     of this paragraph) for any individual described in paragraph 
     (1)(A).''.
       (b) Conforming Amendments.--
       (1) Section 134(b)(3)(A) (as amended by section 102) is 
     further amended by inserting ``and paragraph (4)'' after 
     ``subparagraphs (B) and (C)''.
       (2) Section 3121(a)(18) is amended by striking ``or 129'' 
     and inserting ``, 129, or 134(b)(4)''.
       (3) Section 3306(b)(13) is amended by striking ``or 129'' 
     and inserting ``, 129, or 134(b)(4)''.
       (4) Section 3401(a)(18) is amended by striking ``or 129'' 
     and inserting ``, 129, or 134(b)(4)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.

     SEC. 8. CLARIFICATION RELATING TO EXCEPTION FROM ADDITIONAL 
                   TAX ON CERTAIN DISTRIBUTIONS FROM QUALIFIED 
                   TUITION PROGRAMS, ETC., ON ACCOUNT OF 
                   ATTENDANCE AT MILITARY ACADEMY.

       (a) In General.--Subparagraph (B) of section 530(d)(4) 
     (relating to exceptions from additional tax for distributions 
     not used for educational purposes) is amended by striking 
     ``or'' at the end of clause (iii), by redesignating clause 
     (iv) as clause (v), and by inserting after clause (iii) the 
     following new clause:
       ``(iv) made on account of the attendance of the designated 
     beneficiary at the United States Military Academy, the United 
     States Naval Academy, the United States Air Force Academy, 
     the United States Coast Guard Academy, or the United States 
     Merchant Marine Academy, to the extent that the amount of the 
     payment or distribution does not exceed the costs of advanced 
     education (as defined by section 2005(e)(3) of title 10, 
     United States Code, as in effect on the date of the enactment 
     of this section) attributable to such attendance, or''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect for taxable years beginning after December 
     31, 2002.

     SEC. 9. ABOVE-THE-LINE DEDUCTION FOR OVERNIGHT TRAVEL 
                   EXPENSES OF NATIONAL GUARD AND RESERVE MEMBERS.

       (a) Deduction Allowed.--Section 162 (relating to certain 
     trade or business expenses) is amended by redesignating 
     subsection (p) as subsection (q) and inserting after 
     subsection (o) the following new subsection:
       ``(p) Treatment of Expenses of Members of Reserve Component 
     of Armed Forces of the United States.--For purposes of 
     subsection (a)(2), in the case of an individual who performs 
     services as a member of a reserve component of the Armed 
     Forces of the United States at any time during the taxable 
     year, such individual shall be deemed to be away from home in 
     the pursuit of a trade or business for any period during 
     which such individual is away from home in connection with 
     such services.''.
       (b) Deduction Allowed Whether or Not Taxpayer Elects To 
     Itemize.--Paragraph (2) of section 62(a) (relating to certain 
     trade and business deductions of employees) is amended by 
     adding at the end the following new subparagraph:
       ``(E) Certain expenses of members of reserve components of 
     the armed forces of the united states.--The deductions 
     allowed by section 162 which consist of expenses, determined 
     at a rate not in excess of the rates for travel expenses 
     (including per diem in lieu of subsistence) authorized for 
     employees of agencies under subchapter I of chapter 57 of 
     title 5, United States Code, and not in excess of $1,500, 
     paid or incurred by the taxpayer in connection with the 
     performance of services by such taxpayer as a member of a 
     reserve component of the Armed Forces of the United States 
     for any period during which such individual is more than 100 
     miles away from home in connection with such services.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2002.

[[Page 9018]]



     SEC. 10. TAX RELIEF AND ASSISTANCE FOR FAMILIES OF ASTRONAUTS 
                   WHO LOSE THEIR LIVES ON A SPACE MISSION.

