[House Report 108-149] [From the U.S. Government Publishing Office] 108th Congress Report HOUSE OF REPRESENTATIVES 1st Session 108-149 ====================================================================== RELATING TO CONSIDERATION OF THE SENATE AMENDMENTS TO H.R. 1308, TAX RELIEF, SIMPLIFICATION, AND EQUITY ACT OF 2003 _______ June 11, 2003.--Referred to the House Calendar and ordered to be printed _______ Mr. Reynolds, from the Committee on Rules, submitted the following R E P O R T [To accompany H. Res. 270] The Committee on Rules, having had under consideration House Resolution 270, by a record vote of 9 to 4, report the same to the House with the recommendation that the resolution be adopted. SUMMARY OF PROVISIONS OF THE RESOLUTION The resolution provides for the disposition of the Senate amendments to H.R. 1308, the Tax Relief, Simplification, and Equity Act of 2003. The rule provides that upon adoption of the resolution the bill, H.R. 1308, with the Senate amendments thereto, be hereby taken from the Speaker's table. The rule provides that upon adoption of the resolution the Senate amendment to the title is hereby agreed to. The rule further provides that upon adoption of the resolution the Senate amendment to the text is hereby agreed to with the amendment printed in this report. Finally, section 2 of the resolution provides that it shall be in order for the chairman of the Committee on Ways and Means to move that the House insist on its amendment to the Senate amendment to H.R. 1308, or that the House disagree to any further Senate amendment, and request or agree to a conference with the Senate thereon. COMMITTEE VOTES Pursuant to clause 3(b) of House rule XIII the results of each record vote on an amendment or motion to report, together with the names of those voting for and against, are printed below: Rules Committee Record Vote No. 108 Date: June 11, 2003. Measure: Relating to consideration of the Senate amendments to the bill H.R. 1308, Tax Relief, Simplification, and Equity Act of 2003. Motion by: Mr. Frost. Summary of motion: To make in order H.R. 2392. Results: Defeated 4 to 9. Vote by Members: Goss--Nay; Linder--Nay; Pryce--Nay; Diaz- Balart--Nay; Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay; Frost--Yea; Slaughter--Yea; McGovern--Yea; Hastings (FL)--Yea; Dreier--Nay. Rules Committee Record Vote No. 109 Date: June 11, 2003. Measure: Relating to consideration of the Senate amendments to the bill H.R. 1308, Tax Relief, Simplification, and Equity Act of 2003. Motion by: Mr. Goss. Summary of motion: To report the resolution. Results: Agreed to 9 to 4. Vote by Members: Goss--Yea; Linder--Yea; Pryce--Yea; Diaz- Balart--Yea; Hastings (WA)--Yea; Myrick--Yea; Sessions--Yea; Reynolds--Yea; Frost--Nay; Slaughter--Nay; McGovern--Nay; Hastings (FL)--Nay; Dreier--Yea. SUMMARY OF AMENDMENT Thomas (CA): Increases the child credit to $1,000 per eligible child through 2010. The $1,000 child credit is scheduled to sunset in 2005. It will gradually increase back to $1,000 by 2010. Ensures that the child credit stays at the $1,000 level through 2010. Eliminates the marriage penalty in the child credit. The phase-out thresholds of the child credit create a marriage penalty for married couples with incomes over $110,000. Millions of children are denied the child credit because of this penalty. Eliminates the marriage penalty by raising the phase-out threshold for married couples to $150,000. Accelerates the increase in the refundable child credit. Under present law, the child credit is refundable by an amount equal to 10% of earned income in excess of $10,500. The 10% rate is scheduled to increase to 15% in 2005. The amendment accelerates this increase so that the 15% rate takes effect in 2003 instead of 2005. Provides tax relief and enhances tax fairness for Members of the Armed Forces. The amendment includes the military tax relief provisions that have passed the House and are awaiting action in the Senate. These provisions include capital gains tax relief on home sales, tax-free death gratuity payments, and tax-free dependent care assistance for members of the military. Suspends the tax-exempt status of designated terrorist organizations. The amendment provides that the tax-exempt status of an organization is automatically suspended during any period in which the organization is designated as a terrorist organization or is listed in or designated by an Executive Order as supporting terrorism. Provides tax relief for astronauts who die on space missions. The amendment extends the income and estate tax relief provisions of the ``Victims of Terrorism Tax Relief Act of 2002'' to astronauts who lose their lives in a space shuttle mission, including those who lost their lives in the space shuttle Columbia disaster. TEXT OF AMENDMENT In lieu of the matter proposed to be inserted by the amendment of the Senate to the text of the bill, insert the following: SECTION 1. SHORT TITLE, ETC. (a) Short Title.--This Act may be cited as the ``All-American 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.-- Sec. 1. Short title, etc. TITLE I--CHILD TAX CREDIT Sec. 101. Expansion of child tax credit. TITLE II--ARMED FORCES TAX FAIRNESS Sec. 201. Special rule for members of uniformed services and Foreign Service in determining exclusion of gain from sale of principal residence. Sec. 202. Restoration of full exclusion from gross income of death gratuity payment. Sec. 203. Exclusion for amounts received under Department of Defense homeowners assistance program. Sec. 204. Expansion of combat zone filing rules to contingency operations. Sec. 205. Modification of membership requirement for exemption from tax for certain veterans' organizations. Sec. 206. Clarification of the treatment of certain dependent care assistance programs. Sec. 207. Clarification relating to exception from additional tax on certain distributions from qualified tuition programs, etc., on account of attendance at military academy. Sec. 208. Above-the-line deduction for overnight travel expenses of National Guard and Reserve members. TITLE III--SUSPENSION OF TAX-EXEMPT STATUS OF TERRORIST ORGANIZATIONS Sec. 301. Suspension of tax-exempt status of terrorist organizations. TITLE IV--RELIEF FOR ASTRONAUTS Sec. 401. Tax relief and assistance for families of astronauts who lose their lives on a space mission. TITLE I--CHILD TAX CREDIT SEC. 101. EXPANSION OF CHILD TAX CREDIT. (a) Credit Refundability.--Clause (i) of section 24(d)(1)(B) (relating to portion of credit refundable) is amended by striking ``(10 percent in the case of taxable years beginning before January 1, 2005)''. (b) Increase in Credit Through 2010.