[House Report 107-65]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     107-65

======================================================================



 
           FALLEN HERO SURVIVOR BENEFIT FAIRNESS ACT OF 2001

                                _______
                                

  May 15, 2001.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Thomas, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1727]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 1727) to amend the Taxpayer Relief Act of 1997 to 
provide for consistent treatment of survivor benefits for 
public safety officers killed in the line of duty, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
 I. Summary and Background............................................2
      A. Purpose and Summary.....................................     2
      B. Background and Need for Legislation.....................     2
      C. Legislative History.....................................     2
II. Explanation of the Bill...........................................2
      A. Extension of Present-Law Treatment of Survivor Annuities 
          with Respect to Certain Public Safety Officers Killed 
          in the Line of Duty....................................     2
III.Vote of the Committee.............................................3

IV. Budget Effects of the Bill........................................3
      A. Committee Estimates of Budgetary Effects................     3
      B. Statement Regarding New Budget Authority and Tax 
          Expenditures Budget Authority..........................     4
      C. Cost Estimate Prepared by the Congressional Budget 
          Office.................................................     4
 V. Other Matters to be Discussed Under the Rules of the House........5
      A. Committee Oversight Findings and Recommendations........     5
      B. Statement of General Performance Goals and Objectives...     5
      C. Constitutional Authority Statement......................     5
      D. Information Relating to Unfunded Mandates...............     6
      E. Applicability of House Rule XXI 5(b)....................     6
      F. Tax Complexity Analysis.................................     6
VI. Changes in Existing Law Made by the Bill as Reported..............6

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Fallen Hero Survivor Benefit Fairness 
Act of 2001''.

SEC. 2. CONSISTENT TREATMENT OF SURVIVOR BENEFITS FOR PUBLIC SAFETY 
                    OFFICERS KILLED IN THE LINE OF DUTY.

  Subsection (b) of section 1528 of the Taxpayer Relief Act of 1997 
(Public Law 105-34) is amended by striking the period and inserting ``, 
and to amounts received in taxable years beginning after December 31, 
2001, with respect to individuals dying on or before December 31, 
1996.''.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The bill, H.R. 1727, as amended (the ``Fallen Hero Survivor 
Benefit Fairness Act of 2001''), equalizes the treatment of 
survivor annuities for public safety officers killed in the 
line of duty, regardless of the date of death.
    The bill provides net tax reductions of over $24 million 
over fiscal years 2001-2006.

                 B. Background and Need for Legislation

    The provisions approved by the Committee eliminate 
inequities in present law regarding the tax treatment of 
survivor annuities for public safety officers killed in the 
line of duty. The estimated revenue effects of the provisions 
comply with the most recent Congressional Budget Office 
revisions of budget surplus projections.

                         C. Legislative History


                            Committee Action

    The Committee on Ways and Means marked up the provisions of 
the bill on May 9, 2001, and reported the provisions, as 
amended, on May 9, 2001, by a voice vote, with a quorum 
present.

                      II. EXPLANATION OF THE BILL


   A. Extension of Present Law Treatment of Survivor Annuities with 
  Respect to Certain Public Safety Officers Killed in the Line of Duty


 (Sec. 2 of the bill and sec. 1528 of the Taxpayer Relief Act of 1997)


                              Present Law

    The Taxpayer Relief Act of 1997 provided that an amount 
paid as a survivor annuity on account of the death of a public 
safety officer who is killed in the line of duty is excludable 
from income to the extent the survivor annuity is attributable 
to the officer's service as a law enforcement officer. The 
survivor annuity must be provided under a governmental plan to 
the surviving spouse (or former spouse) of the public safety 
officer or to a child of the officer. Public safety officers 
include law enforcement officers, firefighters, rescue squad or 
ambulance crew. The provision does not apply with respect to 
the death of a public safety officer if it is determined by the 
appropriate supervising authority that (1) the death was caused 
by the intentional misconduct of the officer or by the 
officer's intention to bring about the death, (2) the officer 
was voluntarily intoxicated at the time of death, (3) the 
officer was performing his or her duties in a grossly negligent 
manner at the time of death, or (4) the actions of the 
individual to whom payment is to be made were a substantial 
contributing factor to the death of the officer.
    The provision applies to amounts received in taxable years 
beginning after December 31, 1996, with respect to individuals 
dying after that date.

                           Reasons for Change

    The Committee believes that survivors of public safety 
officers killed in the line of duty should all receive the same 
tax treatment, regardless of when the officer died.

                        Explanation of Provision

    The bill extends the present-law treatment of survivor 
annuities with respect to public safety officers killed in the 
line of duty with respect to individuals dying on or before 
December 31, 1996.

                             Effective Date

    The provision is effective with respect to payments 
received after December 31, 2001.

                       III. VOTE OF THE COMMITTEE

    Ordered reported by voice vote, with quorum present.