       (a) Income Tax Relief.--
       (1) In general.--Subsection (d) of section 692 (relating to 
     income taxes of members of Armed Forces and victims of 
     certain terrorist attacks on death) is amended by adding at 
     the end the following new paragraph:
       ``(5) Relief with respect to astronauts.--The provisions of 
     this subsection shall apply to any astronaut whose death 
     occurs while on a space mission, except that paragraph (3)(B) 
     shall be applied by using the date of the death of the 
     astronaut rather than September 11, 2001.''.
       (2) Conforming amendments.--
       (A) Section 5(b)(1) is amended by inserting ``, 
     astronauts,'' after ``Forces''.
       (B) Section 6013(f)(2)(B) is amended by inserting ``, 
     astronauts,'' after ``Forces''.
       (3) Clerical amendments.--
       (A) The heading of section 692 is amended by inserting ``, 
     ASTRONAUTS,'' after ``FORCES''.
       (B) The item relating to section 692 in the table of 
     sections for part II of subchapter J of chapter 1 is amended 
     by inserting ``, astronauts,'' after ``Forces''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply with respect to any astronaut whose death occurs 
     after December 31, 2002.
       (b) Death Benefit Relief.--
       (1) In general.--Subsection (i) of section 101 (relating to 
     certain death benefits) is amended by adding at the end the 
     following new paragraph:
       ``(4) Relief with respect to astronauts.--The provisions of 
     this subsection shall apply to any astronaut whose death 
     occurs while on a space mission.''.
       (2) Clerical amendment.--The heading for subsection (i) of 
     section 101 is amended by inserting ``or Astronauts'' after 
     ``Victims''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to amounts paid after December 31, 2002, with 
     respect to deaths occurring after such date.
       (c) Estate Tax Relief.--
       (1) In general.--Subsection (b) of section 2201 (defining 
     qualified decedent) is amended by striking ``and'' at the end 
     of paragraph (1)(B), by striking the period at the end of 
     paragraph (2) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(3) any astronaut whose death occurs while on a space 
     mission.''.
       (2) Clerical amendments.--
       (A) The heading of section 2201 is amended by inserting ``, 
     DEATHS OF ASTRONAUTS,'' after ``FORCES''.
       (B) The item relating to section 2201 in the table of 
     sections for subchapter C of chapter 11 is amended by 
     inserting ``, deaths of astronauts,'' after ``Forces''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to estates of decedents dying after December 31, 
     2002.

     SEC. 11. PROTECTION OF SOCIAL SECURITY.

       The amounts transferred to any trust fund under title II of 
     the Social Security Act shall be determined as if this Act 
     (other than this section) had not been enacted.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
California (Mr. Thomas) and the gentleman from Maryland (Mr. Cardin) 
each will control 20 minutes.
  The Chair recognizes the gentleman from California (Mr. Thomas).
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I am a firm believer that no bill should pass this House 
until it is ready. I am prepared to tell the House this bill is more 
than ready. It passed twice last year, and the Senate failed to act. As 
recently as March 20 of this year, the bill, in its current form save a 
technical correction, passed as H.R. 1307. That vote was 422-0.
  H.R. 1664 is in its current form virtually, as I said, except for 
technical correction, in the same form as H.R. 1307. There are two 
modifications that we are adding to this bill based upon discussions 
with the Senate so that the good and worthy purposes contained in this 
bill which no one has challenged can go to the President for his long-
overdue signature.
  The two provisions which the Chair believes, if added to this bill, 
will initiate a process in the Senate which will move the bill 
immediately to the floor of the Senate; and this version which passes 
the House, when it passes, will move through the Senate without the 
need for a conference. The two provisions that we are adding is that in 
the special rule provided for military personnel to determine if they 
have met the 24 months out of 5-year residency to trigger the capital 
gain exclusion on a home sale, would be extended to members of the 
foreign service.
  Secondly, the underlying benefits of the bill, the income and estate 
tax relief provisions that were provided, for example, for the victims 
of terrorism in the Tax Relief Act of 2002, would be extended to 
astronauts who lose their lives during a space mission; and, of course, 
that would apply to those astronauts who unfortunately lost their lives 
during the recent Columbia Shuttle disaster.
  Adding those two provisions, which I do not believe are 
controversial, to the underlying bill means we can finally, and long 
overdue, provide these benefits. It means that the history of this bill 
will be that the House and the Senate agree, and the President is 
prepared to sign.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CARDIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I must admit I am somewhat baffled by the comments of my 
distinguished chairman. If it is in the interest of this body to enact 
legislation quickly, then we should just take the Senate bill and 
ratify the Senate bill and send it to the President, and we can get it 
signed. It seems to me that is the easiest way for us to work this out 
for our military.
  Mr. THOMAS. Mr. Speaker, will the gentleman yield?
  Mr. CARDIN. I yield to the gentleman from California.
  Mr. THOMAS. If the Senate bill were not flawed in several different 
ways, the suggestion the gentleman makes would be acceptable. I think 
it is evidence that even the Senate recognizes some fundamental 
problems when they are willing to accept a bill that we are going to 
send over, rather than going to a conference.
  Mr. CARDIN. Mr. Speaker, I appreciate the gentleman's comments, but 
the differences here in substance between what we will be voting on and 
what the other body has voted on is that the Senate provided unlimited 
exclusions for death benefits payable to our military, and the 
legislation before us is less generous.
  The House bill provides less generous eligibility rules for capital 
gains relief, and the Senate bill provided unlimited deductions for 
travel expenses of our National Guard members and Reservists, yet the 
legislation before us imposes a $1,500 cap on those deductions.
  I do not know the logic of us limiting the reasonable expenses of our 
National Guard members, particularly when they have been called upon in 
this most recent conflict. It seems to me that those changes in every 
case work against our military, and I am surprised that we are not 
ratifying the Senate's bill.
  But the most important difference is that the Senate included a 
provision to stop tax avoidance by those who have renounced their 
citizenship in this country, and the legislation before us today does 
not include that provision. I would suggest that is probably the major 
reason why we are acting on yet another version of this bill, which is 
extremely important for us to pass.
  I agree with the chairman on that point, but it seems to me that we 
are now faced with the option of providing less benefits than we should 
to our military and losing an opportunity to close a major loophole in 
our Tax Code for those who renounce their citizenship, still taking 
advantage of U.S. tax law.
  Mr. Speaker, I reserve the balance of my time.
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I have to tell Members I think we have come full circle. 
One of the reasons there was so much, I assume, angst on the other side 
of the aisle was that at one time the bill contained extraneous 
material. Now the gentleman is complaining that I am not accepting the 
Senate version of the bill which contains, oh, my goodness, extraneous 
material. The gentleman knows well that the, quote/unquote, extraneous 
material has been contained in another bill which is moving on the 
Senate side and which will become law is a far more appropriate vehicle 
than this particular measure.
  In addition to that, the extraneous material that the gentlemen 
insists that we agree to, coming from the Senate, is not the solution 
on the individual expatriation that our own Joint

