[Congressional Bills 110th Congress]
[From the U.S. Government Printing Office]
[H.R. 6081 Enrolled Bill (ENR)]
H.R.6081
One Hundred Tenth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Thursday,
the third day of January, two thousand and eight
An Act
To amend the Internal Revenue Code of 1986 to provide benefits for
military personnel, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

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(a) Short Title.--This Act may be cited as the ``Heroes Earnings
Assistance and Relief Tax Act of 2008''.
(b) Reference.--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:

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e25b3cc1293a815bac79f6bd880371ecc3c73a16ece1209734ceeb72f4a36e36

TITLE I

-BENEFITS FOR MILITARY

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pay is reduced as a result of award of disability
compensation.

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who are active duty members of the uniformed services.

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by certain employees of the intelligence community.

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flexible spending arrangements of individuals called to active
duty.

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tax rebates and other benefits provided to volunteer
firefighters and emergency medical responders.

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TITLE II

-IMPROVEMENTS IN SUPPLEMENTAL SECURITY INCOME

determining supplemental security income benefits.

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supplemental security income eligibility and benefit amounts.

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services under contract with United States Government treated
as American employers.

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TITLE III

-REVENUE PROVISIONS

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TITLE IV

-PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH

(a) In General.--Subsection (h) of section 6428 (relating to
identification number requirement) is amended by adding at the end the
following new paragraph:
``(3) Special rule for members of the armed forces.--Paragraph
(1) shall not apply to a joint return where at least 1 spouse was a
member of the Armed Forces of the United States at any time during
the taxable year.''.
(b) Effective Date.--The amendments made by this section shall take
effect as if included in the amendments made by section 101 of the
Economic Stimulus Act of 2008.

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PURPOSES OF EARNED INCOME TAX CREDIT.
(a) In General.--Clause (vi) of section 32(c)(2)(B) (defining
earned income) is amended to read as follows:
``(vi) a taxpayer may elect to treat amounts excluded
from gross income by reason of section 112 as earned
income.''.
(b) Conforming Amendment.--Paragraph (4) of section 6428(e) is
amended by striking ``except that--'' and all that follows through
``(B) such term shall'' and inserting ``except that such term shall''.
(c) Sunset Not Applicable.--Section 105 of the Working Families Tax
Relief Act of 2004 (relating to application of EGTRRA sunset to this
title) shall not apply to section 104(b) of such Act.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years ending after December 31, 2007.

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(a) Qualified Mortgage Bonds Used To Finance Residences for
Veterans Without Regard to First-Time Homebuyer Requirement.--
Subparagraph (D) of section 143(d)(2) (relating to exceptions) is
amended by striking ``and before January 1, 2008''.
(b) Increase in Bond Limitation for Alaska, Oregon, and
Wisconsin.--Clause (ii) of section 143(l)(3)(B) (relating to State
veterans limit) is amended by striking ``$25,000,000'' each place it
appears and inserting ``$100,000,000''.
(c) Definition of Qualified Veteran.--Paragraph (4) of section
143(l) (defining qualified veteran) is amended to read as follows:
``(4) Qualified veteran.--For purposes of this subsection, the
term `qualified veteran' means any veteran who--
``(A) served on active duty, and
``(B) applied for the financing before the date 25 years
after the last date on which such veteran left active
service.''.
(d) Effective Date.--The amendments made by this section shall
apply to bonds issued after December 31, 2007.
(e) Transition Rule.--In the case of any bond issued after December
31, 2007, and before the date of the enactment of this Act,
subparagraph (B) of section 143(l)(4) of the Internal Revenue Code of
1986, as amended by this section, shall be applied by substituting ``30
years'' for ``25 years''.

