11:25 AM EST

Jim McDermott, D-WA 7th

Mr. McDERMOTT. Madam Speaker, I move to suspend the rules and pass the bill (H.R. 3997) to amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes, as amended.

The Clerk read the title of the bill.

The text of the bill is as follows:

H.R. 3997

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 2007''.

(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 AND VOLUNTEER FIREFIGHTERS

Sec..101..Election to include combat pay as earned income for purposes of earned income tax credit.

Sec..102..Modification of mortgage revenue bonds for veterans.

Sec..103..Survivor and disability payments with respect to qualified military service.

Sec..104..Treatment of differential military pay as wages.

Sec..105..Exclusion from income for benefits provided to volunteer firefighters and emergency medical responders.

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..Disclosure of return information relating to 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.

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..Modification of penalty for failure to file partnership returns.

Sec..302..Penalty for failure to file S corporation returns.

Sec..303..Increase in information return penalties.

Sec..304..Increase in minimum penalty on failure to file a return of tax.

TITLE I--BENEFITS FOR MILITARY AND VOLUNTEER FIREFIGHTERS

SEC. 101. 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) 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.

(c) Effective Date.--The amendment made by this section shall apply to taxable years ending after December 31, 2007.

SEC. 102. 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.

SEC. 103. SURVIVOR AND DISABILITY PAYMENTS WITH RESPECT TO QUALIFIED MILITARY SERVICE.

(a) Plan Qualification Requirement for Death Benefits Under USERRA-Qualified Active Military Service.--Subsection (a) of section 401 (relating to requirements for qualification) is amended by inserting after paragraph (36) the following new paragraph:

``(37) DEATH BENEFITS UNDER USERRA-QUALIFIED ACTIVE MILITARY SERVICE.--A trust shall not constitute a qualified trust unless the plan provides that, in the case of a participant who dies while performing qualified military service (as defined in section 414(u)), the survivors of the participant are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the plan had the participant resumed and then terminated

employment on account of death.''.

(b) Treatment in the Case of Death or Disability Resulting From Active Military Service for Benefit Accrual Purposes.--Subsection (u) of section 414 (relating to special rules relating to veterans' reemployment rights under USERRA) is amended by redesignating paragraphs (9) and (10) as paragraphs (10) and (11), respectively, and by inserting after paragraph (8) the following new paragraph:

``(9) TREATMENT IN THE CASE OF DEATH OR DISABILITY RESULTING FROM ACTIVE MILITARY SERVICE.--

``(A) IN GENERAL.--For benefit accrual purposes, an employer sponsoring a retirement plan may treat an individual who dies or becomes disabled (as defined under the terms of the plan) while performing qualified military service with respect to the employer maintaining the plan as if the individual has resumed employment in accordance with the individual's reemployment rights under chapter 43 of title 38, United States Code, on the day preceding death or disability (as the case may be)

and terminated employment on the actual date of death or disability. In the case of any such treatment, and subject to subparagraphs (B) and (C), any full or partial compliance by such plan with respect to the benefit accrual requirements of paragraph (8) with respect to such individual shall be treated for purposes of paragraph (1) as if such compliance were required under such chapter 43.

``(B) NONDISCRIMINATION REQUIREMENT.--Subparagraph (A) shall apply only if all individuals performing qualified military service with respect to the employer maintaining the plan (as determined under subsections (b), (c), (m), and (o)) who die or became disabled as a result of performing qualified military service prior to reemployment by 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, 2009.

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 ``2011'' for ``2009'' 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 [Page: H12754]

(II) ending on the date described in clause (i)(II) (or, if earlier, the date the plan or contract amendment is adopted).

SEC. 104. 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, 2007.

(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, 2007.

(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, 2009.

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 ``2011'' for ``2009'' 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. 105. EXCLUSION FROM INCOME FOR BENEFITS PROVIDED TO VOLUNTEER FIREFIGHTERS AND EMERGENCY MEDICAL RESPONDERS.

(a) In General.--Part III of subchapter B of chapter 1 (relating to items specifically excluded from gross income) is amended by inserting after section 139A the following new section:

``SEC. 139B. BENEFITS PROVIDED TO VOLUNTEER FIREFIGHTERS AND EMERGENCY MEDICAL RESPONDERS.

``(a) In General.--In the case of any member of a qualified volunteer emergency response organization, gross income shall not include--

``(1) any qualified State and local tax benefit, and

``(2) any qualified payment.

``(b) Denial of Double Benefits.--In the case of any member of a qualified volunteer emergency response organization--

``(1) the deduction under 164 shall be determined with regard to any qualified State and local tax benefit, and

``(2) expenses paid or incurred by the taxpayer in connection with the performance of services as such a member shall be taken into account under section 170 only to the extent such expenses exceed the amount of any qualified payment excluded from gross income under subsection (a).

``(c) Definitions.--For purposes of this section--

``(1) QUALIFIED STATE AND LOCAL TAX BENEFIT.--The term `qualified state and local tax benefit' means any reduction or rebate of a tax described in paragraph (1), (2), or (3) of section 164(a) provided by a State or political division thereof on account of services performed as a member of a qualified volunteer emergency response organization.

``(2) QUALIFIED PAYMENT.--

``(A) IN GENERAL.--The term `qualified payment' means any payment (whether reimbursement or otherwise) provided by a State or political division thereof on account of the performance of services as a member of a qualified volunteer emergency response organization.

``(B) APPLICABLE DOLLAR LIMITATION.--The amount determined under subparagraph (A) for any taxable year shall not exceed $30 multiplied by the number of months during such year that the taxpayer performs such services.

``(3) QUALIFIED VOLUNTEER EMERGENCY RESPONSE ORGANIZATION.--The term `qualified volunteer emergency response organization' means any volunteer organization--

``(A) which is organized and operated to provide firefighting or emergency medical services for persons in the State or political subdivision, as the case may be, and

``(B) which is required (by written agreement) by the State or political subdivision to furnish firefighting or emergency medical services in such State or political subdivision.''.

(b) Clerical Amendment.--The table of sections for such part is amended by inserting after the item relating to section 139A the following new item:

``Sec..139B. Benefits provided to volunteer firefighters and emergency medical responders.''.

(c) Effective Date.--The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 106. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED SERVICES RETIRED PAY IS REDUCED AS A RESULT OF AWARD OF DISABILITY COMPENSATION.

(a) In General.--Subsection (d) of section 6511 (relating to special rules applicable to income taxes) is amended by adding at the end the following new paragraph:

``(8) SPECIAL RULES WHEN UNIFORMED SERVICES RETIRED PAY IS REDUCED AS A RESULT OF AWARD OF DISABILITY COMPENSATION.--

``(A) PERIOD OF LIMITATION ON FILING CLAIM.--If the claim for credit or refund relates to an overpayment of tax imposed by subtitle A on account of--

``(i) the reduction of uniformed services retired pay computed under section 1406 or 1407 of title 10, United States Code, or

``(ii) the waiver of such pay under section 5305 of title 38 of such Code,

as a result of an award of compensation under title 38 of such Code pursuant to a determination by the Secretary of Veterans Affairs, the 3-year period of limitation prescribed in subsection (a) shall be extended, for purposes of permitting a credit or refund based upon the amount of such reduction or waiver, until the end of the 1-year period beginning on the date of such determination.

``(B) LIMITATION TO 5 TAXABLE YEARS.--Subparagraph (A) shall not apply with respect to any taxable year which began more than 5 years before the date of such determination.''.

