House Report 107-65 - FALLEN HERO SURVIVOR BENEFIT FAIRNESS ACT OF 2001

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

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

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

FALLEN HERO SURVIVOR BENEFIT FAIRNESS ACT OF 2001

_______

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

_______

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

R E P O R T

[To accompany H.R. 1727]

[Including cost estimate of the Congressional Budget Office]

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

CONTENTS

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

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

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

SECTION 1. SHORT TITLE.

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

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

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

I. SUMMARY AND BACKGROUND

A. Purpose and Summary

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

B. Background and Need for Legislation

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

C. Legislative History

Committee Action

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

II. EXPLANATION OF THE BILL

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

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

Present Law

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

Reasons for Change

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

Explanation of Provision

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

Effective Date

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

III. VOTE OF THE COMMITTEE

Ordered reported by voice vote, with quorum present.

IV. BUDGET EFFECTS OF THE BILL

A. Committee Estimate of Budgetary Effects

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

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

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

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

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

C. Cost Estimate Prepared by the Congressional Budget Office

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

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

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

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

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

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

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

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

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

A. Committee Oversight Findings and Recommendations

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

B. Statement of General Performance Goals and Objectives

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

C. Constitutional Authority Statement

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

D. Information Relating to Unfunded Mandates

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

E. Applicability of House Rule XXI 5(b)

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

F. Tax Complexity Analysis

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

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

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

SECTION 1528 OF THE TAXPAYER RELIEF ACT OF 1997

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

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