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QUALIFIED MILITARY SERVICE.
(a) Plan Qualification Requirement for Death Benefits Under USERRA-
Qualified Active Military Service.--Subsection (a) of section 401
(relating to requirements for qualification) is amended by inserting
after paragraph (36) the following new paragraph:
``(37) Death benefits under userra-qualified active military
service.--A trust shall not constitute a qualified trust unless the
plan provides that, in the case of a participant who dies while
performing qualified military service (as defined in section
414(u)), the survivors of the participant are entitled to any
additional benefits (other than benefit accruals relating to the
period of qualified military service) provided under the plan had
the participant resumed and then terminated employment on account
of death.''.
(b) Treatment in the Case of Death or Disability Resulting From
Active Military Service for Benefit Accrual Purposes.--Subsection (u)
of section 414 (relating to special rules relating to veterans'
reemployment rights under USERRA) is amended by redesignating
paragraphs (9) and (10) as paragraphs (10) and (11), respectively, and
by inserting after paragraph (8) the following new paragraph:
``(9) Treatment in the case of death or disability resulting
from active military service.--
``(A) In general.--For benefit accrual purposes, an
employer sponsoring a retirement plan may treat an individual
who dies or becomes disabled (as defined under the terms of the
plan) while performing qualified military service with respect
to the employer maintaining the plan as if the individual has
resumed employment in accordance with the individual's
reemployment rights under chapter 43 of title 38, United States
Code, on the day preceding death or disability (as the case may
be) and terminated employment on the actual date of death or
disability. In the case of any such treatment, and subject to
subparagraphs (B) and (C), any full or partial compliance by
such plan with respect to the benefit accrual requirements of
paragraph (8) with respect to such individual shall be treated
for purposes of paragraph (1) as if such compliance were
required under such chapter 43.
``(B) Nondiscrimination requirement.--Subparagraph (A)
shall apply only if all individuals performing qualified
military service with respect to the employer maintaining the
plan (as determined under subsections (b), (c), (m), and (o))
who die or became disabled as a result of performing qualified
military service prior to reemployment by the employer are
credited with service and benefits on reasonably equivalent
terms.
``(C) Determination of benefits.--The amount of employee
contributions and the amount of elective deferrals of an
individual treated as reemployed under subparagraph (A) for
purposes of applying paragraph (8)(C) shall be determined on
the basis of the individual's average actual employee
contributions or elective deferrals for the lesser of--
``(i) the 12-month period of service with the employer
immediately prior to qualified military service, or
``(ii) if service with the employer is less than such
12-month period, the actual length of continuous service
with the employer.''.
(c) Conforming Amendments.--
(1) Section 404(a)(2) is amended by striking ``and (31)'' and
inserting ``(31), and (37)''.
(2) Section 403(b) is amended by adding at the end the
following new paragraph:
``(14) Death benefits under userra-qualified active military
service.--This subsection shall not apply to an annuity contract
unless such contract meets the requirements of section
401(a)(37).''.
(3) Section 457(g) is amended by adding at the end the
following new paragraph:
``(4) Death benefits under userra-qualified active military
service.--A plan described in paragraph (1) shall not be treated as
an eligible deferred compensation plan unless such plan meets the
requirements of section 401(a)(37).''.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply with respect to deaths and disabilities occurring on or after
January 1, 2007.
(2) Provisions relating to plan amendments.--
(A) In general.--If this subparagraph applies to any plan
or contract amendment, such plan or contract shall be treated
as being operated in accordance with the terms of the plan
during the period described in subparagraph (B)(iii).
(B) Amendments to which subparagraph (A) applies.--
(i) In general.--Subparagraph (A) shall apply to any
amendment to any plan or annuity contract which is made--
(I) pursuant to the amendments made by subsection
(a) or pursuant to any regulation issued by the
Secretary of the Treasury under subsection (a), and
(II) on or before the last day of the first plan
year beginning on or after January 1, 2010.
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), this clause
shall be applied by substituting ``2012'' for ``2010'' in
subclause (II).
(ii) Conditions.--This paragraph shall not apply to any
amendment unless--
(I) the plan or contract is operated as if such
plan or contract amendment were in effect for the
period described in clause (iii), and
(II) such plan or contract amendment applies
retroactively for such period.
(iii) Period described.--The period described in this
clause is the period--
(I) beginning on the effective date specified by
the plan, and
(II) ending on the date described in clause (i)(II)
(or, if earlier, the date the plan or contract
amendment is adopted).

