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Committee on Ways and Means
 

For Immediate Release
Contact: Press Office 202-225-8933
October 9, 2002

WASHINGTON - Today, lawmakers passed H.R. 5557, the Armed Forces Tax Fairness Act of 2002, to offer tax relief and improve the quality of life for those protecting our country in America’s Armed Forces. This legislation, sponsored by Rep. Bill Thomas (R-CA), Chairman of the Ways and Means Committee, passed the House with a unanimous, bipartisan vote of 412-0.

“This is important legislation that protects the personal interests’ of our military men and women while we ask them to go overseas and put their lives at risk for our freedom, as well as in our efforts to win the war on terrorism,” said Rep. Jerry Weller (R-IL), a member of the Ways and Means Committee.

The Armed Forces Tax Fairness Act includes the following provisions:

• Death Gratuity Benefits - Provides that the entire $6,000 death gratuity payments received by families of deceased members of the military would be tax-free.

• Capital Gain Exclusion on Home Sales - Military personnel seldom are located in one place long enough to take advantage of capital gains exclusion on the sale of a home. This bill ensures that members of the Armed Services, who are away from their residence on official duty, receive the intended benefits under the tax code. H.R. 5557 allows members of the Armed Services to exclude up to $250,000 ($500,000 for married couples) of gain from the sale of a principle residence by ignoring time spent transferred away from home on active duty in determining the five-year ownership test.
  

• Exclusion for HAP Payments - Provides members of the Armed Forces with tax-free payments under the Homeowners’ Assistance Program to compensate them for the drop in home values resulting from military base closures or realignments.
  

• Extend Combat Zone Filing Rules to Contingency Operations - Extends deadlines for filing tax returns, making tax payments, and other acts to certain individuals serving in “contingency operations,” which are operations where personnel are, or may become, involved in military actions during a war or a Presidentially-declared national emergency.
  

• Expand Eligibility Criteria of Veterans’ Organizations - Expands the definition of a veterans’ organization by allowing lineal descendents to qualify under one of the eligibility tests.
  

• Exclusion for Dependent Care Benefits - Clarifies that dependent care benefits provided under a military dependent care assistance program are excludible from income.

“It is important for our military men and women that we stand in strong bipartisan support of this bill when we ask them to take the risks that they do,” said Weller.