--Subsection (a) of section 24 (relating to child tax credit) is amended to read as follows: ``(a) Allowance of Credit.--There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each qualifying child of the taxpayer an amount equal to $1,000.''. (c) Removal of Marriage Penalty in Phaseout Thresholds.-- Paragraph (2) of section 24(b) is amended to read as follows: ``(2) Threshold amount.--For purposes of paragraph (1), the term `threshold amount' means $75,000 ($150,000 in the case of a joint return).''. (d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2002. (e) Application of EGTRRA Sunset.--Each amendment made by this section shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 to the same extent and in the same manner as section 201 of such Act. TITLE II--ARMED FORCES TAX FAIRNESS SEC. 201. SPECIAL RULE FOR MEMBERS OF UNIFORMED SERVICES AND FOREIGN SERVICE IN DETERMINING EXCLUSION OF GAIN FROM SALE OF PRINCIPAL RESIDENCE. (a) In General.--Subsection (d) of section 121 (relating to exclusion of gain from sale of principal residence) is amended by adding at the end the following new paragraph: ``(10) 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 referred to 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 as a member of the Foreign Service. ``(B) Maximum period of suspension.--Such 5- year period shall not be extended more than 5 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 150 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.--The term `member of the Foreign Service' 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 180 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; Special Rule.-- (1) Effective date.--The amendment made by this section shall take effect as if included in the amendments made by section 312 of the Taxpayer Relief Act of 1997. (2) Waiver of limitations.--If refund or credit of any overpayment of tax resulting from the amendment 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. 202. RESTORATION OF FULL EXCLUSION FROM GROSS INCOME OF DEATH GRATUITY PAYMENT. (a) In General.--Paragraph (3) of section 134(b) (relating to qualified military benefit) 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 before December 31, 1991.''. (b) Conforming Amendment.--Section 134(b)(3)(A) is amended by striking ``subparagraph (B)'' and inserting ``subparagraphs (B) and (C)''. (c) Effective Date.--The amendments made by this section shall apply with respect to deaths occurring after September 10, 2001. SEC. 203. EXCLUSION FOR AMOUNTS RECEIVED UNDER DEPARTMENT OF DEFENSE HOMEOWNERS ASSISTANCE PROGRAM. (a) In General.--Subsection (a) of section 132 (relating to 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.-- ``(1) In general.--For purposes of this section, 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). ``(2) Limitation.--With respect to any property, such term shall not include any payment referred to in paragraph (1) to the extent that the sum of all such payments related to such property exceeds the amount described in clause (1) of subsection (c) of such section (as in effect on such date).''. (c) Effective Date.--The amendments made by this section shall apply to payments made after the date of the enactment of this Act. SEC. 204. EXPANSION OF COMBAT ZONE FILING RULES TO CONTINGENCY OPERATIONS. (a) In General.--Subsection (a) of section 7508 (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 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. 205. 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 amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 206. CLARIFICATION OF THE TREATMENT OF CERTAIN DEPENDENT CARE ASSISTANCE PROGRAMS. (a) In General.--Subsection (b) of section 134 (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).''. (b) Conforming Amendments.-- (1) Section 134(b)(3)(A) (as amended by section 202) is further 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 amendments made by this section shall apply to taxable years beginning after December 31, 2002. SEC. 207. 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 amendment made by this section shall take effect for taxable years beginning after December 31, 2002. SEC. 208. ABOVE-THE-LINE DEDUCTION FOR OVERNIGHT TRAVEL EXPENSES OF NATIONAL GUARD AND RESERVE MEMBERS. (a) Deduction Allowed.--Section 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 services.''. (b) Deduction Allowed Whether or Not Taxpayer Elects To Itemize.--Paragraph (2) of section 62(a) (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, not in excess of $1,500, 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.''. (c) Effective Date.--The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2002. TITLE III--SUSPENSION OF TAX-EXEMPT STATUS OF TERRORIST ORGANIZATIONS SEC. 301. 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-- ``(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 section 170, 545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 for 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 ``(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 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 amendments made by this section shall apply to designations made before, on, or after the date of the enactment of this Act. TITLE IV--RELIEF FOR ASTRONAUTS SEC. 401. TAX RELIEF AND ASSISTANCE FOR FAMILIES OF ASTRONAUTS WHO LOSE THEIR LIVES ON A SPACE MISSION. (a) Income Tax Relief.-- (1) In general.--Subsection (d) 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 provisions of this subsection shall apply to any astronaut whose death occurs while on a space mission, 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 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 provisions of this subsection shall apply to any astronaut whose death occurs while on a space mission.''. (2) Clerical amendment.--The heading for subsection (i) of section 101 is amended by inserting ``or Astronauts'' after ``Victims''. (3) Effective date.--The 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.--Subsection (b) of section 2201 (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 while on a space mission.''. (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''. (3) Effective date.--The amendments made by this subsection shall apply to estates of decedents dying after December 31, 2002. In lieu of the matter inserted by the Senate to the long title of the bill, insert the following: ``An Act to amend the Internal Revenue Code of 1986 to enhance fairness in the internal revenue laws, and for other purposes.''.