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(a) Income Tax Withholding on Differential Wage Payments.--
(1) In general.--Section 3401 (relating to definitions) is
amended by adding at the end the following new subsection:
``(h) Differential Wage Payments to Active Duty Members of the
Uniformed Services.--
``(1) In general.--For purposes of subsection (a), any
differential wage payment shall be treated as a payment of wages by
the employer to the employee.
``(2) Differential wage payment.--For purposes of paragraph
(1), the term `differential wage payment' means any payment which--
``(A) is made by an employer to an individual with respect
to any period during which the individual is performing service
in the uniformed services (as defined in chapter 43 of title
38, United States Code) while on active duty for a period of
more than 30 days, and
``(B) represents all or a portion of the wages the
individual would have received from the employer if the
individual were performing service for the employer.''.
(2) Effective date.--The amendment made by this subsection
shall apply to remuneration paid after December 31, 2008.
(b) Treatment of Differential Wage Payments for Retirement Plan
Purposes.--
(1) Pension plans.--
(A) In general.--Section 414(u) (relating to special rules
relating to veterans' reemployment rights under USERRA), as
amended by section 103(b), is amended by adding at the end the
following new paragraph:
``(12) Treatment of differential wage payments.--
``(A) In general.--Except as provided in this paragraph,
for purposes of applying this title to a retirement plan to
which this subsection applies--
``(i) an individual receiving a differential wage
payment shall be treated as an employee of the employer
making the payment,
``(ii) the differential wage payment shall be treated
as compensation, and
``(iii) the plan shall not be treated as failing to
meet the requirements of any provision described in
paragraph (1)(C) by reason of any contribution or benefit
which is based on the differential wage payment.
``(B) Special rule for distributions.--
``(i) In general.--Notwithstanding subparagraph (A)(i),
for purposes of section 401(k)(2)(B)(i)(I),
403(b)(7)(A)(ii), 403(b)(11)(A), or 457(d)(1)(A)(ii), an
individual shall be treated as having been severed from
employment during any period the individual is performing
service in the uniformed services described in section
3401(h)(2)(A).
``(ii) Limitation.--If an individual elects to receive
a distribution by reason of clause (i), the plan shall
provide that the individual may not make an elective
deferral or employee contribution during the 6-month period
beginning on the date of the distribution.
``(C) Nondiscrimination requirement.--Subparagraph (A)(iii)
shall apply only if all employees of an employer (as determined
under subsections (b), (c), (m), and (o)) performing service in
the uniformed services described in section 3401(h)(2)(A) are
entitled to receive differential wage payments on reasonably
equivalent terms and, if eligible to participate in a
retirement plan maintained by the employer, to make
contributions based on the payments on reasonably equivalent
terms. For purposes of applying this subparagraph, the
provisions of paragraphs (3), (4), and (5) of section 410(b)
shall apply.
``(D) Differential wage payment.--For purposes of this
paragraph, the term `differential wage payment' has the meaning
given such term by section 3401(h)(2).''.
(B) Conforming amendment.--The heading for section 414(u)
is amended by inserting ``and to Differential Wage Payments to
Members on Active Duty'' after ``USERRA''.
(2) Differential wage payments treated as compensation for
individual retirement plans.--Section 219(f)(1) (defining
compensation) is amended by adding at the end the following new
sentence: ``The term compensation includes any differential wage
payment (as defined in section 3401(h)(2)).''.
(3) Effective date.--The amendments made by this subsection
shall apply to years beginning after December 31, 2008.
(c) Provisions Relating to Plan Amendments.--
(1) In general.--If this subsection applies to any plan or
annuity contract amendment, such plan or contract shall be treated
as being operated in accordance with the terms of the plan or
contract during the period described in paragraph (2)(B)(i).
(2) Amendments to which section applies.--
(A) In general.--This subsection shall apply to any
amendment to any plan or annuity contract which is made--
(i) pursuant to any amendment made by subsection
(b)(1), and
(ii) on or before the last day of the first plan year
beginning on or after January 1, 2010.
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), this subparagraph
shall be applied by substituting ``2012'' for ``2010'' in
clause (ii).
(B) Conditions.--This subsection shall not apply to any
plan or annuity contract amendment unless--
(i) during the period beginning on the date the
amendment described in subparagraph (A)(i) takes effect and
ending on the date described in subparagraph (A)(ii) (or,
if earlier, the date the plan or contract amendment is
adopted), the plan or contract is operated as if such plan
or contract amendment were in effect, and
(ii) such plan or contract amendment applies
retroactively for such period.

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RETIRED PAY IS REDUCED AS A RESULT OF AWARD OF DISABILITY
COMPENSATION.
(a) In General.--Subsection (d) of section 6511 (relating to
special rules applicable to income taxes) is amended by adding at the
end the following new paragraph:
``(8) Special rules when uniformed services retired pay is
reduced as a result of award of disability compensation.--
``(A) Period of limitation on filing claim.--If the claim
for credit or refund relates to an overpayment of tax imposed
by subtitle A on account of--
``(i) the reduction of uniformed services retired pay
computed under section 1406 or 1407 of title 10, United
States Code, or
``(ii) the waiver of such pay under section 5305 of
title 38 of such Code,
as a result of an award of compensation under title 38 of such
Code pursuant to a determination by the Secretary of Veterans
Affairs, the 3-year period of limitation prescribed in
subsection (a) shall be extended, for purposes of permitting a
credit or refund based upon the amount of such reduction or
waiver, until the end of the 1-year period beginning on the
date of such determination.
``(B) Limitation to 5 taxable years.--Subparagraph (A)
shall not apply with respect to any taxable year which began
more than 5 years before the date of such determination.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to claims for credit or refund filed after the date of the
enactment of this Act.
(c) Transition Rules.--In the case of a determination described in
paragraph (8) of section 6511(d) of the Internal Revenue Code of 1986
(as added by this section) which is made by the Secretary of Veterans
Affairs after December 31, 2000, and before the date of the enactment
of this Act, such paragraph--
(1) shall not apply with respect to any taxable year which
began before January 1, 2001, and
(2) shall be applied by substituting for ``the date of such
determination'' in subparagraph (A) thereof.

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TO ACTIVE DUTY.
(a) In General.--Clause (iv) of section 72(t)(2)(G) is amended by
striking ``, and before December 31, 2007''.
(b) Effective Date.--The amendment made by this section shall apply
to individuals ordered or called to active duty on or after December
31, 2007.

