[108th Congress Public Law 121]
[From the U.S. Government Printing Office]
[DOCID: f:publ121.108]
[[Page 117 STAT. 1335]]
Public Law 108-121
108th Congress
An Act
To amend title 10, United States Code, and the Internal Revenue Code of
1986 to increase the death gratuity payable with respect to deceased
members of the Armed Forces and to exclude such gratuity from gross
income, to provide additional tax relief for members of the Armed Forces
and their families, and for other purposes. <<NOTE: Nov. 11,
2003 - [H.R. 3365]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: Military Family
Tax Relief Act of 2003.>>
SECTION 1. <<NOTE: 26 USC 1 note.>> SHORT TITLE, ETC.
(a) Short Title.--This Act may be cited as the ``Military Family Tax
Relief Act of 2003''.
(b) Amendment of 1986 Code.--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--IMPROVING TAX EQUITY FOR MILITARY PERSONNEL
Sec. 101. Exclusion of gain from sale of a principal residence by a
member of the uniformed services or the Foreign Service.
Sec. 102. Treatment of death gratuities payable with respect to deceased
members of the Armed Forces.
Sec. 103. Exclusion for amounts received under Department of Defense
homeowners assistance program.
Sec. 104. Expansion of combat zone filing rules to contingency
operations.
Sec. 105. Modification of membership requirement for exemption from tax
for certain veterans' organizations.
Sec. 106. Clarification of the treatment of certain dependent care
assistance programs.
Sec. 107. Clarification relating to exception from additional tax on
certain distributions from qualified tuition programs, etc.,
on account of attendance at military academy.
Sec. 108. Suspension of tax-exempt status of terrorist organizations.
Sec. 109. Above-the-line deduction for overnight travel expenses of
National Guard and Reserve members.
Sec. 110. Tax relief and assistance for families of Space Shuttle
Columbia heroes.
TITLE II--REVENUE PROVISION
Sec. 201. Extension of customs user fees.
[[Page 117 STAT. 1336]]
TITLE I--IMPROVING TAX EQUITY FOR MILITARY PERSONNEL
SEC. 101. EXCLUSION OF GAIN FROM SALE OF A PRINCIPAL RESIDENCE BY A
MEMBER OF THE UNIFORMED SERVICES OR THE FOREIGN SERVICE.
(a) In General.--Subsection (d) <<NOTE: 26 USC 121.>> of section 121
(relating to exclusion of gain from sale of principal residence) is
amended by redesignating paragraph (9) as paragraph (10) and by
inserting after paragraph (8) the following new paragraph:
``(9) Members of uniformed services and foreign service.--
``(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 on
qualified official extended duty as a member of the
uniformed services or of the Foreign Service of the
United States.
``(B) Maximum period of suspension.--The 5-year
period described in subsection (a) shall not be extended
more than 10 years by reason of subparagraph (A).
``(C) Qualified official extended duty.--For
purposes of this paragraph--
``(i) In general.--The term `qualified
official extended duty' means any extended duty
while serving at a duty station which is at least
50 miles from such property or while residing
under Government orders in Government quarters.
``(ii) Uniformed services.--The term
`uniformed services' has the meaning given such
term by section 101(a)(5) of title 10, United
States Code, as in effect on the date of the
enactment of this paragraph.
``(iii) Foreign service of the united
states.--The term `member of the Foreign Service
of the United States' has the meaning given the
term `member of the Service' by paragraph (1),
(2), (3), (4), or (5) of section 103 of the
Foreign Service Act of 1980, as in effect on the
date of the enactment of this paragraph.
``(iv) Extended duty.--The term `extended
duty' means any period of active duty pursuant to
a call or order to such duty for a period in
excess of 90 days or for an indefinite period.
``(D) Special rules relating to election.--
``(i) Election limited to 1 property at a
time.--An election under subparagraph (A) with
respect to any property may not be made if such an
election is in effect with respect to any other
property.
``(ii) Revocation of election.--An election
under subparagraph (A) may be revoked at any
time.''.
(b) Effective Date; <<NOTE: 26 USC 121 note.>> Special Rule.--
(1) Effective date.--The amendments made by this section
shall take effect as if included in the amendments made by
section 312 of the Taxpayer Relief Act of 1997.