(b) Effective Date.--The amendment made by subsection (a) shall apply to claims [Page: H12755]

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. DISCLOSURE OF RETURN INFORMATION RELATING TO VETERANS PROGRAMS MADE PERMANENT.

(a) In General.--Subparagraph (D) of section 6103(l)(7) (relating to disclosure of return information to Federal, State, and local agencies administering certain programs under the Social Security Act, the Food Stamp Act of 1977, or title 38, United States Code or certain housing assistance programs) is amended by striking the last sentence.

(b) Effective Date.--The amendments made by this section 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.

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: H12756]

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. MODIFICATION OF PENALTY FOR FAILURE TO FILE PARTNERSHIP RETURNS.

(a) Extension of Time Limitation.--Subsection (a) of section 6698 (relating to general rule) is amended by striking ``5 months'' and inserting ``12 months''.

(b) Increase in Penalty Amount.--Paragraph (1) of section 6698(b) is amended by striking ``$50'' and inserting ``$100''.

(c) Effective Date.--The amendments made by this section shall apply to returns required to be filed after the date of the enactment of this Act.

SEC. 302. PENALTY FOR FAILURE TO FILE S CORPORATION RETURNS.

(a) In General.--Part I of subchapter B of chapter 68 (relating to assessable penalties) is amended by adding at the end the following new section:

``SEC. 6699. FAILURE TO FILE S CORPORATION RETURN.

``(a) General Rule.--In addition to the penalty imposed by section 7203 (relating to willful failure to file return, supply information, or pay tax), if any S corporation required to file a return under section 6037 for any taxable year--

``(1) fails to file such return at the time prescribed therefor (determined with regard to any extension of time for filing), or

``(2) files a return which fails to show the information required under section 6037,

such S corporation shall be liable for a penalty determined under subsection (b) for each month (or fraction thereof) during which such failure continues (but not to exceed 12 months), unless it is shown that such failure is due to reasonable cause.

``(b) Amount Per Month.--For purposes of subsection (a), the amount determined under this subsection for any month is the product of--

``(1) $100, multiplied by

``(2) the number of persons who were shareholders in the S corporation during any part of the taxable year.

``(c) Assessment of Penalty.--The penalty imposed by subsection (a) shall be assessed against the S corporation.

``(d) Deficiency Procedures Not to Apply.--Subchapter B of chapter 63 (relating to deficiency procedures for income, estate, gift, and certain excise taxes) shall not apply in respect of the assessment or collection of any penalty imposed by subsection (a).''.

(b) Clerical Amendment.--The table of sections for part I of subchapter B of chapter 68 is amended by adding at the end the following new item:

``Sec..6699..Failure to file S corporation return.''.

(c) Effective Date.--The amendments made by this section shall apply to returns required to be filed after the date of the enactment of this Act.

SEC. 303. INCREASE IN INFORMATION RETURN PENALTIES.

(a) Failure To File Correct Information Returns.--

(1) IN GENERAL.--Subsections (a)(1), (b)(1)(A), and (b)(2)(A) of section 6721 are each amended by striking ``$50'' and inserting ``$100''.

(2) AGGREGATE ANNUAL LIMITATION.--Subsections (a)(1), (d)(1)(A), and (e)(3)(A) of section 6721 are each amended by striking ``$250,000'' and inserting ``$600,000''.

(b) Reduction Where Correction Within 30 Days.--

(1) IN GENERAL.--Subparagraph (A) of section 6721(b)(1) is amended by striking ``$15'' and inserting ``$25''.

(2) AGGREGATE ANNUAL LIMITATION.--Subsections (b)(1)(B) and (d)(1)(B) of section 6721 are each amended by striking ``$75,000'' and inserting ``$200,000''.

(c) Reduction Where Correction on or Before August 1.--

(1) IN GENERAL.--Subparagraph (A) of section 6721(b)(2) is amended by striking ``$30'' and inserting ``$60''.

(2) AGGREGATE ANNUAL LIMITATION.--Subsections (b)(2)(B) and (d)(1)(C) of section 6721 are each amended by striking ``$150,000'' and inserting ``$400,000''.

(d) Aggregate Annual Limitations for Persons With Gross Receipts of Not More Than $5,000,000.--Paragraph (1) of section 6721(d) is amended--

(1) by striking ``$100,000'' in subparagraph (A) and inserting ``$250,000'',

(2) by striking ``$25,000'' in subparagraph (B) and inserting ``$75,000'', and

(3) by striking ``$50,000'' in subparagraph (C) and inserting ``$150,000''.

(e) Penalty in Case of Intentional Disregard.--Paragraph (2) of section 6721(e) is amended by striking ``$100'' and inserting ``$250''.

(f) Failure To Furnish Correct Payee Statements.--

(1) IN GENERAL.--Subsection (a) of section 6722 is amended by striking ``$50'' and inserting ``$100''.

(2) AGGREGATE ANNUAL LIMITATION.--Subsections (a) and (c)(2)(A) of section 6722 are each amended by striking ``$100,000'' and inserting ``$600,000''.

(3) PENALTY IN CASE OF INTENTIONAL DISREGARD.--Paragraph (1) of section 6722(c) is amended by striking ``$100'' and inserting ``$250''.

(g) Failure To Comply With Other Information Reporting Requirements.--Section 6723 is amended--

(1) by striking ``$50'' and inserting ``$100'', and

(2) by striking ``$100,000'' and inserting ``$600,000''.

(h) Effective Date.--The amendments made by this section shall apply with respect to information returns required to be filed on or after January 1, 2008.

SEC. 304. 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 ``$225''.

(b) Effective Date.--The amendment made by this section shall apply to returns the due date for the filing of which (including extensions) is after December 31, 2007.

11:26 AM EST

Jim McDermott, D-WA 7th

Mr. McDERMOTT. Madam Speaker, I move to suspend the rules and pass the bill (H.R. 3997) to amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes, as amended.

The Clerk read the title of the bill.

The text of the bill is as follows:

H.R. 3997

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 2007''.

(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 AND VOLUNTEER FIREFIGHTERS

Sec..101..Election to include combat pay as earned income for purposes of earned income tax credit.

Sec..102..Modification of mortgage revenue bonds for veterans.

Sec..103..Survivor and disability payments with respect to qualified military service.

Sec..104..Treatment of differential military pay as wages.

Sec..105..Exclusion from income for benefits provided to volunteer firefighters and emergency medical responders.

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..Disclosure of return information relating to 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.

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..Modification of penalty for failure to file partnership returns.

Sec..302..Penalty for failure to file S corporation returns.

Sec..303..Increase in information return penalties.

Sec..304..Increase in minimum penalty on failure to file a return of tax.

TITLE I--BENEFITS FOR MILITARY AND VOLUNTEER FIREFIGHTERS

SEC. 101. 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) 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.

(c) Effective Date.--The amendment made by this section shall apply to taxable years ending after December 31, 2007.

SEC. 102. 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.

SEC. 103. SURVIVOR AND DISABILITY PAYMENTS WITH RESPECT TO QUALIFIED MILITARY SERVICE.

(a) Plan Qualification Requirement for Death Benefits Under USERRA-Qualified Active Military Service.--Subsection (a) of section 401 (relating to requirements for qualification) is amended by inserting after paragraph (36) the following new paragraph:

``(37) DEATH BENEFITS UNDER USERRA-QUALIFIED ACTIVE MILITARY SERVICE.--A trust shall not constitute a qualified trust unless the plan provides that, in the case of a participant who dies while performing qualified military service (as defined in section 414(u)), the survivors of the participant are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the plan had the participant resumed and then terminated

employment on account of death.''.