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VETERANS PROGRAMS MADE PERMANENT.
(a) In General.--Paragraph (7) of section 6103(l) is amended by
striking the last sentence thereof.
(b) Conforming Amendment.--Section 6103(l)(7)(D)(viii)(III) is
amended by striking ``sections 1710(a)(1)(I), 1710(a)(2), 1710(b), and
1712(a)(2)(B)'' and inserting ``sections 1710(a)(2)(G), 1710(a)(3), and
1710(b)''.
(c) Effective Date.--The amendment made by subsection (a) shall
apply to requests made after September 30, 2008.

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AND EDUCATION SAVINGS ACCOUNTS.
(a) Provision in Effect Before Pension Protection Act.--Subsection
(e) of section 408A (relating to qualified rollover contribution), as
in effect before the amendments made by section 824 of the Pension
Protection Act of 2006, is amended to read as follows:
``(e) Qualified Rollover Contribution.--For purposes of this
section--
``(1) In general.--The term `qualified rollover contribution'
means a rollover contribution to a Roth IRA from another such
account, or from an individual retirement plan, but only if such
rollover contribution meets the requirements of section 408(d)(3).
Such term includes a rollover contribution described in section
402A(c)(3)(A). For purposes of section 408(d)(3)(B), there shall be
disregarded any qualified rollover contribution from an individual
retirement plan (other than a Roth IRA) to a Roth IRA.
``(2) Military death gratuity.--
``(A) In general.--The term `qualified rollover
contribution' includes a contribution to a Roth IRA maintained
for the benefit of an individual made before the end of the 1-
year period beginning on the date on which such individual
receives an amount under section 1477 of title 10, United
States Code, or section 1967 of title 38 of such Code, with
respect to a person, to the extent that such contribution does
not exceed--
``(i) the sum of the amounts received during such
period by such individual under such sections with respect
to such person, reduced by
``(ii) the amounts so received which were contributed
to a Coverdell education savings account under section
530(d)(9).
``(B) Annual limit on number of rollovers not to apply.--
Section 408(d)(3)(B) shall not apply with respect to amounts
treated as a rollover by subparagraph (A).
``(C) Application of section 72.--For purposes of applying
section 72 in the case of a distribution which is not a
qualified distribution, the amount treated as a rollover by
reason of subparagraph (A) shall be treated as investment in
the contract.''.
(b) Provision in Effect After Pension Protection Act.--Subsection
(e) of section 408A, as in effect after the amendments made by section
824 of the Pension Protection Act of 2006, is amended to read as
follows:
``(e) Qualified Rollover Contribution.--For purposes of this
section--
``(1) In general.--The term `qualified rollover contribution'
means a rollover contribution--
``(A) to a Roth IRA from another such account,
``(B) from an eligible retirement plan, but only if--
``(i) in the case of an individual retirement plan,
such rollover contribution meets the requirements of
section 408(d)(3), and
``(ii) in the case of any eligible retirement plan (as
defined in section 402(c)(8)(B) other than clauses (i) and
(ii) thereof), such rollover contribution meets the
requirements of section 402(c), 403(b)(8), or 457(e)(16),
as applicable.
For purposes of section 408(d)(3)(B), there shall be
disregarded any qualified rollover contribution from an
individual retirement plan (other than a Roth IRA) to a Roth
IRA.
``(2) Military death gratuity.--
``(A) In general.--The term `qualified rollover
contribution' includes a contribution to a Roth IRA maintained
for the benefit of an individual made before the end of the 1-
year period beginning on the date on which such individual
receives an amount under section 1477 of title 10, United
States Code, or section 1967 of title 38 of such Code, with
respect to a person, to the extent that such contribution does
not exceed--
``(i) the sum of the amounts received during such
period by such individual under such sections with respect
to such person, reduced by
``(ii) the amounts so received which were contributed
to a Coverdell education savings account under section
530(d)(9).
``(B) Annual limit on number of rollovers not to apply.--
Section 408(d)(3)(B) shall not apply with respect to amounts
treated as a rollover by the subparagraph (A).
``(C) Application of section 72.--For purposes of applying
section 72 in the case of a distribution which is not a
qualified distribution, the amount treated as a rollover by
reason of subparagraph (A) shall be treated as investment in
the contract.''.
(c) Education Savings Accounts.--Subsection (d) of section 530 is
amended by adding at the end the following new paragraph:
``(9) Military death gratuity.--
``(A) In general.--For purposes of this section, the term
`rollover contribution' includes a contribution to a Coverdell
education savings account made before the end of the 1-year
period beginning on the date on which the contributor receives
an amount under section 1477 of title 10, United States Code,
or section 1967 of title 38 of such Code, with respect to a
person, to the extent that such contribution does not exceed--
``(i) the sum of the amounts received during such
period by such contributor under such sections with respect
to such person, reduced by
``(ii) the amounts so received which were contributed
to a Roth IRA under section 408A(e)(2) or to another
Coverdell education savings account.
``(B) Annual limit on number of rollovers not to apply.--
The last sentence of paragraph (5) shall not apply with respect
to amounts treated as a rollover by the subparagraph (A).
``(C) Application of section 72.--For purposes of applying
section 72 in the case of a distribution which is includible in
gross income under paragraph (1), the amount treated as a
rollover by reason of subparagraph (A) shall be treated as
investment in the contract.''.
(d) Effective Dates.--
(1) In general.--Except as provided by paragraphs (2) and (3),
the amendments made by this section shall apply with respect to
deaths from injuries occurring on or after the date of the
enactment of this Act.
(2) Application of amendments to deaths from injuries occurring
on or after october 7, 2001, and before enactment.--The amendments
made by this section shall apply to any contribution made pursuant
to section 408A(e)(2) or 530(d)(5) of the Internal Revenue Code of
1986, as amended by this Act, with respect to amounts received
under section 1477 of title 10, United States Code, or under
section 1967 of title 38 of such Code, for deaths from injuries
occurring on or after October 7, 2001, and before the date of the
enactment of this Act if such contribution is made not later than 1
year after the date of the enactment of this Act.
(3) Pension protection act changes.--Section 408A(e)(1) of the
Internal Revenue Code of 1986 (as in effect after the amendments
made by subsection (b)) shall apply to taxable years beginning
after December 31, 2007.