[[Page 9019]]

Committee on Taxation recommends is the most appropriate solution.
  Mr. CARDIN. Mr. Speaker, will the gentleman yield?
  Mr. THOMAS. I yield to the gentleman from Maryland.
  Mr. CARDIN. Mr. Speaker, I do not think that it is ever extraneous to 
try to offset the cost of the bill, and that is the reason this 
provision was put in, so we do not add to the deficit.
  Mr. THOMAS. Mr. Speaker, I must tell the gentleman that offsetting 
costs with extraneous material is one thing; accepting a solution which 
our committee that we utilize to recommend appropriate changes does not 
believe is the appropriate exchange is another.
  The gentleman also pointed out two differences between the House and 
the Senate bill, and it is true. I understand the gentleman and where 
his party is coming from. They do not see a problem with absolute, 
open-ended, unlimited ability to write off expenses. That is just very, 
very typical.
  What we have accepted, by the Senate, are reasonable and appropriate 
limits. Whenever the phrase ``reasonable and appropriate'' is used, the 
counterargument always seems to be unlimited. The Senate thinks it is 
appropriate to accept a reasonable and appropriate, and so do we.
  Mr. Speaker, I ask unanimous consent to yield the balance of my time 
to the gentleman from Texas (Mr. Sam Johnson) and that he may control 
that time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.