(b) Treatment in the Case of Death or Disability Resulting From Active Military Service for Benefit Accrual Purposes.--Subsection (u) of section 414 (relating to special rules relating to veterans' reemployment rights under USERRA) is amended by redesignating paragraphs (9) and (10) as paragraphs (10) and (11), respectively, and by inserting after paragraph (8) the following new paragraph:

``(9) TREATMENT IN THE CASE OF DEATH OR DISABILITY RESULTING FROM ACTIVE MILITARY SERVICE.--

``(A) IN GENERAL.--For benefit accrual purposes, an employer sponsoring a retirement plan may treat an individual who dies or becomes disabled (as defined under the terms of the plan) while performing qualified military service with respect to the employer maintaining the plan as if the individual has resumed employment in accordance with the individual's reemployment rights under chapter 43 of title 38, United States Code, on the day preceding death or disability (as the case may be)

and terminated employment on the actual date of death or disability. In the case of any such treatment, and subject to subparagraphs (B) and (C), any full or partial compliance by such plan with respect to the benefit accrual requirements of paragraph (8) with respect to such individual shall be treated for purposes of paragraph (1) as if such compliance were required under such chapter 43.

``(B) NONDISCRIMINATION REQUIREMENT.--Subparagraph (A) shall apply only if all individuals performing qualified military service with respect to the employer maintaining the plan (as determined under subsections (b), (c), (m), and (o)) who die or became disabled as a result of performing qualified military service prior to reemployment by 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, 2009.

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 ``2011'' for ``2009'' 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 [Page: H12754]

(II) ending on the date described in clause (i)(II) (or, if earlier, the date the plan or contract amendment is adopted).

SEC. 104. 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, 2007.

(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, 2007.

(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, 2009.

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 ``2011'' for ``2009'' 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. 105. EXCLUSION FROM INCOME FOR BENEFITS PROVIDED TO VOLUNTEER FIREFIGHTERS AND EMERGENCY MEDICAL RESPONDERS.

(a) In General.--Part III of subchapter B of chapter 1 (relating to items specifically excluded from gross income) is amended by inserting after section 139A the following new section:

``SEC. 139B. BENEFITS PROVIDED TO VOLUNTEER FIREFIGHTERS AND EMERGENCY MEDICAL RESPONDERS.

``(a) In General.--In the case of any member of a qualified volunteer emergency response organization, gross income shall not include--

``(1) any qualified State and local tax benefit, and

``(2) any qualified payment.

``(b) Denial of Double Benefits.--In the case of any member of a qualified volunteer emergency response organization--

``(1) the deduction under 164 shall be determined with regard to any qualified State and local tax benefit, and

``(2) expenses paid or incurred by the taxpayer in connection with the performance of services as such a member shall be taken into account under section 170 only to the extent such expenses exceed the amount of any qualified payment excluded from gross income under subsection (a).

``(c) Definitions.--For purposes of this section--

``(1) QUALIFIED STATE AND LOCAL TAX BENEFIT.--The term `qualified state and local tax benefit' means any reduction or rebate of a tax described in paragraph (1), (2), or (3) of section 164(a) provided by a State or political division thereof on account of services performed as a member of a qualified volunteer emergency response organization.

``(2) QUALIFIED PAYMENT.--

``(A) IN GENERAL.--The term `qualified payment' means any payment (whether reimbursement or otherwise) provided by a State or political division thereof on account of the performance of services as a member of a qualified volunteer emergency response organization.

``(B) APPLICABLE DOLLAR LIMITATION.--The amount determined under subparagraph (A) for any taxable year shall not exceed $30 multiplied by the number of months during such year that the taxpayer performs such services.

``(3) QUALIFIED VOLUNTEER EMERGENCY RESPONSE ORGANIZATION.--The term `qualified volunteer emergency response organization' means any volunteer organization--

``(A) which is organized and operated to provide firefighting or emergency medical services for persons in the State or political subdivision, as the case may be, and

``(B) which is required (by written agreement) by the State or political subdivision to furnish firefighting or emergency medical services in such State or political subdivision.''.

(b) Clerical Amendment.--The table of sections for such part is amended by inserting after the item relating to section 139A the following new item:

``Sec..139B. Benefits provided to volunteer firefighters and emergency medical responders.''.

(c) Effective Date.--The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 106. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED SERVICES RETIRED PAY IS REDUCED AS A RESULT OF AWARD OF DISABILITY COMPENSATION.

(a) In General.--Subsection (d) of section 6511 (relating to special rules applicable to income taxes) is amended by adding at the end the following new paragraph:

``(8) SPECIAL RULES WHEN UNIFORMED SERVICES RETIRED PAY IS REDUCED AS A RESULT OF AWARD OF DISABILITY COMPENSATION.--

``(A) PERIOD OF LIMITATION ON FILING CLAIM.--If the claim for credit or refund relates to an overpayment of tax imposed by subtitle A on account of--

``(i) the reduction of uniformed services retired pay computed under section 1406 or 1407 of title 10, United States Code, or

``(ii) the waiver of such pay under section 5305 of title 38 of such Code,

as a result of an award of compensation under title 38 of such Code pursuant to a determination by the Secretary of Veterans Affairs, the 3-year period of limitation prescribed in subsection (a) shall be extended, for purposes of permitting a credit or refund based upon the amount of such reduction or waiver, until the end of the 1-year period beginning on the date of such determination.

``(B) LIMITATION TO 5 TAXABLE YEARS.--Subparagraph (A) shall not apply with respect to any taxable year which began more than 5 years before the date of such determination.''.

(b) Effective Date.--The amendment made by subsection (a) shall apply to claims [Page: H12755]

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. DISCLOSURE OF RETURN INFORMATION RELATING TO VETERANS PROGRAMS MADE PERMANENT.

(a) In General.--Subparagraph (D) of section 6103(l)(7) (relating to disclosure of return information to Federal, State, and local agencies administering certain programs under the Social Security Act, the Food Stamp Act of 1977, or title 38, United States Code or certain housing assistance programs) is amended by striking the last sentence.

(b) Effective Date.--The amendments made by this section 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.

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: H12756]

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. MODIFICATION OF PENALTY FOR FAILURE TO FILE PARTNERSHIP RETURNS.

(a) Extension of Time Limitation.--Subsection (a) of section 6698 (relating to general rule) is amended by striking ``5 months'' and inserting ``12 months''.

(b) Increase in Penalty Amount.--Paragraph (1) of section 6698(b) is amended by striking ``$50'' and inserting ``$100''.

(c) Effective Date.--The amendments made by this section shall apply to returns required to be filed after the date of the enactment of this Act.

SEC. 302. PENALTY FOR FAILURE TO FILE S CORPORATION RETURNS.

(a) In General.--Part I of subchapter B of chapter 68 (relating to assessable penalties) is amended by adding at the end the following new section:

``SEC. 6699. FAILURE TO FILE S CORPORATION RETURN.

``(a) General Rule.--In addition to the penalty imposed by section 7203 (relating to willful failure to file return, supply information, or pay tax), if any S corporation required to file a return under section 6037 for any taxable year--

``(1) fails to file such return at the time prescribed therefor (determined with regard to any extension of time for filing), or

``(2) files a return which fails to show the information required under section 6037,

such S corporation shall be liable for a penalty determined under subsection (b) for each month (or fraction thereof) during which such failure continues (but not to exceed 12 months), unless it is shown that such failure is due to reasonable cause.