[[Page 117 STAT. 1337]]
(2) Waiver of limitations.--If refund or credit of any
overpayment of tax resulting from the amendments made by this
section is prevented at any time before the close of the 1-year
period beginning on the date of the enactment of this Act by the
operation of any law or rule of law (including res judicata),
such refund or credit may nevertheless be made or allowed if
claim therefor is filed before the close of such period.
SEC. 102. TREATMENT OF DEATH GRATUITIES PAYABLE WITH RESPECT TO DECEASED
MEMBERS OF THE ARMED FORCES.
(a) Increase in Amount of Death Gratuity.--
(1) In general.--Section 1478(a) of title 10, United States
Code, is amended by striking ``$6,000'' and inserting
``$12,000''.
(2) Effective date.--The <<NOTE: Applicability. 10 USC 1478
note.>> amendment made by this subsection shall take effect as
of September 11, 2001, and shall apply with respect to deaths
occurring on or after that date.
(b) Exclusion From Gross Income.--
(1) In general.--Subsection (b)(3) <<NOTE: 26 USC 134.>> of
section 134 (relating to certain military benefits) is amended
by adding at the end the following new subparagraph:
``(C) Exception for death gratuity adjustments made
by law.--Subparagraph (A) shall not apply to any
adjustment to the amount of death gratuity payable under
chapter 75 of title 10, United States Code, which is
pursuant to a provision of law enacted after September
9, 1986.''.
(2) Conforming amendment.--Subparagraph (A) of section
134(b)(3) is amended by striking ``subparagraph (B)'' and
inserting ``subparagraphs (B) and (C)''.
(3) Effective date.--The <<NOTE: Applicability. 26 USC 134
note.>> amendments made by this subsection shall apply with
respect to deaths occurring after September 10, 2001.
SEC. 103. EXCLUSION FOR AMOUNTS RECEIVED UNDER DEPARTMENT OF DEFENSE
HOMEOWNERS ASSISTANCE PROGRAM.
(a) In General.--Section 132(a) (relating to the exclusion from
gross income of certain fringe benefits) is amended by striking ``or''
at the end of paragraph (6), by striking the period at the end of
paragraph (7) and inserting ``, or'', and by adding at the end the
following new paragraph:
``(8) qualified military base realignment and closure
fringe.''.
(b) Qualified Military Base Realignment and Closure Fringe.--Section
132 is amended by redesignating subsection (n) as subsection (o) and by
inserting after subsection (m) the following new subsection:
``(n) Qualified Military Base Realignment and Closure Fringe.--For
purposes of this section--
``(1) In general.--The term `qualified military base
realignment and closure fringe' means 1 or more payments under
the authority of section 1013 of the Demonstration Cities and
Metropolitan Development Act of 1966 (42 U.S.C. 3374) (as in
effect on the date of the enactment of this subsection) to
offset the adverse effects on housing values as a result of a
military base realignment or closure.
``(2) Limitation.--With respect to any property, such term
shall not include any payment referred to in paragraph (1)
[[Page 117 STAT. 1338]]
to the extent that the sum of all of such payments related to
such property exceeds the maximum amount described in clause (1)
of subsection (c) of such section (as in effect on such
date).''.
(c) Effective Date.--The <<NOTE: Applicability. 26 USC 132
note.>> amendments made by this section shall apply to payments made
after the date of the enactment of this Act.
SEC. 104. EXPANSION OF COMBAT ZONE FILING RULES TO CONTINGENCY
OPERATIONS.
(a) In General.--Section <<NOTE: 26 USC 7508.>> 7508(a) (relating to
time for performing certain acts postponed by reason of service in
combat zone) is amended--
(1) by inserting ``, or when deployed outside the United
States away from the individual's permanent duty station while
participating in an operation designated by the Secretary of
Defense as a contingency operation (as defined in section
101(a)(13) of title 10, United States Code) or which became such
a contingency operation by operation of law'' after ``section
112'',
(2) by inserting in the first sentence ``or at any time
during the period of such contingency operation'' after ``for
purposes of such section'',
(3) by inserting ``or operation'' after ``such an area'',
and
(4) by inserting ``or operation'' after ``such area''.
(b) Conforming Amendments.--
(1) Section 7508(d) is amended by inserting ``or contingency
operation'' after ``area''.
(2) The heading for section 7508 is amended by inserting
``or contingency operation'' after ``combat zone''.
(3) The item relating to section 7508 in the table of
sections for chapter 77 is amended by inserting ``or contingency
operation'' after ``combat zone''.
