[Congressional Record (Bound Edition), Volume 152 (2006), Part 6]
[House]
[Pages 7358-7360]
[From the U.S. Government Publishing Office, www.gpo.gov]




 PROVIDING FOR CONCURRENCE BY HOUSE WITH AMENDMENT IN SENATE AMENDMENT 
        TO H.R. 1499, HEROES EARNED RETIREMENT OPPORTUNITIES ACT

  Mr. SAM JOHNSON of Texas. Mr. Speaker, I move to suspend the rules 
and agree to the resolution (H. Res. 803) providing for the concurrence 
by the House with amendment in the amendment of the Senate to H.R. 
1499.
  The Clerk read as follows:

                              H. Res. 803

       Resolved, That upon the adoption of this resolution the 
     bill (H.R. 1499) entitled ``An Act to amend the Internal 
     Revenue Code of 1986 to allow members of the Armed Forces 
     serving in a combat zone to make contributions to their 
     individual retirement plans even if the compensation on which 
     such contribution is based is excluded from gross income, and 
     for other purposes'', with the Senate amendment thereto, 
     shall be considered to have been taken from the Speaker's 
     table to the end that the Senate amendment thereto be, and 
     the same is hereby, agreed to with an amendment as follows:
       Add at the end of the Senate amendment the following:
       Page 3, after line 3, insert the following new subsection:
       (c) Contributions for Taxable Years Ending Before 
     Enactment.--
       (1) In general.--In the case of any taxpayer with respect 
     to whom compensation was excluded from gross income under 
     section 112 of the Internal Revenue Code of 1986 for any 
     taxable year beginning after December 31, 2003, and ending 
     before the date of the enactment of this Act, any 
     contribution to an individual retirement plan made on account 
     of such taxable year and not later than the last day of the 
     3-year period beginning on the date of the enactment of this 
     Act shall be treated, for purposes of such Code, as having 
     been made on the last day of such taxable year.
       (2) Waiver of limitations.--
       (A) Credit or refund.--If the credit or refund of any 
     overpayment of tax resulting from a contribution to which 
     paragraph (1) applies is prevented at any time by the 
     operation of any law or rule of law (including res judicata), 
     such credit or refund may nevertheless be allowed or made if 
     the claim therefor is filed before the close of the 1-year 
     period beginning on the date that such contribution is made 
     (determined without regard to paragraph (1)).
       (B) Assessment of deficiency.--The period for assessing a 
     deficiency attributable to a contribution to which paragraph 
     (1) applies shall not expire before the close of the 3-year 
     period beginning on the date that such contribution is made. 
     Such deficiency may be assessed before the expiration of such 
     3-year period notwithstanding the provisions of any other law 
     or rule of law which would otherwise prevent such assessment.
       (3) Individual retirement plan defined.--For purposes of 
     this subsection, the term ``individual retirement plan'' has 
     the meaning given such term by section 7701(a)(37) of such 
     Code.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Sam Johnson) and the gentleman from Michigan (Mr. Levin) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Texas.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, this is an important bill that 
will allow our troops serving in combat zones to contribute some of 
their tax-exempt combat pay to retirement savings. Because combat pay 
is exempt from tax, it does not qualify as earned income that is 
normally allowed in an individual retirement account.
  Mr. Speaker, I would now like to yield as much time as she may 
consume to the Representative from North Carolina (Ms. Foxx).

                              {time}  1445

  Ms. FOXX. Mr. Speaker, I am truly honored to be here today. I am 
honored because the mere consideration of this bill represents the 
greatness of our Republican democracy. At this time 2 years ago, I 
dreamed of coming before this House and working for the people of the 
Fifth Congressional District of North Carolina. Here I am today 
promoting a bill I wrote to help those very constituents who deserve it 
the most.
  Just over a year ago, the family of Army Specialist Michael Hensley 
from my district in Clemmons, North Carolina, contacted me with a 
problem that his son and many of our other brave soldiers are facing.
  Specialist Hensley wanted to do the responsible thing by making the 
maximum allowable contribution to his individual retirement account, 
but found out that because of the nature of his wages, he would not be 
able to contribute to his nest egg this year.