``(b) Amount Per Month.--For purposes of subsection (a), the amount determined under this subsection for any month is the product of--

``(1) $100, multiplied by

``(2) the number of persons who were shareholders in the S corporation during any part of the taxable year.

``(c) Assessment of Penalty.--The penalty imposed by subsection (a) shall be assessed against the S corporation.

``(d) Deficiency Procedures Not to Apply.--Subchapter B of chapter 63 (relating to deficiency procedures for income, estate, gift, and certain excise taxes) shall not apply in respect of the assessment or collection of any penalty imposed by subsection (a).''.

(b) Clerical Amendment.--The table of sections for part I of subchapter B of chapter 68 is amended by adding at the end the following new item:

``Sec..6699..Failure to file S corporation return.''.

(c) Effective Date.--The amendments made by this section shall apply to returns required to be filed after the date of the enactment of this Act.

SEC. 303. INCREASE IN INFORMATION RETURN PENALTIES.

(a) Failure To File Correct Information Returns.--

(1) IN GENERAL.--Subsections (a)(1), (b)(1)(A), and (b)(2)(A) of section 6721 are each amended by striking ``$50'' and inserting ``$100''.

(2) AGGREGATE ANNUAL LIMITATION.--Subsections (a)(1), (d)(1)(A), and (e)(3)(A) of section 6721 are each amended by striking ``$250,000'' and inserting ``$600,000''.

(b) Reduction Where Correction Within 30 Days.--

(1) IN GENERAL.--Subparagraph (A) of section 6721(b)(1) is amended by striking ``$15'' and inserting ``$25''.

(2) AGGREGATE ANNUAL LIMITATION.--Subsections (b)(1)(B) and (d)(1)(B) of section 6721 are each amended by striking ``$75,000'' and inserting ``$200,000''.

(c) Reduction Where Correction on or Before August 1.--

(1) IN GENERAL.--Subparagraph (A) of section 6721(b)(2) is amended by striking ``$30'' and inserting ``$60''.

(2) AGGREGATE ANNUAL LIMITATION.--Subsections (b)(2)(B) and (d)(1)(C) of section 6721 are each amended by striking ``$150,000'' and inserting ``$400,000''.

(d) Aggregate Annual Limitations for Persons With Gross Receipts of Not More Than $5,000,000.--Paragraph (1) of section 6721(d) is amended--

(1) by striking ``$100,000'' in subparagraph (A) and inserting ``$250,000'',

(2) by striking ``$25,000'' in subparagraph (B) and inserting ``$75,000'', and

(3) by striking ``$50,000'' in subparagraph (C) and inserting ``$150,000''.

(e) Penalty in Case of Intentional Disregard.--Paragraph (2) of section 6721(e) is amended by striking ``$100'' and inserting ``$250''.

(f) Failure To Furnish Correct Payee Statements.--

(1) IN GENERAL.--Subsection (a) of section 6722 is amended by striking ``$50'' and inserting ``$100''.

(2) AGGREGATE ANNUAL LIMITATION.--Subsections (a) and (c)(2)(A) of section 6722 are each amended by striking ``$100,000'' and inserting ``$600,000''.

(3) PENALTY IN CASE OF INTENTIONAL DISREGARD.--Paragraph (1) of section 6722(c) is amended by striking ``$100'' and inserting ``$250''.

(g) Failure To Comply With Other Information Reporting Requirements.--Section 6723 is amended--

(1) by striking ``$50'' and inserting ``$100'', and

(2) by striking ``$100,000'' and inserting ``$600,000''.

(h) Effective Date.--The amendments made by this section shall apply with respect to information returns required to be filed on or after January 1, 2008.

SEC. 304. 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 ``$225''.

(b) Effective Date.--The amendment made by this section shall apply to returns the due date for the filing of which (including extensions) is after December 31, 2007.

11:29 AM EST

Philip English, R-PA 3rd

Mr. ENGLISH of Pennsylvania. Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, we cannot express enough the tremendous debt of gratitude we owe the brave men and women who defend our freedoms every day. It is with great honor that I join my colleagues on the House floor today and [Page: H12758]

help lead the debate on H.R. 3997, the Heroes Earnings Assistance and Relief Tax Act. This legislation is more than a simple cleanup of some of the disincentives, distortions and oversights that have disadvantaged our active duty military

and veterans in the Tax Code.

This legislation is significant because it sends a clear message that even as many of our best and brightest are currently in harm's way in theaters where they are facing hostile fire, this Congress is prepared to work on a bipartisan basis to consider every option and every opportunity to improve the lives of their families and their predecessors.

The $2.3 billion tax package which was reported out of the House Ways and Means Committee last week will bolster tax and Social Security benefits for military servicemembers, veterans and volunteers. This important measure will allow our active military men and women to benefit from the earned income tax credit by allowing them to pair their nontaxable combat pay with their earned income.

H.R. 3997 will ease the financial burden of losing a loved one by allowing survivors to put military death benefits into Roth IRAs without limitations. Furthermore, this legislation will ensure military Reservists will have the opportunity to make penalty-free withdrawals from their retirement plans, including 401(k) and IRA accounts. If deployed, these men and women will be able to provide the financial footing their families may depend on during their absence.

I am also pleased that the majority, in bringing this bill to the floor today, included in it an amendment I offered and withdrew in committee. I appreciate the bipartisan support displayed on this critical issue. Specifically, my provision will expand Social Security income benefits to our aged, disabled and blind veterans.

Under current law, the Social Security Administration counts annuities paid by State governments to veterans who are blind, disabled or aged as earned income. As a result, veterans in certain States like Pennsylvania, which provides paralyzed vets with an $1,800-per-year annuity, may be denied Federal benefits or receive a lower amount than veterans in States that do not provide such annuities. H.R. 3997 will correct this inequity in the law and ensure that annuities awarded by States to vets

with certain disabilities are disregarded when determining SSI benefits.

Madam Speaker, the dedication and bravery made by American soldiers have allowed us to exercise our everyday freedoms. Many have made the ultimate sacrifice, and it is our duty in Congress to make sure that veterans rights and interests are protected and served. As many of us prepare for this upcoming Veterans Day, this legislation reaches our Chamber at the proper time and includes the right incentives to help our men and women in uniform. Overall, this legislation is a bundle of commonsense

changes to help those who have contributed to the defense of our country and the protection of our freedoms. I am proud to be a supporter of this initiative, and I retain the balance of my time.

11:33 AM EST

Richard Neal, D-MA 2nd

Mr. NEAL of Massachusetts. Madam Speaker, I am delighted that this bipartisan legislation to assist our veterans is before the House today. It also is certainly of great assistance to our active duty military and Reservists and indeed their families. The bill we are considering today is the product of a joint hearing held last month by the Select Revenue Measures Subcommittee led by myself and the Ranking Member English and the Income Security Subcommittee led by Chairman McDermott

and Ranking Member Weller. We heard from a number of veterans advocates, military families groups, the Social Security Administration, Members of Congress and others who discussed their proposals to either enhance tax provisions or reduce burdens on those who serve or volunteer for America.

The bill we are considering today, which passed out of the full committee last week, is a product of those deliberations and will go far to assist those serving this country, again, emphasizing support for their families. This country is fortunate that so many soldiers and sailors have been willing to sacrifice for our defense. We must remember, once again, that this is a shared sacrifice. The families of someone serving this country can suffer financially, as well as emotionally, during extended

tours. Congress has a responsibility to ensure that the Tax Code and other income security provisions do not create problems but, rather, solve them for military families. That is exactly what this bill will allow us to do.