(c) Effective Date.--The <<NOTE: Applicability. 26 USC 7508
note.>> amendments made by this section shall apply to any period for
performing an act which has not expired before the date of the enactment
of this Act.
SEC. 105. MODIFICATION OF MEMBERSHIP REQUIREMENT FOR EXEMPTION FROM TAX
FOR CERTAIN VETERANS' ORGANIZATIONS.
(a) In General.--Subparagraph (B) of section 501(c)(19) (relating to
list of exempt organizations) is amended by striking ``or widowers'' and
inserting ``, widowers, ancestors, or lineal descendants''.
(b) Effective Date.--The <<NOTE: Applicability. 26 USC 501
note.>> amendments made by this section shall apply to taxable years
beginning after the date of the enactment of this Act.
SEC. 106. CLARIFICATION OF THE TREATMENT OF CERTAIN DEPENDENT CARE
ASSISTANCE PROGRAMS.
(a) In General.--Section 134(b) (defining qualified military
benefit) is amended by adding at the end the following new paragraph:
``(4) Clarification of certain benefits.--For purposes of
paragraph (1), such term includes any dependent care assistance
program (as in effect on the date of the enactment of this
paragraph) for any individual described in paragraph (1)(A).''.
[[Page 117 STAT. 1339]]
(b) Conforming Amendments.--
(1) Section 134(b)(3)(A), <<NOTE: 26 USC 134.>> as amended
by section 102, is amended by inserting ``and paragraph (4)''
after ``subparagraphs (B) and (C)''.
(2) Section 3121(a)(18) is amended by striking ``or 129''
and inserting ``, 129, or 134(b)(4)''.
(3) Section 3306(b)(13) is amended by striking ``or 129''
and inserting ``, 129, or 134(b)(4)''.
(4) Section 3401(a)(18) is amended by striking ``or 129''
and inserting ``, 129, or 134(b)(4)''.
(c) Effective Date.--The <<NOTE: Applicability. 26 USC 134
note.>> amendments made by this section shall apply to taxable years
beginning after December 31, 2002.
(d) No Inference.--No <<NOTE: 26 USC 134 note.>> inference may be
drawn from the amendments made by this section with respect to the tax
treatment of any amounts under the program described in section
134(b)(4) of the Internal Revenue Code of 1986 (as added by this
section) for any taxable year beginning before January 1, 2003.
SEC. 107. CLARIFICATION RELATING TO EXCEPTION FROM ADDITIONAL TAX ON
CERTAIN DISTRIBUTIONS FROM QUALIFIED TUITION PROGRAMS, ETC.,
ON ACCOUNT OF ATTENDANCE AT MILITARY ACADEMY.
(a) In General.--Subparagraph (B) of section 530(d)(4) (relating to
exceptions from additional tax for distributions not used for
educational purposes) is amended by striking ``or'' at the end of clause
(iii), by redesignating clause (iv) as clause (v), and by inserting
after clause (iii) the following new clause:
``(iv) made on account of the attendance of
the designated beneficiary at the United States
Military Academy, the United States Naval Academy,
the United States Air Force Academy, the United
States Coast Guard Academy, or the United States
Merchant Marine Academy, to the extent that the
amount of the payment or distribution does not
exceed the costs of advanced education (as defined
by section 2005(e)(3) of title 10, United States
Code, as in effect on the date of the enactment of
this section) attributable to such attendance,
or''.
(b) Effective Date.--The <<NOTE: Applicability. 26 USC 530
note.>> amendments made by this section shall apply to taxable years
beginning after December 31, 2002.
SEC. 108. SUSPENSION OF TAX-EXEMPT STATUS OF TERRORIST ORGANIZATIONS.
(a) In General.--Section 501 (relating to exemption from tax on
corporations, certain trusts, etc.) is amended by redesignating
subsection (p) as subsection (q) and by inserting after subsection (o)
the following new subsection:
``(p) Suspension of Tax-Exempt Status of Terrorist Organizations.--
``(1) In general.--The exemption from tax under subsection
(a) with respect to any organization described in paragraph (2),
and the eligibility of any organization described in paragraph
(2) to apply for recognition of exemption under subsection (a),
shall be suspended during the period described in paragraph (3).