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CORPS.
(a) In General.--Subsection (d) of section 121 (relating to special
rules) is amended by adding at the end the following new paragraph:
``(12) Peace corps.--
``(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 outside the United States--
``(i) on qualified official extended duty (as defined
in paragraph (9)(C)) as an employee of the Peace Corps, or
``(ii) as an enrolled volunteer or volunteer leader
under section 5 or 6 (as the case may be) of the Peace
Corps Act (22 U.S.C. 2504, 2505).
``(B) Applicable rules.--For purposes of subparagraph (A),
rules similar to the rules of subparagraphs (B) and (D) shall
apply.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 2007.

b6033721f3431fb5e81a24a5db903703adf0b6a4f4e9acd47eef026c67b332d6

EMPLOYEES WHO ARE ACTIVE DUTY MEMBERS OF THE UNIFORMED SERVICES.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
(relating to business credits) is amended by adding at the end the
following new section:
``SEC. 45P. EMPLOYER WAGE CREDIT FOR EMPLOYEES WHO ARE ACTIVE DUTY
MEMBERS OF THE UNIFORMED SERVICES.
``(a) General Rule.--For purposes of section 38, in the case of an
eligible small business employer, the differential wage payment credit
for any taxable year is an amount equal to 20 percent of the sum of the
eligible differential wage payments for each of the qualified employees
of the taxpayer during such taxable year.
``(b) Definitions.--For purposes of this section--
``(1) Eligible differential wage payments.--The term `eligible
differential wage payments' means, with respect to each qualified
employee, so much of the differential wage payments (as defined in
section 3401(h)(2)) paid to such employee for the taxable year as
does not exceed $20,000.
``(2) Qualified employee.--The term `qualified employee' means
a person who has been an employee of the taxpayer for the 91-day
period immediately preceding the period for which any differential
wage payment is made.
``(3) Eligible small business employer.--
``(A) In general.--The term `eligible small business
employer' means, with respect to any taxable year, any employer
which--
``(i) employed an average of less than 50 employees on
business days during such taxable year, and
``(ii) under a written plan of the employer, provides
eligible differential wage payments to every qualified
employee of the employer.
``(B) Controlled groups.--For purposes of subparagraph (A),
all persons treated as a single employer under subsection (b),
(c), (m), or (o) of section 414 shall be treated as a single
employer.
``(c) Coordination With Other Credits.--The amount of credit
otherwise allowable under this chapter with respect to compensation
paid to any employee shall be reduced by the credit determined under
this section with respect to such employee.
``(d) Disallowance for Failure To Comply With Employment or
Reemployment Rights of Members of the Reserve Components of the Armed
Forces of the United States.--No credit shall be allowed under
subsection (a) to a taxpayer for--
``(1) any taxable year, beginning after the date of the
enactment of this section, in which the taxpayer is under a final
order, judgment, or other process issued or required by a district
court of the United States under section 4323 of title 38 of the
United States Code with respect to a violation of chapter 43 of
such title, and
``(2) the 2 succeeding taxable years.
``(e) Certain Rules to Apply.--For purposes of this section, rules
similar to the rules of subsections (c), (d), and (e) of section 52
shall apply.
``(f) Termination.--This section shall not apply to any payments
made after December 31, 2009.''.
(b) Credit Treated as Part of General Business Credit.--Section
38(b) (relating to general business credit) is amended by striking
``plus'' at the end of paragraph (31), by striking the period at the
end of paragraph (32) and inserting ``, plus'', and by adding at the
end of following new paragraph:
``(33) the differential wage payment credit determined under
section 45P(a).''.
(c) No Deduction for Compensation Taken Into Account for Credit.--
Section 280C(a) (relating to rule for employment credits) is amended by
inserting ``45P(a),'' after ``45A(a),''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by adding at the end
the following new item:
``Sec. 45P. Employer wage credit for employees who are active duty
members of the uniformed services.''.
(e) Effective Date.--The amendments made by this section shall
apply to amounts paid after the date of the enactment of this Act.