11:34 AM EST

Philip English, R-PA 3rd

Mr. ENGLISH of Pennsylvania. Madam Speaker, at this point, I would like to yield 2 minutes to a leader on our committee, the distinguished gentleman from Illinois (Mr. Weller).

11:35 AM EST

Jerry Weller, R-IL 11th

Mr. WELLER of Illinois. Madam Speaker, last month the members of the Ways and Means Committee heard compassionate testimony on several of the tax and benefit provisions for veterans, military families and volunteers in the bill we are considering on the floor today. Several provisions amend the Supplemental Security Income program that operates under the jurisdiction of the Ways and Means Subcommittee on Income Security and Family Support, which I have the privilege of serving as ranking member.

These would effectively expand eligibility for and increase SSI benefit payments to certain military families, veterans and AmeriCorps participants. The bill also includes provisions offered by my friends and colleagues, Phil English of Pennsylvania and Tom Reynolds of New York, that would ensure comparable treatment under the SSI program when it comes to State annuities for blind and other disabled veterans.

It is important that we look for ways to ensure that those in the military and their families who make sacrifices receive appropriate and timely support. The bill before us today will provide more help to our veterans, to our military families and to others who volunteer in service to our Nation. That is something I support, and I urge all my colleagues to join me in supporting our soldiers, our families and others who volunteer to help America by voting ``yes'' for this legislation.

11:36 AM EST

Lloyd Doggett, D-TX 25th

Mr. DOGGETT. Madam Speaker, support for our troops does not begin on the battlefield and it must not end there. With approval of this legislation, Texas veterans will be eligible for below-market home loans of up to $325,000. Under the previous law, this benefit was restricted to veterans who had served prior to 1977. Today, we close the gap for the many who have been our heroes in the last 30 years who are not currently eligible. Those who have served to keep us safe in our homes deserve a chance

of a home of their own. That is what this bill does.

We know that Veterans Day is approaching, but every day that we enjoy freedom bestowed by the sacrifices of those in uniform is a day that we should honor them. It is often said that we should honor our vets not only with our words but also with our deeds. Well, today we expand the opportunity for each vet to obtain a deed for their home. As veterans paid the price to build our great democracy, we can afford the price of building a foundation for their home ownership.

11:37 AM EST

Philip English, R-PA 3rd

Mr. ENGLISH of Pennsylvania. Madam Speaker, it is now my privilege to yield 2 minutes to another member of our committee and a strong advocate of the cause of veterans, the gentleman from Texas (Mr. Brady).

11:38 AM EST

Kevin Brady, R-TX 8th

Mr. BRADY of Texas. Madam 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 a home. This bill updates current law to ensure that veterans who served after 1977 can qualify for low-interest home loans financed by the Qualified Veterans Mortgage Bonds.

Back home in Texas, this bill is going to enable Texas' Veterans Land Board to expand its existing low-interest loan [Page: H12759]

program to several thousand more Texas veterans, several thousand, helping a new generation of veterans own a piece of the American Dream. Our land commissioner, Jerry Patterson, a Marine veteran himself, does an excellent job supervising this program and reaching out to veterans. This bill is going to allow him, and our State, to help

more veterans get into a home they can afford. My thought is for all the sacrifice our veterans make to defend our country, it is only right that we help them upon their return home.

11:39 AM EST

Richard Neal, D-MA 2nd

Mr. NEAL of Massachusetts. Madam Speaker, I would like to yield 1 1/2 minutes to the gentleman from North Dakota and member of the Ways and Means Committee, Mr. Pomeroy.

11:39 AM EST

Earl Pomeroy, D-ND

Mr. POMEROY. This is a photograph of Major Alan Johnson, his wife, Tori, and his daughter, Megan. This beautiful family suffered the tragedy of losing Major Johnson in Iraq. Last winter, we buried Major Johnson at Arlington Cemetery. His widow contacted me 2 weeks later to tell me that what had happened in the State of Washington is the pension plan there had simply given the money back that Alan Johnson had paid in as if he had terminated his employment at the time he was called to duty, called

to deployment in his status as a Reserve officer.

It brought to light a gap in the law that protects our deployed Reservists and Guardsmen. When they come back, this law seamlessly reintegrates them into the pension plan of their employer, but there was no provision if we tragically lose our soldiers under deployment. Included in this bill is the HEROES Act, introduced by Doc Hastings and myself, that allows for survivor benefits to be paid in this situation. It is a very important addition. It is terribly important that survivors of

our soldiers who paid the ultimate price have survivors benefits under the pension. This law will afford that.

Madam Speaker, I include for the Record a letter to this effect from Mrs. Tori Johnson.

November 5, 2007.

Hon. CHARLES RANGEL,

Chairman, Committee on Ways and Means, Longworth House Office Building, Washington, DC.

DEAR CHAIRMAN RANGEL: I am writing to thank you for introducing the Heroes Earnings Assistance and Relief Tax (HEART) Act, H.R. 3997. Your bill makes many important changes to the tax law that will be of great help to the men and women who serve in the Reserve and the National Guard and their families.

My husband, Major Alan R. Johnson, who was killed in Iraq earlier this year, was a public servant both in the Reserve and in his full time job. In his civilian life, he worked for fifteen years with the Yakima County Department of Corrections. We were a team. He was a strong leader and he depended on the strength of his family. We needed to be strong so he did not need to worry about us when he was serving his county in the Reserves.

Dealing with the problems and technicalities our family had to face after we learned that Alan was killed has not been easy. My husband was 44 and we were planning on his retirement for our future. Because his employer considered Alan as an employee who had voluntarily terminated when he left for his deployment, the survivor benefit under his pension that we would be paid was less than the amount we would have received if he was still an active employee. When I asked why, I found out that in

order to have his pension protected under existing law he had to return to work.

The HEART Act corrects the gap in the Uniform Services Employment and Reemployment Right Act's pension protections for survivors of National Guard and Reserve soldiers who are killed in action and can not return to work. Our Guard and Reservists should know that the families that they leave behind will be able to rely on the survivor benefits that they have earned in their civilian employment.

Over 81,000 Reservist and National Guard members have responded to our Nation's call to duty. They believe in our country and are willing to make that ultimate sacrifice. When they cannot return to their former jobs your bill will make sure that their families will get the full survivor benefits that they earned from their jobs at home.

Again, I thank you for your leadership and that of Congressman Pomeroy and Congressman Hastings in making sure that the country that Reservists, like my husband, have sacrificed everything for will take care of their families. I hope that your bill, H.R. 3997, will become law soon.

Sincerely,

VICTORIA C. JOHNSON.

11:41 AM EST

Philip English, R-PA 3rd

Mr. ENGLISH of Pennsylvania. Madam Speaker, at this point, it would be my honor to yield 4 minutes to a leader in our committee who made a seminal contribution to the SSI component of this legislation, the gentleman from New York (Mr. Reynolds).

(Mr. REYNOLDS asked and was given permission to revise and extend his remarks.)

11:41 AM EST

Tom Reynolds, R-NY 26th

Mr. REYNOLDS. I thank the gentleman from Pennsylvania.

I want to thank both Chairman Rangel and Ranking Member McCrery, as well as Chairman Neal and Chairman McDermott and Ranking Members English and Weller, for their outstanding leadership in crafting this legislation.

Madam Speaker, we come together today not as Democrats and Republicans but as Americans. We are united in our respect for those who wear the uniform of the United States armed services. We are united in our desire to ensure that Federal programs within the Ways and Means Committee's jurisdiction, from the Tax Code to the SSI program, work effectively for members of the military, veterans, first responders and their families. I strongly urge the passage of this legislation.