``(2) Terrorist organizations.--An organization is described
in this paragraph if such organization is designated or
otherwise individually identified--
[[Page 117 STAT. 1340]]
``(A) under section 212(a)(3)(B)(vi)(II) or 219 of
the Immigration and Nationality Act as a terrorist
organization or foreign terrorist organization,
``(B) in or pursuant to an Executive order which is
related to terrorism and issued under the authority of
the International Emergency Economic Powers Act or
section 5 of the United Nations Participation Act of
1945 for the purpose of imposing on such organization an
economic or other sanction, or
``(C) in or pursuant to an Executive order issued
under the authority of any Federal law if--
``(i) the organization is designated or
otherwise individually identified in or pursuant
to such Executive order as supporting or engaging
in terrorist activity (as defined in section
212(a)(3)(B) of the Immigration and Nationality
Act) or supporting terrorism (as defined in
section 140(d)(2) of the Foreign Relations
Authorization Act, Fiscal Years 1988 and 1989);
and
``(ii) such Executive order refers to this
subsection.
``(3) Period of suspension.--With respect to any
organization described in paragraph (2), the period of
suspension--
``(A) begins on the later of--
``(i) the date of the first publication of a
designation or identification described in
paragraph (2) with respect to such organization,
or
``(ii) the date of the enactment of this
subsection, and
``(B) ends on the first date that all designations
and identifications described in paragraph (2) with
respect to such organization are rescinded pursuant to
the law or Executive order under which such designation
or identification was made.
``(4) Denial of deduction.--No deduction shall be allowed
under any provision of this title, including sections 170,
545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), and 2522, with
respect to any contribution to an organization described in
paragraph (2) during the period described in paragraph (3).
``(5) Denial of administrative or judicial challenge of
suspension or denial of deduction.--Notwithstanding section 7428
or any other provision of law, no organization or other person
may challenge a suspension under paragraph (1), a designation or
identification described in paragraph (2), the period of
suspension described in paragraph (3), or a denial of a
deduction under paragraph (4) in any administrative or judicial
proceeding relating to the Federal tax liability of such
organization or other person.
``(6) Erroneous designation.--
``(A) In general.--If--
``(i) the tax exemption of any organization
described in paragraph (2) is suspended under
paragraph (1),
``(ii) each designation and identification
described in paragraph (2) which has been made
with respect to such organization is determined to
be erroneous pursuant to the law or Executive
order under which such designation or
identification was made, and
[[Page 117 STAT. 1341]]
``(iii) the erroneous designations and
identifications result in an overpayment of income
tax for any taxable year by such organization,
credit or refund (with interest) with respect to such
overpayment shall be made.
``(B) Waiver of limitations.--If the credit or
refund of any overpayment of tax described in
subparagraph (A)(iii) is prevented at any time by the
operation of any law or rule of law (including res
judicata), such credit or refund may nevertheless be
allowed or made if the claim therefor is filed before
the close of the 1-year period beginning on the date of
the last determination described in subparagraph
(A)(ii).
``(7) Notice of suspensions.--If <<NOTE: Publication.>> the
tax exemption of any organization is suspended under this
subsection, the Internal Revenue Service shall update the
listings of tax-exempt organizations and shall publish
appropriate notice to taxpayers of such suspension and of the
fact that contributions to such organization are not deductible
during the period of such suspension.''.
(b) Effective Date.--The <<NOTE: Applicability. 26 USC 501
note.>> amendments made by this section shall apply to designations made
before, on, or after the date of the enactment of this Act.
SEC. 109. ABOVE-THE-LINE DEDUCTION FOR OVERNIGHT TRAVEL EXPENSES OF
NATIONAL GUARD AND RESERVE MEMBERS.
(a) Deduction Allowed.--Section <<NOTE: 26 USC 162.>> 162 (relating
to certain trade or business expenses) is amended by redesignating
subsection (p) as subsection (q) and inserting after subsection (o) the
following new subsection:
``(p) Treatment of Expenses of Members of Reserve Component of Armed
Forces of the United States.--For purposes of subsection (a)(2), in the
case of an individual who performs services as a member of a reserve
component of the Armed Forces of the United States at any time during
the taxable year, such individual shall be deemed to be away from home
in the pursuit of a trade or business for any period during which such
individual is away from home in connection with such service.''.