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of the rule XIII of the 
Rules of the House of Representatives, the following statement 
is made concerning the effects on the budget of the revenue 
provisions of the bill, H.R. 1727 as reported.
    The bill is estimated to have the following effects on 
budget receipts for fiscal years 2001-2006:

ESTIMATED BUDGET EFFECTS OF H.R. 1727, THE ``FALLEN HERO SURVIVOR BENEFIT FAIRNESS ACT OF 2001,'' AS REPORTED BY
                             THE COMMITTEE ON WAYS AND MEANS; FISCAL YEARS 2002-2006
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                Provision                         Effective           2002   2003   2004   2005   2006   2002-06
----------------------------------------------------------------------------------------------------------------
Extend the Present-Law Treatment of       pra 12/31/01                  -4     -5     -5     -5     -5       -24
 Survivor Annuities With Respect to
 Public Safety Officers Killed in the
 Line of Duty to Payments With Respect
 to Individuals Dying on or Before
 December 31, 1996.
----------------------------------------------------------------------------------------------------------------
Note. Details may not add to totals due to rounding.

Legend for ``Effective'' column: pra=payments received after.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority. The 
Committee further states that the revenue reducing income tax 
provision involves increased tax expenditures. (See amounts in 
table in Part IV.A., above.)

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 11, 2001.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1727, the Fallen 
Hero Survivor Benefit Fairness Act of 2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Erin 
Whitaker.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 1727--Fallen Hero Survivor Benefit Fairness Act of 2001

    Summary: Under current law, taxpayers may exclude from 
their taxable income certain amounts received as a survivor 
annuity on account of the death of a public safety officer in 
the line of duty. The officer must have died after December 31, 
1996, and the annuity must be provided under a government plan 
to the surviving spouse, former spouse, or child of the public 
safety officer. H.R. 1727 would extend the treatment of these 
survivor annuities with respect to individuals dying on or 
before December 31, 1996. The Congressional Budget Office and 
the Joint Committee on Taxation (JCT) estimate that enacting 
the bill would reduce revenues by $4 million in fiscal year 
2002, by $24 million over the 2002-2006 period, and by $46 
million over the 2002-2011 period. Because the bill would 
affect receipts, pay-as-you-go procedures would apply.
    H.R. 1727 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1727 is shown in the following table. 
All estimates of the revenue effects of the bill were provided 
by JCT.

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2002     2003     2004     2005     2006
----------------------------------------------------------------------------------------------------------------
                                               CHANGES IN REVENUES

Estimated Revenues.................................................       -4       -5       -5       -5       -5
----------------------------------------------------------------------------------------------------------------

    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in governmental receipts that are subject to pay-as-
you-go procedures are shown in the following table. For the 
purposes of enforcing pay-as-you-go procedures, only the 
effects in the current year, the budget year, and the 
succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................                                 Not applicable
Changes in receipts................      0     -4     -5     -5     -5     -5     -5     -5     -4     -4     -4
----------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 1727 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Erin Whitaker.
    Estimate approved by: G. Thomas Woodward, Assistant 
Director for Tax Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was a result of the Committee's 
oversight review concerning the tax burden on individual 
taxpayers that the Committee concluded that it is appropriate 
and timely to enact the revenue provision included in the bill 
as reported.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

                 C. Constitutional Authority Statement

    With respect to clause 3(d)(1) of rule XIII of the Rules of 
the House of Representatives (relating to Constitutional 
Authority), the Committee states that the Committee's action in 
reporting this bill is derived from Article I of the 
Constitution, Section 8 (``The Congress shall have Power To lay 
and collect Taxes, Duties, Imposts and Excises . . .''), and 
from the 16th Amendment to the Constitution.

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                E. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the provisions of the bill, and states that 
the provisions of the bill do not involve any Federal income 
tax rate increases within the meaning of the rule.

                       F. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service Reform and 
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the 
Joint Committee on Taxation (in consultation with the Internal 
Revenue Service and the Department of the Treasury) to provide 
a tax complexity analysis. The complexity analysis is required 
for all legislation reported by the House Committee on Ways and 
Means, the Senate Committee on Finance, or any committee of 
conference if the legislation includes a provision that 
directly or indirectly amends the Internal Revenue Code and has 
widespread applicability to individuals or small businesses.
    The staff of the Joint Committee on Taxation has determined 
that a complexity analysis is not required under section 
4022(b) of the IRS Reform Act because the bill contains no 
provisions that amend the Internal Revenue Code and that have 
``widespread applicability'' to individuals or small 
businesses.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

            SECTION 1528 OF THE TAXPAYER RELIEF ACT OF 1997


SEC. 1528. SURVIVOR BENEFITS FOR PUBLIC SAFETY OFFICERS KILLED IN THE 
                    LINE OF DUTY.

  (a) * * *
  (b) Effective Date.--The amendments made by this section 
shall apply to amounts received in taxable years beginning 
after December 31, 1996, with respect to individuals dying 
after such date[.], and to amounts received in taxable years 
beginning after December 31, 2001, with respect to individuals 
dying on or before December 31, 1996.

                                
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