[Senate Report 114-26]
[From the U.S. Government Publishing Office]
Calendar No. 49
114th Congress } { Report
SENATE
2d Session } { 114-26
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DON'T TAX OUR FALLEN PUBLIC SAFETY HEROES ACT
_______
April 14, 2015.--Ordered to be printed
_______
Mr. Hatch, from the Committee on Finance,
submitted the following
R E P O R T
[To accompany S. 916]
The Committee on Finance, having considered an original
bill, S. 916, to amend the Internal Revenue Code of 1986 to
exclude certain compensation received by public safety officers
and their dependents from gross income, having considered the
same, reports favorably thereon without amendment and
recommends that the bill do pass.
CONTENTS
Page
I. LEGISLATIVE BACKGROUND............................................1
II. EXPLANATION OF THE BILL...........................................2
A. Exclusion of Certain Compensation Received by Public
Safety Officers and Their Dependents (sec. 2 of the
bill and sec. 104(a) of the Code).................... 2
III.BUDGET EFFECTS OF THE BILL........................................3
IV. VOTES OF THE COMMITTEE............................................4
V. REGULATORY IMPACT AND OTHER MATTERS...............................4
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED.............6
I. LEGISLATIVE BACKGROUND
The Committee on Finance, having considered S. 916, the
``Don't Tax Our Fallen Public Safety Heroes Act,'' to amend the
Internal Revenue Code of 1986 to exclude certain compensation
received by public safety officers and their dependents from
gross income, reports favorably thereon without amendment and
recommends that the bill do pass.
Background and need for legislative action
Background.--Based on a proposal recommended by Senator
Toomey, the Committee on Finance marked up original legislation
(a bill to amend the Internal Revenue Code of 1986 to exclude
certain compensation received by public safety officers and
their dependents from gross income) on February 11, 2015, and,
with a majority present, ordered the bill favorably reported.
Related bills include--
In the 114th Congress, S. 322 (Senators Ayotte,
Shaheen, Blunt, Capito, Cardin, Coons, and Toomey) and S. 279
(Senator Ayotte); and
In the 113th Congress, S. 2912 (Senators Ayotte,
Shaheen, and McConnell, and passed by the Senate on September
18, 2014); S. 2377 (Senators Ayotte, Shaheen, and McConnell);
and S. 2355 (Senators Ayotte and Shaheen).
Need for legislative action.--Under longstanding tax law,
benefits paid as compensation for an employee's injury or death
on the job are excluded from income. This exclusion applies in
the case of payments made with respect to a public safety
officer who is killed or becomes disabled in the line of duty.
However, because the tax rules do not address every specific
Federal or State program under which such payments are made,
uncertainty exists as to the tax treatment of payments under a
Federal program of the Bureau of Justice Assistance and similar
State programs. The bill removes this uncertainty.
II. EXPLANATION OF THE BILL
A. Exclusion of Certain Compensation Received by Public Safety Officers
and Their Dependents (sec. 2 of the bill and sec. 104(a) of the Code)
PRESENT LAW
Amounts received under a workmen's compensation act as
compensation for personal injuries or sickness are excluded
from gross income.\1\ This exclusion applies to amounts
received by an employee under a workmen's compensation act, or
under a statute in the nature of a workmen's compensation act
that provides compensation to employees for personal injuries
or sickness incurred in the course of employment, as well as to
compensation paid under a workmen's compensation act to the
survivor or survivors of a deceased employee.\2\
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\1\Sec. 104(a)(1). All statutory references are to the Internal
Revenue Code of 1986 (``Code'') unless otherwise indicated.
\2\Treas. Reg. sec. 1.104-1(b).
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Under the Omnibus Crime Control and Safe Streets Act of
1968, if the Bureau of Justice Assistance (``BJA''), an agency
of the U.S. Department of Justice, determines that a public
safety officer has died as the direct and proximate result of a
personal injury sustained in the line of duty, the BJA will pay
a monetary benefit to surviving family members or other
beneficiary (``public safety officer survivor's benefit'').\3\
In addition, if the BJA determines that a public safety officer
has become permanently and totally disabled as the direct and
proximate result of a personal injury sustained in the line of
duty, the BJA will pay a monetary benefit to the public safety
officer (``public safety officer disability benefit'').\4\
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\3\42 U.S.C. sec. 3796(a).
\4\42 U.S.C. sec. 3796(b).