[[Page 7359]]

Thanks to the Republican leadership of this House, we stand here this 
afternoon to solve this problem.
  Mr. Speaker, our current Tax Code wrongfully prohibits many of our 
brave men and women serving in combat zones from taking advantage of 
individual retirement accounts, or IRAs. Most soldiers serving in these 
combat zones are paid in wages designated as military hazard pay. As 
deployment times have grown longer and longer, many soldiers now serve 
entire calendar years overseas, making their yearly compensation 
consist of hazard pay exclusively. These wages are not taxed, nor 
should they be. However, since this compensation is nontaxable, the 
wages are not eligible for IRA contributions. That is entirely unfair.
  As we all know, IRAs are an excellent tool for responsible retirement 
savings, and responsible retirement savings should be encouraged for 
everyone, but especially for those who take up arms in war zones and 
fight for our freedom.
  The men and women defending America in harm's way overseas should not 
be excluded from fully participating in the important retirement 
investment opportunity that IRAs provide because of a glitch in our Tax 
Code.
  H.R. 1499, the Heroes Earned Retirement Opportunities, or HERO Act, 
will correct this serious injustice. The HERO Act simply designates 
combat hazard pay earned by a member of the Armed Forces as eligible 
for contribution to retirement accounts. The legislation, which is 
endorsed by the Reserve Officers Association and the Military Officers 
Association of America, would not actually tax these wages. It would 
merely allow them to be invested in the same retirement accounts 
available to all Americans.
  To quote the Military Officers Association of America in their letter 
of support for the bill: ``This change makes perfect sense in view of 
all we are asking our servicemembers to do in the war on terror in 
Iraq, Afghanistan and elsewhere.'' I could not have said it better 
myself.
  Mr. Speaker, our heroes defending America overseas certainly deserve 
the same access to retirement savings that we receive. In fact, we 
should be encouraging and even facilitating retirement savings whenever 
possible. Americans need to take responsibility for and control of 
their retirement. Those responsible enough to save their hard-earned 
wages should be rewarded, not burdened with taxes and regulations.
  I would like to thank our Republican majority leader, John Boehner, 
as well as Chairman Bill Thomas, for recognizing the importance of this 
bill and for expeditiously bringing it to the floor of this House. I 
would also like to thank Chairman Duncan Hunter for his service to our 
Nation in Vietnam, for his excellent leadership on the House Armed 
Services Committee and for cosponsoring and supporting this great bill. 
His commitment to our troops is to be applauded.
  Lastly, I would like to thank Congressman Sam Johnson for his 29 
years of service to our Nation and for his cosponsorship of this bill 
and his assistance in the Ways and Means Committee to bring the bill to 
the floor of the House. Congressman Johnson is a true hero, having 
served as a prisoner of war. It is an honor to have him as a cosponsor 
and to have had his strong support throughout the effort to get this 
bill passed.
  I urge all my colleagues to help right this fundamental wrong by 
voting for this straightforward, commonsense legislation.
  Mr. LEVIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I stand today in support of H.R. 1499. This bill is 
actively supported by my Democratic colleagues. On May 23, 2005, this 
bill passed the House under suspension of the rules by voice vote. The 
bill was referred to the Senate and was approved with an amendment to 
change the effective date. Because of the later effective date as 
passed by the Senate, the bill is before us again today merely to 
incorporate a technical change. This change would indeed ensure that 
our service men and women can make eligible contributions for previous 
tax years, 2004 and 2005, for which the deadline has passed, but years 
for which they were eligible to make these contributions.
  We acknowledge fully the work of our military personnel who continue 
to perform so ably for our Nation. We honor their bravery and their 
sacrifice. Therefore, it goes without saying that we endorse this 
effort by the Congress to make it possible for these men and women to 
take advantage of every tax benefit that is available to them, 
including saving for their retirement.
  H.R. 1499, as my colleague and friend, the gentleman from Texas, Mr. 
Johnson, has said, would allow our service men and women to treat their 
compensation received while serving in combat as taxable income in 