b70b2d5627f22d3ff5136478c4527b069f493cfe37f0e492d7948e03a5d7a7ee

MILITARY BENEFITS.
(a) In General.--Section 134(b) (defining qualified military
benefit) is amended by adding at the end the following new paragraph:
``(6) Certain state payments.--The term `qualified military
benefit' includes any bonus payment by a State or political
subdivision thereof to any member or former member of the uniformed
services of the United States or any dependent of such member only
by reason of such member's service in an combat zone (as defined in
section 112(c)(2), determined without regard to the
parenthetical).''.
(b) Effective Date.--The amendment made by this section shall apply
to payments made before, on, or after the date of the enactment of this
Act.

63848a54f98094b22ac8065cee3761de3d5416b06dc00e563a640b4c121649c5

RESIDENCE BY CERTAIN EMPLOYEES OF THE INTELLIGENCE COMMUNITY.
(a) In General.--Paragraph (9) of section 121(d) is amended by
striking subparagraph (E).
(b) Duty Station May Be Inside United States.--Section 121(d)(9)(C)
(defining qualified official extended duty) is amended by striking
clause (vi).
(c) Effective Date.--The amendments made by this section shall
apply to sales or exchanges after the date of the enactment of this
Act.

62ed6d2d3683d4157f8e7f5cf7fc26544be64ebf7ab0bd8e072af89ca16cef0c

FLEXIBLE SPENDING ARRANGEMENTS OF INDIVIDUALS CALLED TO ACTIVE
DUTY.
(a) In General.--Section 125 (relating to cafeteria plans) is
amended by redesignating subsections (h) and (i) as subsection (i) and
(j), respectively, and by inserting after subsection (g) the following
new subsection:
``(h) Special Rule for Unused Benefits in Health Flexible Spending
Arrangements of Individuals Called to Active Duty.--
``(1) In general.--For purposes of this title, a plan or other
arrangement shall not fail to be treated as a cafeteria plan or
health flexible spending arrangement merely because such
arrangement provides for qualified reservist distributions.
``(2) Qualified reservist distribution.--For purposes of this
subsection, the term `qualified reservist distribution' means, any
distribution to an individual of all or a portion of the balance in
the employee's account under such arrangement if--
``(A) such individual was (by reason of being a member of a
reserve component (as defined in section 101 of title 37,
United States Code)) ordered or called to active duty for a
period in excess of 179 days or for an indefinite period, and
``(B) such distribution is made during the period beginning
on the date of such order or call and ending on the last date
that reimbursements could otherwise be made under such
arrangement for the plan year which includes the date of such
order or call.''.
(b) Effective Date.--The amendment made by this section shall apply
to distributions made after the date of the enactment of this Act.

006c12d84ec4c8dfe6bb4a642e86441a5fef29e2be218d1e0adcc27794a6d0a1

PROPERTY TAX REBATES AND OTHER BENEFITS PROVIDED TO VOLUNTEER
FIREFIGHTERS AND EMERGENCY MEDICAL RESPONDERS.
(a) Social Security Taxes.--
(1) Section 3121(a) (relating to definition of wages) is
amended by striking ``or'' at the end of paragraph (21), by
striking the period at the end of paragraph (22) and inserting ``;
or'', and by inserting after paragraph (22) the following new
paragraph:
``(23) any benefit or payment which is excludable from the
gross income of the employee under section 139B(b).''.
(2) Section 209(a) of the Social Security Act is amended by
striking ``or'' at the end of paragraph (18), by striking the
period at the end of paragraph (19) and inserting ``; or'', and by
inserting after paragraph (19) the following new paragraph:
``(20) Any benefit or payment which is excludable from the
gross income of the employee under section 139B(b) of the Internal
Revenue Code of 1986).''.
(b) Unemployment Taxes.--Section 3306(b) (relating to definition of
wages) is amended by striking ``or'' at the end of paragraph (18), by
striking the period at the end of paragraph (19) and inserting ``;
or'', and by inserting after paragraph (19) the following new
paragraph:
``(20) any benefit or payment which is excludable from the
gross income of the employee under section 139B(b).''.
(c) Wage Withholding.--Section 3401(a) (defining wages) is amended
by striking ``or'' at the end of paragraph (21), by striking the period
at the end of paragraph (22) and inserting ``; or'', and by inserting
after paragraph (22) the following new paragraph:
``(23) for any benefit or payment which is excludable from the
gross income of the employee under section 139B(b).''.
(d) Effective Date.--The amendments made by this section shall take
effect as if included in section 5 of the Mortgage Forgiveness Debt
Relief Act of 2007.