I would like to highlight two specific provisions in the bill that have been of particular interest to me during my time in Congress. The first provision, section 202, is modeled on legislation, the Blind Veterans Fairness Act, that I first introduced in the year 2000. My legislation would correct a problem in the Federal SSI rules that affects blind veterans in four States, New York, New Jersey, Pennsylvania and Massachusetts, that provide these veterans modest annuities in recognition of the

substantial sacrifice they have made in service to our country.

Regrettably, under current Federal law, these State annuities actually reduce any SSI payments for which blind veterans would otherwise be eligible. As we heard from Michelle LaRock of New York's Division of Veterans' Affairs at our Ways and Means Committee hearing 3 weeks ago, this quirk in the Federal SSI rules creates a hardship not only for the affected veterans themselves, but for the States that administer these annuity programs as well.

As in years past, the bill I have introduced in the 110th Congress, H.R. 649, has enjoyed bipartisan support. It has been strongly endorsed by the Blinded Veterans Association. I would also like to publicly thank Chairman Rangel, not just the Chair of our committee but the dean of my State's congressional delegation, for his cosponsorship of prior versions of this bill, and I look forward to working closely with him to see the proposal finally enacted into law.

Let me turn briefly to a separate provision, section 107 of the bill, which will permanently allow penalty-free withdrawals from IRAs, 401(k)'s and other retirement funds for Reservists and National Guardsmen called to active duty. As we all know, when Guardsmen and Reservists are called up, they often face significant reductions in pay compared to their civilian salaries, putting an economic strain on their families.

To lessen this economic hardship, many of them chose to draw down on their retirement funds. Unfortunately, under prior law, they faced a 10 percent early withdrawal tax when they did so, and they faced restrictions on making repayments to their retirement funds upon returning from active duty.

[Time: 11:45]

Last year's Pension Protection Act provided relief from this penalty tax and permitted unlimited repayments within 2 years after leaving active duty, but only for Guardsmen or Reservists called to active duty before December 31, 2007.

To ensure that this important relief remains available on a permanent basis going forward, I introduced H.R. 867, the Guardsmen and Reservist Tax Fairness Act, on February 7 of this year. This legislation has also attracted a bipartisan group of cosponsors, as well as endorsements from several leading veteran service organizations. I look forward to seeing these commonsense changes enacted into law over the coming weeks. [Page: H12760]

I urge a ``yes'' vote.

BLINDED VETERANS ASSOCIATION,

Washington, DC, February 9, 2007.

Hon. THOMAS REYNOLDS,

House of Representatives,

Washington, DC.

DEAR REPRESENTATIVE REYNOLDS: On behalf of the Blinded Veterans Association (BVA), the only congressionally chartered Veterans Service Organization exclusively dedicated to serving the needs of our Nation's blinded veterans and their families we commend you for the introduction of H.R. 649 ``Blind Veterans Fairness Act.'' BVA is grateful to you for sponsoring this bill for those blind veterans who have their state annuities counted against the income levels by Social Security. Cornell

University Disability Statistics research has found that the poverty rates for the disabled working age population in 2004, ages 21-64, has risen to 3.33 times the rate of poverty for the non-disabled population. They also found that the poverty rate for those with a sensory disability in this age group was 24.6% in 2005 as compared to 9.3% for the non-disability population.

These annuities from the states are clearly meant as a ``gift'' to help prevent these veterans from falling into these terrible statistics and in appreciation for their service to our nation. BVA appreciates that you not only understand this issue, but are willing to take action to correct the problems blinded veterans have had with these annuities from some states being provided to them. These should not be considered additional income by Social Security, but instead a special disability benefit

for their service to our grateful nation. This penalty should be removed and the annuities excluded from all income for purposes of SSI for purposes of pension benefits.

BVA strongly supports H.R. 649, and we appreciate all your strong efforts in regards to this issue for blinded veterans.

Sincerely,

Thomas Zampieri,

Director, Government Relations.

--

MILITARY OFFICERS

ASSOCIATION OF AMERICA,

Alexandria, VA, March 29, 2007.

Representative TOM REYNOLDS,

House of Representatives,

Washington, DC.

DEAR REPRESENTATIVE REYNOLDS: I am writing on behalf of the 362,000 members of the Military Officers Association of America (MOAA) to thank you for your leadership in sponsoring H.R. 867, the Guardsmen and Reservists' Tax Fairness Act of 2007.

Your bill would make permanent a provision in law for reservists to make penalty- free withdrawals from IRAs, 401ks and similar retirement funds while they are on active duty of at least 6 months. It would also permit them to make unlimited repayments to their retirement plans within two years after leaving active duty. The existing authority will sunset on December 31, 2007.

Under our nation's ``operational reserve'' policy, National Guard and Reserve forces are integrated in all military missions worldwide and are expected to serve on active duty tours one year out of every five or six years. This policy is expected to remain in place for the indefinite future. While Guard and Reserve retention remains strong, it is unrealistic to expect that families and employers can be expected to remain committed to reserve service for the long term without additional support

from Congress. One simple way to help Guard and Reserve service men and women is to allow them to withdraw funds from their civilian retirement plans during an activation and to repay those accounts on an unlimited basis following deactivation for up to two years. Making the existing authority permanent will help reserve families make ends meet, support their future financial security, and reduce the enormous stress and strain they endure in service to our nation.

MOAA strongly endorses H.R. 867 and we pledge our full support for its early enactment.

Thank you for your leadership!

Sincerely,

Norbert R. Ryan, Jr.,

President.

--

ASSOCIATION OF THE

UNITED STATES ARMY,

Arlington, VA, February 12, 2007.

Hon. TOM REYNOLDS,

House of Representatives,

Washington, DC.

DEAR MR. REYNOLDS: On behalf of the more than 100,000 members of the Association of the United States Army, I write to thank you for your leadership in sponsoring H.R. 867, the Guardsmen and Reservists' Tax Fairness Act of 2007. This bill would make permanent a provision in law for reservists to make penalty-free withdrawals from IRAs, 401-ks, and similar retirement funds while they are on active duty for at least 6 months. It would also permit them to make unlimited repayments to their

retirement plans within two years after leaving active duty. The existing authority authorizing these provisions will end on 31 December 2007.

Under our nation's ``operational reserve'' policy, National Guard and Reserve forces are integrated in all military missions worldwide and are expected to serve on active duty tours one year out of every five or six years. This policy is expected to remain in place for the indefinite future. While Guard and Reserve retention remains strong, it is unrealistic to expect that families and employers will remain committed to reserve service for the long term without additional support from Congress.

Making the existing authority permanent will help Reserve Component families make ends meet, support their future financial security, and reduce the enormous stress and strain they endure serving our nation.

The Association of the United States Army strongly endorses H.R. 867, and we pledge our full support for its early enactment.

Sincerely,

Gordon R. Sullivan,

General, USA, Retired,

President.

--

NAVAL RESERVE ASSOCIATION,

Alexandria, VA, February 12, 2007.

Hon. THOMAS M. REYNOLDS,

House of Representatives,

Washington, DC.

DEAR CONGRESSMAN REYNOLDS: I am writing on behalf of the membership of the Naval Reserve Association to thank you for your leadership in sponsoring H.R. 867, the Guardsmen and Reservists' Tax Fairness Act of 2007. Your bill would make permanent a provision in law for reservists to make penalty-free withdrawals from IRAs, 401ks and similar retirement funds while they are on active duty of at least 6 months. It would also permit them to make unlimited repayments to their retirement plans

within two years after leaving active duty. The existing authority will sunset on December 31, 2007.