                              {time}  1815

  Mr. CARDIN. Mr. Speaker, I yield myself such time as I may consume.
  Let me first point out to my distinguished chairman that business 
people have no limit in the Tax Code as to what they can take on their 
travel expenses, and yet we are telling our National Guard that there 
is going to be a limit as to how much they can take on their taxes for 
travel expenses.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from Washington (Mr. McDermott), a distinguished member of our 
committee.
  Mr. McDERMOTT. Mr. Speaker, I thank the gentleman from Maryland (Mr. 
Cardin) for yielding me this time.
  It is really an honor to have a part in another example of the 
Republican tax follies. This bill could have been passed weeks and 
weeks and weeks ago. As we celebrate and are grateful for the fact that 
the war seems to be winding down in Iraq, the people who have been over 
there, we have been trying to do this for them for about, I do not 
know, 3 or 4 or 5 months. First the bill got over in the committee, and 
we had to add on fishing tackle and a whole bunch of other stuff, and 
that did not work out here. So it had to go back and come back on a 
rule, and now it has gone over to the Senate. They have more generous 
provisions. There is just no question about it. And they also added 
this provision that would make it a little bit more difficult for 
people who want to avoid taxes to leave this country, to give up their 
citizenship. At a time when this country ought to be thinking about 
sacrifice because we have asked men and women to sacrifice their lives 
for us, we have people leaving this country saying I do not like this 
country. I have made a whole bunch of money here, but I do not want to 
pay any taxes; so I am leaving. And we let them get out of paying taxes 
for that.
  What kind of statement is that to our troops overseas that this 
Congress will not close the loophole that lets somebody drop their 
citizenship in order to avoid their taxes? If that is not folly at a 
time when our deficit is $400 billion this year and going up and we 
expect the young men and women who are over in Iraq to sacrifice for us 
but we will sacrifice in terms of taxation even on people who are 
giving up their citizenship, there is something really weird about this 
bill. And I certainly know that everybody is going to vote for it.
  What is also strange is they say we are going to give the tax benefit 
to the soldiers and those people, the Marines and whatnot, give it to 
the State Department; but when we offered an amendment in the House 
committee for people in the Peace Corps who are out there risking 
themselves for the United States, they say no. No, not them.
  Let us talk about people who are doing a service to this country, 
which is what this is all about; and yet finally we come out here and 
of course it is almost the day we pay our taxes. So every year for the 
last 8 years we have always had the April 15 tax follies, and this is 
act one and will be followed by act two, which we will get to in a few 
minutes. But this is a bill that we should have accepted the other 
body's construction. It is more generous, and it closes an egregious 
tax loophole.
  Mr. CARDIN. Mr. Speaker, I yield back the balance of my time.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  I would like to say that I too rise in strong support of the Armed 
Forces Tax Fairness Act of 2003, and today's bill goes to great lengths 
to help our brave military men and women and their families despite 
what has been said out there.
  I had the distinct honor of serving my country in the Air Force for 
about 29 years. So my family and I know something about military life. 
And my wife, Shirley, told me that one her worst moments was when the 
military chaplain pulled up in front of the house after I was shot down 
in Vietnam, and her heart just stopped. We never know what they are 
going to say, but we know it is not going to be good.
  I imagine the unspeakable horror of despair and utmost despair of a 
family who just lost a loved one in the military, only to be followed 
up by a visit from the taxman. That is just wrong. So this bill fixes 
that. Let us change it and pass it today.
  This bill permits the entire amount of the death benefit gratuity to 
be tax free. Let us eliminate the unfair, immoral tax on the death 
benefit a serviceman's survivor receives from the Armed Forces. It is 
the least we can do. These families have given the ultimate sacrifice 
for our country. We do not need to take any more from them.
  On a more positive note, I would like to thank all those who helped 
eliminate the penalty on military academy students and their families 
when it comes to withdrawing funds from a 529 education savings 
account. The Miesses of Plano brought that to my attention. Now the 
Plebe, the Zoomie, and the Middy will all have the same benefit of 
being able to take out money tax free like an athlete on a scholarship.
  This is a good bill. This bill is a shining example of democracy at 
its best, in my opinion. It helps our military now, and they need it; 
and they are doing a great job.
  Mrs. JONES of Ohio. Mr. Speaker, I rise to recognize the passage of 
S. 351, the United States Senate version of H.R. 1307, as well as what 
is presented before us at this hour. The new House bill for the Armed 
Forces Tax Fairness Act of 2003, and the Senate amendment to H.R. 1307, 
contained several identical provisions. Those identical provisions 
include exclusion for amounts received under the Defense Homeowners 
Assistance Program. Expansion of combat zone filing rules, modification 
of membership requirements for veterans organizations, clarification of 
treatment of dependent care benefits, treatment of service academy 
appointments for certain tax benefits, and tax relief for the families 
of the Columbia space shuttle astronauts.
  The new House bill provides smaller tax benefits for the military. 
Both bills provide an exclusion from gross income for death benefits. 
However, the House bill would tax increased death benefits to the 
extent that they were the result of legislation enacted after December 
31, 1991. The Senate bill does not have that restriction.
  Both bills provide more liberal treatment for gain on sale of 
principal residence by members of the military and foreign service. 
However, the Senate bill provides the benefits for a longer period. A 
10-year extension rather than a 5-year extension.
  Both bills provide an above the line deduction for overnight travel 
expenses of National Guard and reserve members. However, the House bill 
limits the deduction to $1,500 per year, whereas the Senate bill 
provides no dollar limit on the deduction.