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With respect to payments made by the Law Enforcement
Assistance Administration (a previous agency of the U.S.
Department of Justice) under the Public Safety Officers'
Benefits Act of 1976 to a surviving dependent of a public
safety officer who died as the direct and proximate result of a
personal injury sustained in the line of duty, the Internal
Revenue Service has ruled that the payments are made under a
statute in the nature of a workmen's compensation act and are
thus excluded from gross income.\5\
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\5\Rev. Rul. 77-235, 1977-2 C.B. 45.
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REASONS FOR CHANGE
The Committee wishes to make it clear that benefits paid
solely as a result of a public safety officer's death or
disability in the line of duty are excluded from income.
EXPLANATION OF PROVISION
The provision amends the Code to provide a specific
exclusion from gross income for amounts paid (1) by the BJA as
a public safety officer survivor's benefit or public safety
officer disability benefit, or (2) under a State program that
provides monetary compensation for surviving dependents of a
public safety officer who has died as the direct and proximate
result of a personal injury sustained in the line of duty,
except that the exclusion does not apply to any amounts that
would have been payable if the death of the public safety
officer had occurred other than as the direct and proximate
result of a personal injury sustained in the line of duty.
EFFECTIVE DATE
The provision is effective on the date of enactment of the
provision.
III. BUDGET EFFECTS OF THE BILL
A. Committee Estimates
In compliance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 308(a)(1) of the
Congressional Budget and Impoundment Control Act of 1974, as
amended (the ``Budget Act''), the following statement is made
concerning the estimated budget effects of the revenue
provisions of the ``Don't Tax Our Fallen Public Safety Heroes
Act'' as reported.
The bill is estimated to have no effect on Federal budget
receipts for fiscal years 2015-2025.
B. Budget Authority and Tax Expenditures
Budget authority
In compliance with section 308(a)(1) of the Budget Act, the
Committee states that no provisions of the bill as reported
involve new or increased budget authority.
Tax expenditures
In compliance with section 308(a)(1) of the Budget Act, the
Committee states that the revenue provisions of the bill do not
involve increased or reduced tax expenditures (see statement of
effect on budget receipts in part A, above).
C. Consultation With Congressional Budget Office
In accordance with section 402 of the Budget Act, the
Committee advises that the Congressional Budget Office has not
submitted a statement on the bill. The letter from the
Congressional Budget Office will be provided separately.
IV. VOTES OF THE COMMITTEE
In compliance with paragraph 7(b) of rule XXVI of the
Standing Rules of the Senate, the Committee states that, with a
majority present, the ``Don't Tax Our Fallen Public Safety
Heroes Act'' was ordered favorably reported by voice vote on
February 11, 2015.
V. REGULATORY IMPACT AND OTHER MATTERS
A. Regulatory Impact
Pursuant to paragraph 11(b) of rule XXVI of the Standing
Rules of the Senate, the Committee makes the following
statement concerning the regulatory impact that might be
incurred in carrying out the provisions of the bill.
Impact on individuals and businesses, personal privacy and paperwork
The bill clarifies that certain benefits paid solely as a
result of the death or disability of a public safety officer in
the line of duty are excluded from income. The provisions of
the bill are not expected to impose additional administrative
requirements or regulatory burdens on individuals or
businesses.
The provisions of the bill do not impact personal privacy.
B. Unfunded Mandates Statement
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the tax provisions of the
reported bill do not contain Federal private sector mandates or
Federal intergovernmental mandates on State, local, or tribal
governments within the meaning of Public Law 104-4, the
Unfunded Mandates Reform Act of 1995.
C. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 (``IRS Reform Act'') requires the
staff of the Joint Committee on Taxation (in consultation with
the Internal Revenue Service and the Treasury Department) to
provide a tax complexity analysis. The complexity analysis is
required for all legislation reported by the Senate Committee
on Finance, the House Committee on Ways and Means, or any
committee of conference if the legislation includes a provision
that directly or indirectly amends the Internal Revenue Code
and has widespread applicability to individuals or small
businesses. The staff of the Joint Committee on Taxation has
determined that there are no provisions that are of widespread
applicability to individuals or small businesses.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In the opinion of the Committee, it is necessary in order
to expedite the business of the Senate, to dispense with the
requirements of paragraph 12 of rule XXVI of the Standing Rules
of the Senate (relating to the showing of changes in existing
law made by the bill as reported by the Committee).
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