Under our nation's ``operational reserve'' policy, National Guard and Reserve forces are integrated in all military missions worldwide and are expected to serve on active duty tours one year out of every five or six years. This policy is expected to remain in place for the indefinite future. While Guard and Reserve retention remains strong, it is unrealistic to assume that families and employers can be expected to remain committed to reserve service for the long term without additional support

from Congress.

One simple way to help Guard and Reserve service men and women is to allow them to withdraw funds from their civilian retirement plans during an activation and to repay those accounts on an unlimited basis following deactivation for up to two years. Making the existing authority permanent will help reserve families make ends meet, support their future financial security, and reduce the enormous stress and strain they endure in service to our nation.

The Naval Reserve Association strongly endorses H.R. 867, and we pledge our full support for its early enactment.

Sincerely,

C. WILLIAMS COANE,

RADM, USNR (Ret),

Executive Director.

--

ENLISTED ASSOCIATION

OF THE NATIONAL GUARD,

Alexandria, VA, February 12, 2007.

Hon. TOM REYNOLDS,

House of Representatives,

Washington, DC.

The Enlisted Association of the National Guard of the United States (EANGUS) is the only military service association that represents the interests of every enlisted soldier and airmen in the Army and Air National Guard. With a constituency base of over 414,000 soldiers and airmen, their families, and a large retiree membership, EANGUS engages Capitol Hill on behalf of courageous Guard persons across this nation.

On behalf of EANGUS, and the soldiers and airmen it represents, I am writing on behalf of our membership to thank you for your leadership in sponsoring H.R. 867, the Guardsmen and Reservists' Tax Fairness Act of 2007. Your bill would make permanent a provision in law for reservists to make penalty-free withdrawals from IRA, 401k and similar retirement funds while they are on active duty of at least 6 months. It would also permit them to make unlimited repayments to their retirement plans within

two years after leaving active duty. The existing authority will sunset on December 31, 2007.

Under our nation's ``operational reserve'' policy, National Guard and Reserve forces are integrated in all military missions worldwide and are expected to serve on active duty tours one year out of every five or six years. This policy is expected to remain in place for the indefinite future. While Guard and Reserve retention remains strong, it is unrealistic to expect that families and employers can be expected to remain committed to reserve service for the long term without additional support

from Congress. One simple way to help Guard and Reserve service men and women is to allow them to withdraw funds from their civilian retirement plans during activation and to repay those accounts on an unlimited basis following deactivation for up to two years. Making the existing authority permanent will help reserve families make ends meet, support their future financial security, and reduce the enormous stress and strain they endure in service to our nation.

EANGUS strongly endorses H.R. 867 and we pledge our full support for its early enactment.

Working for America's Best!

Michael P. Cline,

Executive Director.

11:46 AM EST

John B. Larson, D-CT 1st

Mr. LARSON of Connecticut. Madam Speaker, I want to extend as well and compliment Chairman Rangel, Chairman McDermott, and especially Chairman Neal, for the timely manner in which they have handled very important legislation that addresses veterans, but specifically to Mr. Neal because it was not lost on him in this piece of legislation that we also needed to address an important segment of our society, our volunteer firefighters.

It wasn't lost on Mr. Neal that volunteer firefighters protect approximately 38 percent of America's population and more than 70 percent of our land. It wasn't lost on Mr. Neal that volunteer firefighters save taxpayers nearly $37 billion annually with their efforts.

Two-thirds of the 1.2 million firefighters in this country are in fact volunteers. More importantly, it wasn't lost on anyone in this body that it wasn't the FBI, the CIA or the Department of Defense, it was our front line defenders, first responders that were there at the World Trade Center, at the Pentagon and in the fields of Pennsylvania. It's to them, of course, that we owe this debt of gratitude.

It was lost, however, on the IRS that when States like mine in Connecticut moved to provide a rebate on their local property taxes, that they sought to tax it and make it ordinary income on behalf of these brave volunteers. This legislation corrects that. I want to commend the Mitchell brothers, both John and Billy, from South Windsor, Connecticut, John McAuliffe of Whethersfield, and Chief Phil Crombie, who are the genesis of this idea and concept and brought it to my attention.

Madam Speaker, I again thank Chairman Neal for making it all happen.

11:51 AM EST

Earl Blumenauer, D-OR 3rd

Mr. BLUMENAUER. Madam Speaker, I appreciate the gentleman's courtesy in recognizing me and in working with us.

For over 60 years, Oregonians have provided a benefit to our returning veterans of home loans that were below market rate to be able to help them reestablish themselves in the community and as a small gesture of our appreciation for their sacrifice. Unfortunately, with the recent flood of returning veterans from Iraq and Afghanistan, we found that that program has been stretched to the limit and we were faced with denying them access.

Working with Mr. Neal, Chairman Rangel, the committee and subcommittee, we were able to make an important adjustment, a 400 percent increase in the loan cap, so that we will be able to fully meet the needs of returning Oregon veterans, and along the way it will help people in Alaska, Wisconsin, Texas, and California. In this time of uncertainty in the housing market, giving these important loans to our veterans is an important gesture. I appreciate the work that the committee

has done to make this a reality.

11:52 AM EST

Philip English, R-PA 3rd

Mr. ENGLISH of Pennsylvania. Madam Speaker, it is now my privilege to yield 4 minutes to the distinguished gentleman from Kansas (Mr. Moran), a true advocate of the veterans, as well as all of the military facilities in his district.

11:52 AM EST

Jerry Moran, R-KS 1st

Mr. MORAN of Kansas. I thank the gentleman from Pennsylvania for recognizing me.

This, as you can hear, is an important piece of legislation that is widely supported and praised here on the House floor today, but I am disappointed that the majority in the committee rejected an amendment that the gentleman from Pennsylvania (Mr. English) offered.

This amendment was a commonsense, bipartisan fix to the Tax Code to prevent lower-income military personnel and their families from being discriminated against when applying to live in affordable housing built under the Low Income Housing Tax Credit Program.

A number of military installations across the country are experiencing housing shortages as a result of the 2005 BRAC. One of those facilities, Fort Riley, an Army post located in the State of Kansas, is nearly doubling in size and is now seeing an influx of 30,000 soldiers, civilian workers, and others.

When the new soldiers live off base, they receive a military housing allowance from the government that they use for payment of rent. Though the Tax Code does not treat the housing allowance as taxable income, it is considered income when determining a military family's eligibility to live in facilities financed with low-income housing tax credits. The result is that some servicemembers, particularly our enlisted men and women, are considered to earn too much income and are thus disqualified

from living in affordable housing.

However, comparatively low-income civilians receiving section 8 housing vouchers from the Federal Government are more likely to qualify for this 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, and affordable housing; and they should be given a fair opportunity to qualify for it. The House acted in May to exempt military housing allowance from income eligibility requirements when qualifying for the Head Start program. The USDA's WIC nutrition program for Women, Infants and Children also provides for this exemption. Unfortunately, the discrimination persists when military families apply to live in affordable housing and enlisted

servicemembers and their families continue to be treated unfairly in communities across the country.

I had hoped to offer amendment here today on the House floor to address this issue, but the procedure by which this bill is brought to the floor does not allow me that opportunity. I would urge and encourage my colleagues to join me in cosponsoring H.R. 1481, The [Page: H12762]

Military Access to Housing Act, to correct this inequality, and to encourage the leadership of this House to bring this measure to the floor for a vote.