(b) Deduction Allowed Whether or Not Taxpayer Elects To Itemize.--
Section 62(a)(2) (relating to certain trade and business deductions of
employees) is amended by adding at the end the following new
subparagraph:
``(E) Certain expenses of members of reserve
components of the armed forces of the united states.--
The deductions allowed by section 162 which consist of
expenses, determined at a rate not in excess of the
rates for travel expenses (including per diem in lieu of
subsistence) authorized for employees of agencies under
subchapter I of chapter 57 of title 5, United States
Code, paid or incurred by the taxpayer in connection
with the performance of services by such taxpayer as a
member of a reserve component of the Armed Forces of the
United States for any period during which such
individual is more than 100 miles away from home in
connection with such services.''.
[[Page 117 STAT. 1342]]
(c) Effective Date.--The <<NOTE: Applicability. 26 USC 62
note.>> amendments made by this section shall apply to amounts paid or
incurred in taxable years beginning after December 31, 2002.
SEC. 110. TAX RELIEF AND ASSISTANCE FOR FAMILIES OF SPACE SHUTTLE
COLUMBIA HEROES.
(a) Income Tax Relief.--
(1) In general.--Subsection (d) <<NOTE: 26 USC 692.>> of
section 692 (relating to income taxes of members of Armed Forces
and victims of certain terrorist attacks on death) is amended by
adding at the end the following new paragraph:
``(5) Relief with respect to astronauts.--
The <<NOTE: Applicability.>> provisions of this subsection shall
apply to any astronaut whose death occurs in the line of duty,
except that paragraph (3)(B) shall be applied by using the date
of the death of the astronaut rather than September 11, 2001.''.
(2) Conforming amendments.--
(A) Section 5(b)(1) is amended by inserting ``,
astronauts,'' after ``Forces''.
(B) Section 6013(f)(2)(B) is amended by inserting
``, astronauts,'' after ``Forces''.
(3) Clerical amendments.--
(A) The heading of section 692 is amended by
inserting ``, astronauts,'' after ``forces''.
(B) The item relating to section 692 in the table of
sections for part II of subchapter J of chapter 1 is
amended by inserting ``, astronauts,'' after ``Forces''.
(4) Effective date.--The <<NOTE: Applicability. 26 USC 5
note.>> amendments made by this subsection shall apply with
respect to any astronaut whose death occurs after December 31,
2002.
(b) Death Benefit Relief.--
(1) In general.--Subsection (i) of section 101 (relating to
certain death benefits) is amended by adding at the end the
following new paragraph:
``(4) Relief with respect to astronauts.--
The <<NOTE: Applicability.>> provisions of this subsection shall
apply to any astronaut whose death occurs in the line of
duty.''.
(2) Clerical amendment.--The heading for subsection (i) of
section 101 is amended by inserting ``or Astronauts'' after
``Victims''.
(3) Effective date.--The <<NOTE: Applicability. 26 USC 101
note.>> amendments made by this subsection shall apply to
amounts paid after December 31, 2002, with respect to deaths
occurring after such date.
(c) Estate Tax Relief.--
(1) In general.--Section 2201(b) (defining qualified
decedent) is amended by striking ``and'' at the end of paragraph
(1)(B), by striking the period at the end of paragraph (2) and
inserting ``, and'', and by adding at the end the following new
paragraph:
``(3) any astronaut whose death occurs in the line of
duty.''.
(2) Clerical amendments.--
(A) The heading of section 2201 is amended by
inserting ``, deaths of astronauts,'' after ``forces''.
(B) The item relating to section 2201 in the table
of sections for subchapter C of chapter 11 is amended by
inserting ``, deaths of astronauts,'' after ``Forces''.
[[Page 117 STAT. 1343]]
(3) Effective date.--The <<NOTE: Applicability. 26 USC 2201
note.>> amendments made by this subsection shall apply to
estates of decedents dying after December 31, 2002.
TITLE II--REVENUE PROVISION
SEC. 201. EXTENSION OF CUSTOMS USER FEES.
Section 13031(j)(3) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended by striking
``March 31, 2004'' and inserting ``March 1, 2005''.
Approved November 11, 2003.
LEGISLATIVE HISTORY--H.R. 3365:
---------------------------------------------------------------------------
CONGRESSIONAL RECORD, Vol. 149 (2003):
Oct. 29, considered and passed House.
Nov. 3, considered and passed Senate, amended.
Nov. 4, further amended in Senate.
Nov. 5, House concurred in Senate amendments.
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