e66e0a7e58f846803547bc64a3d0463a4f9150e7563c0fc0a843573ff0f8dbd3

EARNED INCOME.
(a) In General.--Section 1612(a)(1)(A) of the Social Security Act
(42 U.S.C. 1382a(a)(1)(A)) is amended by inserting ``(and, in the case
of cash remuneration paid for service as a member of a uniformed
service (other than payments described in paragraph (2)(H) of this
subsection or subsection (b)(20)), without regard to the limitations
contained in section 209(d))'' before the semicolon.
(b) Certain Housing Payments Treated as In-Kind Support and
Maintenance.--Section 1612(a)(2) of such Act (42 U.S.C. 1382a(a)(2)) is
amended--
(1) by striking ``and'' at the end of subparagraph (F);
(2) by striking the period at the end of subparagraph (G) and
inserting ``; and''; and
(3) by adding at the end the following:
``(H) payments to or on behalf of a member of a uniformed
service for housing of the member (and his or her dependents,
if any) on a facility of a uniformed service, including
payments provided under section 403 of title 37, United States
Code, for housing that is acquired or constructed under
subchapter IV of chapter 169 of title 10 of such Code, or any
related provision of law, and any such payments shall be
treated as support and maintenance in kind subject to
subparagraph (A) of this paragraph.''.

7ea0f3750c5fede368404c5c817522fe5fe7005c5512d506ff700dd7c9ba07ba

DETERMINING SUPPLEMENTAL SECURITY INCOME BENEFITS.
(a) Income Disregard.--Section 1612(b) of the Social Security Act
(42 U.S.C. 1382a(b)) is amended--
(1) by striking ``and'' at the end of paragraph (22);
(2) by striking the period at the end of paragraph (23) and
inserting ``; and''; and
(3) by adding at the end the following:
``(24) any annuity paid by a State to the individual (or such
spouse) on the basis of the individual's being a veteran (as
defined in section 101 of title 38, United States Code), and blind,
disabled, or aged.''.
(b) Resource Disregard.--Section 1613(a) of such Act (42 U.S.C.
1382b(a)) is amended--
(1) by striking ``and'' at the end of paragraph (14);
(2) by striking the period at the end of paragraph (15) and
inserting ``; and''; and
(3) by inserting after paragraph (15) the following:
``(16) for the month of receipt and every month thereafter, any
annuity paid by a State to the individual (or such spouse) on the
basis of the individual's being a veteran (as defined in section
101 of title 38, United States Code), and blind, disabled, or
aged.''.

418049cf0b7d68c85b733476e1f6e806a90bbe473b7d8b2386e4f4fd9281c5ff

DETERMINING SUPPLEMENTAL SECURITY INCOME ELIGIBILITY AND BENEFIT
AMOUNTS.
Section 1612(b) of the Social Security Act (42 U.S.C. 1382a(b)), as
amended by section 202(a) of this Act, is amended--
(1) in paragraph (23), by striking ``and'' at the end;
(2) in paragraph (24), by striking the period and inserting ``;
and''; and
(3) by adding at the end the following:
``(25) any benefit (whether cash or in-kind) conferred upon (or
paid on behalf of) a  participant in an AmeriCorps position
approved by the Corporation for  National and Community Service
under section 123 of the National and Community Service Act of 1990
(42 U.S.C. 12573).''.

7c7cc06d4f9a668f9f9926e933f404fd0c1dd10d5314bbcc5b35c9cf1eab699e

The amendments made by this title shall be effective with respect
to benefits payable for months beginning after 60 days after the date
of the enactment of this Act.