11:55 AM EST

Bill Pascrell Jr., D-NJ 8th

Mr. PASCRELL. Madam Speaker, I rise today in strong support of H.R. 3997, and I want to commend Chairman Rangel, Congressman Neal, and Congressman English for their persistence.

Tax changes, if done wrong, can exacerbate existing inequalities, hurt our moral fabric, and slow the economy; so I am glad today with this bill we will take up a tax measure that is not geared towards increasing the fortunes of the already fortunate, but instead we will provide a measure of relief for those brave men and women serving in the military and as first responders.

In particular, I am glad to see that this bill excludes from income certain reimbursable expenses incurred in the line of duty by volunteer firefighters; and I commend my friend, Congressman Larson from Connecticut, who has worked on this issue for some time.

I am truly heartened we are permanently extending combat pay in the calculations of the earned income tax credit. Recent law allowed members of the Armed Forces to exclude combat pay, which is generally nontaxable, for purposes of computing the earned income credit. But this will only last through the 2006 tax year. Many of us have worked for some time to make this proposal permanent. I am tremendously pleased that this provision has made it into the broader package that we are discussing today.

There is no reason a member of the Armed Forces should lose their earned income tax credit when they are mobilized serving their country.

Again, I thank the chairman and I thank Mr. Neal and Mr. English for their work and diligence on this critical issue.

11:57 AM EST

Bill Pascrell Jr., D-NJ 8th

Mr. PASCRELL. Madam Speaker, I rise today in strong support of H.R. 3997, and I want to commend Chairman Rangel, Congressman Neal, and Congressman English for their persistence.

Tax changes, if done wrong, can exacerbate existing inequalities, hurt our moral fabric, and slow the economy; so I am glad today with this bill we will take up a tax measure that is not geared towards increasing the fortunes of the already fortunate, but instead we will provide a measure of relief for those brave men and women serving in the military and as first responders.

In particular, I am glad to see that this bill excludes from income certain reimbursable expenses incurred in the line of duty by volunteer firefighters; and I commend my friend, Congressman Larson from Connecticut, who has worked on this issue for some time.

I am truly heartened we are permanently extending combat pay in the calculations of the earned income tax credit. Recent law allowed members of the Armed Forces to exclude combat pay, which is generally nontaxable, for purposes of computing the earned income credit. But this will only last through the 2006 tax year. Many of us have worked for some time to make this proposal permanent. I am tremendously pleased that this provision has made it into the broader package that we are discussing today.

There is no reason a member of the Armed Forces should lose their earned income tax credit when they are mobilized serving their country.

Again, I thank the chairman and I thank Mr. Neal and Mr. English for their work and diligence on this critical issue.

11:58 AM EST

Shelley Berkley, D-NV 1st

Ms. BERKLEY. Madam Speaker, as Veterans Day approaches, the timing could not be more appropriate for Congress to be considering the HEART Act. This legislation will help veterans and their families, and it will also show them that their fellow citizens appreciate their service and honor their sacrifices for our country.

Nevada has one of the fastest growing veterans populations in the country, and I have seen firsthand the economic hardship that extended military deployment in Iraq and Afghanistan have caused. The HEART Act will allow more families to qualify for the earned income tax credit or to make penalty-free withdrawals from retirement plans in time of true economic need to help ease the burden of deployment.

Nevada has suffered 59 deaths during the global war on terror, including 46 in Iraq. I support the provisions of this bill that will allow the spouses of those who sacrificed their lives to be better able to plan for their futures and those of their children.

As a member of both the Ways and Means Committee and the Veterans' Affairs Committee, I strongly support this bill. I urge my colleagues to vote for this bipartisan legislation.

[Time: 12:00]

12:00 PM EST

Jason Altmire, D-PA 4th

Mr. ALTMIRE. I thank the chairman for including in this bill legislation I introduced to assist our brave men and women in uniform.

My bill, H.R. 3827, the Active Duty Military Tax Relief Act, ensures that active duty military personnel will be able to treat combat pay as earned income when computing the earned income tax credit.

My bill also allows Reservists called to active duty to make penalty-free withdrawals from their retirement plans. And servicemembers who receive differential pay from their civilian employer will be able to contribute those wages to their retirement plan.

Finally, family members of those killed in the line of duty will be able to contribute up to $100,000 of the military death gratuity into tax-favored accounts, such as Roth IRAs and education savings accounts.

I thank the chairman for working with me to ensure that all of these provisions from my bill have been included in full in this legislation which I strongly support.

12:01 PM EST

Nancy Boyda, D-KS 2nd

Mrs. BOYDA of Kansas. Madam Speaker, unless we act now, over 150,000 of our American troops and their families will pay sharply higher taxes. Unless Congress extends the military eligibility for the earned income tax credit, we will, through inaction, slash the EITC for hundreds of thousands of troops. It would be a tax borne solely by our soldiers and our military families. We call it a soldier tax.

Our military continues to serve our country with honor and distinction. The last thing we need is for our soldiers and their families to have to worry about paying higher taxes next year. That is why I authored the Tax Relief for Armed Combat Families Act for 2007. It will permanently end the soldier tax. Our military families should not have to worry from year to year what funds are going to be available to take care of their families.

I thank Chairman Rangel and Chairman Neal for working my language into today's legislation, and I call on my colleagues to pass this important legislation. Let's permanently end the soldier tax.

12:03 PM EST

Susan Davis, D-CA 53rd

Mrs. DAVIS of California. Mr. Speaker, I want to thank my colleagues from the Ways and Means Committee for including provisions from H.R. 337 and H.R. 551 in the HEART Act. These are two important bills that I have been championing since I came to Congress.

The first bill addresses a glitch in the SSI program. Because eligibility for SSI benefits is based on a family's income, military families lose benefits when additional pay is added to their income. A military family struggling to make ends meet loses benefits for their children if they receive jump pay, hazardous duty pay or a number of other pays considered ``unearned income.'' I think I speak for my colleagues when I say these pays are not unearned but hard earned.

The second bill addresses qualified veterans mortgage bonds. And as a Californian, I join with other colleagues in the desire to provide veterans who signed up for service after 1977 with a better opportunity to achieve homeownership. Why should a veteran who served in Iraq be treated any differently than somebody who signed up before 1977? Correcting this flaw in current law will allow those returning from Iraq and Afghanistan to have [Page: H12763]

great opportunities

towards owning a home in California's high-cost real estate market.

12:05 PM EST

Richard Neal, D-MA 2nd

Mr. NEAL of Massachusetts. Mr. Speaker, I would like to recognize the gentlewoman from California (Mrs. Davis), a good friend of the American veteran as well, for 1 minute.

12:05 PM EST

Sam Farr, D-CA 17th

Mr. FARR. Mr. Speaker, I would like to thank the leadership of the Ways and Means Committee and the members because I think this bill takes a commonsense approach of having, as you have heard, the stories told about people who have had problems that just don't make sense. This is sort of fix the dumb-dumb in the tax law, and that is what this bill does for military veterans, volunteer firefighters, and eligible Peace Corps volunteers and others.

I am pleased that the committee included my legislation I authorized to provide tax relief for thousands of military retirees whose VA disability claims have been delayed by dysfunctional VA claims backlog.

The issue was brought to my attention by a constituent, Michael St. Germain, whose VA claim took over 8 years to process. Imagine, 8 years to process one VA claim. I am proud in the MilCon-VA appropriations bill that we have appropriated $124 million to provide 1,800 new claims processors to work on the 400,000 backlog of claims. I thank the committee for extending for another 2 years the claims adjustment.