[[Page 9020]]

  The Senate bill contains a provision suspending tax-exempt status for 
terrorist organizations. The House bill contains no such provision.
  Furthermore, the cost of the Senate bill is offset, with the largest 
offset being a provision preventing tax avoidance by individuals 
renouncing their citizenship in this country. For military death 
benefits, under current law, a $6,000 death gratuity is paid to the 
survivors of members of the Armed Forces killed in the line of duty. 
This death benefit was increased from $3,000 to $6,000 in 1991 during 
the Persian Gulf War. Prior to the increase, the entire benefit was 
tax-free; however, because the Tax Code was not changed to reflect the 
1991 increase, only the first $3,000 is currently exempt from Federal 
tax.
  Let us--Republicans and Democrats--work to pass a measure that we all 
can find common ground. Our U.S. Senators have found a way to pass an 
effective measure for the Armed Forces Tax Fairness Act, let us do the 
same.
  Mr. Speaker, I yield back the balance of my time.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise today to express my 
support of H.R. 1664, the Armed Forces Tax Fairness Act of 2003. It has 
been long overdue that we provide real relief to the men and women who 
serve in our armed forces. Many of the members of the military are 
minorities, and this bill will help many in my own 18th Congressional 
District in Houston. More than 200,000 troops are now being employed to 
the Persian Gulf. In Houston, many soldiers have been called upon to 
serve on the front lines.
  This bill includes tax benefits for the families of astronauts who 
die in the line of duty, including those of the space shuttle Columbia. 
It provides National Guard and reservists with a tax deduction of up to 
$1,500 for transportation, meals and lodging to attend required 
meetings. This bill also makes tax-free the full $6,000 death gratuity 
paid to survivors of members of the armed forces killed in the line of 
duty. The measure also exempts from taxable income amounts received 
under the Department of Defense's Homeowners Assistance Program, which 
provides payments to certain employees and members of the armed forces 
to offset the adverse effects on housing values resulting from military 
base realignment or closure.
  The bill also provides National Guard and reserve members as ``above-
the-line'' tax deduction, that is, taken directly from gross income 
before any itemized or standard deductions for overnight 
transportation, meals and lodging expenses for member who travel more 
than 100 miles from home to attend National Guard and Reserve meetings. 
Under this bill, a member could deduct up to $1,500 in connection with 
their service.
  I am pleased that this bill waives income tax liability for the year 
of death and the year prior to death for astronauts who die in the line 
of duty.
  Under current law, the time for filing tax returns, paying taxes and 
other Internal Revenue Service requirements is generally suspended for 
anyone serving in a combat zone during the period of combatant 
activities. This bill applies the suspension of tax-filing rules to 
person deployed outside the United States away from their permanent 
duty station while participating in an operation designated by the 
Defense secretary as a ``contingency operation'' or that becomes a 
contingency operation. This is defined as a military operation 
designated by the Defense secretary as one in which members of the 
armed forces are, or may become, involved in military actions, 
operations or hostilities against an enemy of the United States. This 
provision will help our armed forces serving in Iraq.
  This legislation provides tax relief to the members of our military. 
Our soldiers are on frontlines, and now as the war with Iraq continues, 
we are calling upon these men and women to make even greater 
sacrifices. This bill represents a compromise between the House and 
Senate versions in order to avoid a conference. I support this 
legislation to provide immediate tax relief to the members of our armed 
forces and our veterans.
  Studies have shown pay rates in the military consistently lag behind 
comparable jobs in the private sector. I believe that this legislation 
would help military families as they struggle like so many to pay basic 
expenses.
  The provisions in this legislation would provide tax breaks on home 
sales, travel expenses, and death benefits. We have ample tax benefits 
for corporations, it is time to help our officers and enlisted soldiers 
in the armed forces.
  Now more than ever, it's important to support America's top-notch 
armed forces. I've always believed that in order for Americans to enjoy 
the freedom that characterizes our country, and for Texans to be able 
to fully enjoy the natural beauty and resources of our state, it is 
crucial for the citizens of the nation and our state to feel safe.
  To achieve this goal, it's vital that we keep America's armed forces 
strong. Throughout the years, I've fought for funding to constantly 
improve the quality of defense-related activities in my state of Texas.
  The importance of national defense is increasing every day, and I 
will continue to support our armed forces--they are the young men and 
women on the front lines who are called to sacrifice for this great 
nation and to preserve our Constitutional protections and liberties.
  I urge my colleagues to support this bill. Thank you.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield back the balance of my 
time.
  The SPEAKER pro tempore (Mr. Bass). The question is on the motion 
offered by the gentleman from California (Mr. Thomas) that the House 
suspend the rules and pass the bill, H.R. 1664.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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