[Congressional Record (Bound Edition), Volume 154 (2008), Part 7]
[House]
[Pages 9933-9945]
[From the U.S. 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.

[[Page 9934]]

       ``(B) Nondiscrimination requirement.--Subparagraph (A) 
     shall apply only if all individuals performing qualified 
     military service with respect to the employer maintaining the 
     plan (as determined under subsections (b), (c), (m), and (o)) 
     who die or became disabled as a result of performing 
     qualified military service prior to reemployment by the 
     employer are credited with service and benefits on reasonably 
     equivalent terms.
       ``(C) Determination of benefits.--The amount of employee 
     contributions and the amount of elective deferrals of an 
     individual treated as reemployed under subparagraph (A) for 
     purposes of applying paragraph (8)(C) shall be determined on 
     the basis of the individual's average actual employee 
     contributions or elective deferrals for the lesser of--
       ``(i) the 12-month period of service with the employer 
     immediately prior to qualified military service, or
       ``(ii) if service with the employer is less than such 12-
     month period, the actual length of continuous service with 
     the employer.''.
       (c) Conforming Amendments.--
       (1) Section 404(a)(2) is amended by striking ``and (31)'' 
     and inserting ``(31), and (37)''.
       (2) Section 403(b) is amended by adding at the end the 
     following new paragraph:
       ``(14) Death benefits under userra-qualified active 
     military service.--This subsection shall not apply to an 
     annuity contract unless such contract meets the requirements 
     of section 401(a)(37).''.
       (3) Section 457(g) is amended by adding at the end the 
     following new paragraph:
       ``(4) Death benefits under userra-qualified active military 
     service.--A plan described in paragraph (1) shall not be 
     treated as an eligible deferred compensation plan unless such 
     plan meets the requirements of section 401(a)(37).''.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to deaths and disabilities occurring on or 
     after January 1, 2007.
       (2) Provisions relating to plan amendments.--
       (A) In general.--If this subparagraph applies to any plan 
     or contract amendment, such plan or contract shall be treated 
     as being operated in accordance with the terms of the plan 
     during the period described in subparagraph (B)(iii).
       (B) Amendments to which subparagraph (A) applies.--
       (i) In general.--Subparagraph (A) shall apply to any 
     amendment to any plan or annuity contract which is made--

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


[[Page 9935]]


     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.
       (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.

[[Page 9936]]



     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.
       ``(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

[[Page 9937]]

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

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

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

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

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

     SEC. 204. EFFECTIVE DATE.

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

                     TITLE III--REVENUE PROVISIONS

     SEC. 301. 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

[[Page 9938]]

     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.--
       ``(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.--

[[Page 9939]]

       (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 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.

[[Page 9940]]

       ``(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 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

[[Page 9941]]

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 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. 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

[[Page 9942]]

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 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

[[Page 9943]]

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).
  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.

[[Page 9944]]


  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 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

[[Page 9945]]

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.
  Ms. McCOLLUM of Minnesota. Mr. Speaker, I rise in strong support of 
H.R. 6081, the Heroes Earnings Assistance and Relief Tax (HEART) Act 
and to commend Speaker Pelosi and Chairman Rangel for their 
perseverance in getting this important bill to the President's desk.
  H.R. 6081 includes vital tax provisions that help military families 
facing significant financial hardships due to extended deployments. 
According to a Department of Defense survey, 55 percent of married 
National Guardsmen and Reservists suffer a loss of income when they are 
called to active duty. The Heart Act helps to fix this problem by 
providing a tax credit of up to $4,000 for small businesses that 
continue to pay National Guard and Reserve employees when they are 
called to serve.
  This important bill makes permanent several IRS provisions that 
relieve economic hardships as a result of military service including 
the Earned Income Tax Credit for families of soldiers in combat. H.R. 
6081 also allows more military families to be eligible for the economic 
stimulus rebates and makes it easier for veterans to become homeowners 
through low-interest loans.
  The Heart Act is fully offset and will not increase our national 
debt. It pays for these tax breaks by closing an offshore loophole that 
allows government contractors, who receive millions or billions in 
taxpayers' dollars, to set up companies in foreign countries to avoid 
paying Social Security and Medicare taxes. For example, defense 
contractor KBR, has reportedly avoided paying over $100 million in 
Social Security and Medicare taxes by creating shell companies in the 
Cayman Islands. H.R. 6081 also stops tax benefits for Americans who 
renounce their citizenship in order to avoid paying U.S. taxes.
  The men and women of the armed forces who serve this country with 
honor during times of war should be assured that their families will 
not suffer financially from being deployed. I urge my colleagues to 
support this important bill.
  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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