1c2021c384f4ac011e341518a24ff6ade4013dc2eed9e8a0e7c952937804ed3b

98242f4418c1790082e9c873f6fcb028c70dfb334a9e3888c7a32a1da5c2cae4

PERFORMING SERVICES UNDER CONTRACT WITH UNITED STATES GOVERNMENT
TREATED AS AMERICAN EMPLOYERS.
(a) FICA Taxes.--Section 3121 (relating to definitions) is amended
by adding at the end the following new subsection:
``(z) Treatment of Certain Foreign Persons as American Employers.--
``(1) In general.--If any employee of a foreign person is
performing services in connection with a contract between the
United States Government (or any instrumentality thereof) and any
member of any domestically controlled group of entities which
includes such foreign person, such foreign person shall be treated
for purposes of this chapter as an American employer with respect
to such services performed by such employee.
``(2) Domestically controlled group of entities.--For purposes
of this subsection--
``(A) In general.--The term `domestically controlled group
of entities' means a controlled group of entities the common
parent of which is a domestic corporation.
``(B) Controlled group of entities.--The term `controlled
group of entities' means a controlled group of corporations as
defined in section 1563(a)(1), except that--
``(i) `more than 50 percent' shall be substituted for
`at least 80 percent' each place it appears therein, and
``(ii) the determination shall be made without regard
to subsections (a)(4) and (b)(2) of section 1563.
A partnership or any other entity (other than a corporation)
shall be treated as a member of a controlled group of entities
if such entity is controlled (within the meaning of section
954(d)(3)) by members of such group (including any entity
treated as a member of such group by reason of this sentence).
``(3) Liability of common parent.--In the case of a foreign
person who is a member of any domestically controlled group of
entities, the common parent of such group shall be jointly and
severally liable for any tax under this chapter for which such
foreign person is liable by reason of this subsection, and for any
penalty imposed on such person by this title with respect to any
failure to pay such tax or to file any return or statement with
respect to such tax or wages subject to such tax. No deduction
shall be allowed under this title for any liability imposed by the
preceding sentence.
``(4) Provisions preventing double taxation.--
``(A) Agreements.--Paragraph (1) shall not apply to any
services which are covered by an agreement under subsection
(l).
``(B) Equivalent foreign taxation.--Paragraph (1) shall not
apply to any services if the employer establishes to the
satisfaction of the Secretary that the remuneration paid by
such employer for such services is subject to a tax imposed by
a foreign country which is substantially equivalent to the
taxes imposed by this chapter.
``(5) Cross reference.--For relief from taxes in cases covered
by certain international agreements, see sections 3101(c) and
3111(c).''.
(b) Social Security Benefits.--Subsection (e) of section 210 of the
Social Security Act (42 U.S.C. 410(e)) is amended--
(1) by striking ``(e) The term'' and inserting ``(e)(1) The
term'',
(2) by redesignating clauses (1) through (6) as clauses (A)
through (F), respectively, and
(3) by adding at the end the following new paragraph:
``(2)(A) If any employee of a foreign person is performing services
in connection with a contract between the United States Government (or
any instrumentality thereof) and any member of any domestically
controlled group of entities which includes such foreign person, such
foreign person shall be treated as an American employer with respect to
such services performed by such employee.
``(B) For purposes of this paragraph--
``(i) The term `domestically controlled group of entities'
means a controlled group of entities the common parent of which is
a domestic corporation.
``(ii) The term `controlled group of entities' means a
controlled group of corporations as defined in section 1563(a)(1)
of the Internal Revenue Code of 1986, except that--
``(I) `more than 50 percent' shall be substituted for `at
least 80 percent' each place it appears therein, and
``(II) the determination shall be made without regard to
subsections (a)(4) and (b)(2) of section 1563 of such Code.
A partnership or any other entity (other than a corporation) shall
be treated as a member of a controlled group of entities if such
entity is controlled (within the meaning of section 954(d)(3) of
such Code) by members of such group (including any entity treated
as a member of such group by reason of this sentence).
``(C) Subparagraph (A) shall not apply to any services to which
paragraph (1) of section 3121(z) of the Internal Revenue Code of 1986
does not apply by reason of paragraph (4) of such section.''.
(c) Effective Date.--The amendment made by this section shall apply
to services performed in calendar months beginning more than 30 days
after the date of the enactment of this Act.

2bf0f8f5abbd8721f0b632ed3828b3e6be5f20f2af0c21fb37cced2cec6fd312

OF TAX.
(a) In General.--Subsection (a) of section 6651 is amended by
striking ``$100'' in the last sentence and inserting ``$135''.
(b) Effective Date.--The amendment made by this section shall apply
to returns required to be filed after December 31, 2008.
BENEFITS

b4bb77826efd59076988a25253475111f4bfe8e8592098edabb96a3582a05d2a

HEALTH BENEFITS.
(a) Internal Revenue Code of 1986.--Subsection (f) of section 9812
is amended--
(1) by striking ``and'' at the end of paragraph (2), and
(2) by striking paragraph (3) and inserting the following new
paragraphs:
``(3) on or after January 1, 2008, and before the date of the
enactment of the Heroes Earnings Assistance and Relief Tax Act of
2008, and
``(4) after December 31, 2008.''.
(b) Employee Retirement Income Security Act of 1974.--Subsection
(f) of section 712 of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1185a(f)) is amended by striking ``services furnished
after December 31, 2007'' and inserting ``services furnished--
``(1) on or after January 1, 2008, and before the date of the
enactment of the Heroes Earnings Assistance and Relief Tax Act of
2008, and
``(2) after December 31, 2008.''.
(c) Public Health Service Act.--Subsection (f) of section 2705 of
the Public Health Service Act (42 U.S.C. 300gg-5(f)) is amended by
striking ``services furnished after December 31, 2007'' and inserting
``services furnished--
``(1) on or after January 1, 2008, and before the date of the
enactment of the Heroes Earnings Assistance and Relief Tax Act of
2008, and
``(2) after December 31, 2008.''.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.

942eb4ecd7efff07a21841035a74321c7cd2e0dc6e9dc4a23ee17085c49289bd

Heroes Earnings Assistance and Relief Tax Act of 2008

Other Sections

TITLE I

TITLE II

TITLE III

TITLE IV

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