order to help them meet the income eligibility requirement for making 
contributions to an individual retirement account.
  At a recent hearing of our committee, two of our five witnesses 
highlighted the large shortfall in retirement savings many of our 
workers in this country face. I am sure that many members of the 
military fall within this group. This bill is a small step in the right 
direction of closing that gap.
  Other larger steps need to be taken. For example, Democratic Members 
of this Congress are hopeful that we can work with our Republican 
colleagues to preserve another tax benefit that may be of even greater 
help to many military families. A provision in current law would permit 
military families to treat combat pay as taxable compensation for 
purposes of claiming the Earned Income Tax Credit. This provision, 
though, is set to expire at the end of this year.
  The EITC is a refundable credit many low- and middle-income taxpayers 
can claim when they file their Federal tax returns. Eligible families 
may claim a portion of their credit ratably during the year. The EITC 
helps to relieve the Federal tax burden on many families who are 
working full-time, yet find themselves at or below the poverty level.
  We had hoped that this provision could be included as part of the 
bill before us today to further help military families. However, we 
were assured that this provision will be taken up later in the year, 
and we will continue to press for the extension of this provision 
before it expires.
  Also let me finish by expressing my hope and the hope of so many on 
my side of the aisle that this Congress and the administration will 
meet their responsibilities to our veterans on health, on re-
employment, and on so many other major needs of those in the military 
and the veterans of this country.
  Mr. Speaker, I would say to my friend, Mr. Johnson, therefore 
anticipating your remarks, and your remarks indeed reflect your service 
to this country, I yield back the balance of my time.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, as Mr. Levin pointed out, we passed this legislation 
before. Our colleagues in the Senate then passed the bill by unanimous 
consent back in October, but made a change regarding the effective 
date.
  The HERO Act will help our combat troops save for their retirement, 
as Mr. Levin pointed out, or for first-time home purchases or for 
education by saving in a Roth IRA.
  Currently, all Americans can save up to $4,000 this year in an IRA or 
a Roth IRA. This cap on annual contributions will increase to $5,000 in 
2008. Right now our combat troops are not able to contribute to IRAs 
because that combat pay does not fit the definition of taxable earned 
income.
  As Mr. Levin pointed out, our combat troops are putting their lives 
on the line in a very dangerous situation, and to recognize this 
service, their pay is not subject to tax. This bill is a way for 
Congress and the American people to say thank you every payday.
  There are a lot of young servicemembers who are single who come home 
at the end of a tour in a combat zone with a nice little nest egg. Once 
we get this bill signed into law, it will be great for these young men 
and women to put some of that money into a Roth IRA for the purchase of 
a home, to spend on

[[Page 7360]]

school, or just for long-term retirement. While there are plenty of 
other tantalizing things for these young people to spend their money 
on, we need to at least give them the opportunity to save some of it in 
the same way that all other Americans can save.
  I am one of the conferees working out the differences between the 
House and Senate on the pension bill. I look forward to getting that 
bill completed soon so we can increase the opportunity of all Americans 
to save and to make their pension plans safer. However, our troops are 
prohibited from even contributing combat pay to an IRA, and we need to 
remedy this situation right now.
  According to the Joint Committee on Taxation, the bill would provide 
$70 million of tax benefits to military families over the next decade. 
We will pass the HERO Act with no controversy, and I hope our 
colleagues in the other body follow suit in the near future.
  Mr. Speaker, I thank Mr. Levin for his comments, and I appreciate Ms. 
Foxx introducing the bill. It is the right thing to do.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Texas (Mr. Sam Johnson) that the House suspend the rules 
and agree to the resolution, H. Res. 803.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mr. LEVIN. 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 question will 
be postponed.

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