PRESIDENT SIGNS BAUCUS’ MILITARY TAX BILL INTO LAW
Senator Says Military
Personnel Protect Our Country, Shouldn’t Worry About Fighting The Tax
Code.
(Washington, D.C.) – The
President today signed into law a bill that contained provisions by
Montana’s senior U.S Senator Max Baucus’ tax package that would make it
financially easier for men and women to serve in the armed forces.
As chairman of the powerful
Senate Finance committee, the panel with jurisdiction over all taxes and
revenue, Baucus wrote the Defenders of Freedom Tax Relief Act of 2007,
which passed the Senate late last year and would correct tax inequities
for armed service personnel and provide tax incentives so military men
and women wouldn’t have to fight the tax code as well.
The House passed its version
of the bill and Baucus’ bill was joined together with the House-passed
bill in a joint House-Senate conference committee to work out differences
between the two bills. The final bill – Heroes Earnings Assistance and
Relief Tax (HEART) Act – passed both the House and Senate at the end of
May and today was signed by the President and became law.
“Our brave Montana men and women
lay their lives on the line to protect the freedoms we enjoy every day,”
Baucus said.
“When they return home they shouldn’t have to fight
the tax code too. This bill is not going to heal wounds but it’s one way
we can honor of the men and women, fathers and mothers, brothers and
sisters who are fighting for our country.”
Baucus’
Military Tax Package:
- Makes permanent a provision that allows soldiers
to count their non-taxable combat pay when figuring their
eligibility for the earned income tax credit. This refundable
federal income tax credit puts cash in the hands of low-income
working individuals and families.
- Allows all veterans—not just first-time
homebuyers—to use qualified mortgage bonds to purchase their homes.
- Cut taxes for small businesses when they continue
paying some salary to members of the National Guard and Reserve who
are called to duty.
- Eliminates cumbersome rules for reporting of
income when companies continue paying some salary to members of the
National Guard and Reserve who are called to duty. This makes
it easier for reservists to file their taxes and simpler for
employers to keep contributing to those employees’ retirement plans.
- Allows the families of soldiers killed in the
line of duty to contribute up to 100 percent of survivor benefits to
a retirement or education savings account.
- Allows reservists to withdraw money from
retirement plans and give them two years to replace the funds
without tax penalty.
- Extends a provision that gives retired veterans
more time to claim a tax refund on some types of disability benefit
payments.
- Makes permanent a provision that gives
intelligence service employees a longer period of time to meet
residency requirements necessary to exclude profits from the sale of
their home from capital gains tax, which is often necessary due to
frequent deployment. This provision was originally created in
the 2003 bill and is set to expire in 2010. The 2007 military
bill makes this provision permanent and updates the proposal so that
the law would no longer require intelligence officers to be
stationed overseas to elect the suspension.
- Gives the IRS the authority to treat gifts of
thanks from states to veterans—such as payments of excess state
revenue—as nontaxable gifts.
- The ability for families of Reservists killed in
the line of duty to collect life insurance and other benefits
provided by the civilian employer.
- Permission for a soldier’s basic housing
allowance to be excluded when their income status is being
determined for purposes of a developer’s eligibility for low-income
housing credits and tax exempt bonds.
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