To amend the Internal Revenue Code of 1986 to expand the combat zone income tax exclusion to include income for the period of transit to the combat zone and to remove the limitation on such exclusion for commissioned officers, and for other purposes.

1. Adds SEC. ____. EXPANSION OF INCOME TAX EXCLUSION FOR COMBAT ZONE SERVICE on page 281, between lines 2 and 3

   Adds a sectionPrinted page

   Inserted: SEC. ____. EXPANSION OF INCOME TAX EXCLUSION FOR COMBAT ZONE SERVICE.

   Inserted: (a) Combat Zone Service To Include Transit to Zone.--Section 112(c)(3) of the Internal Revenue Code of 1986 (relating to definitions) is amended by adding at the end the following new sentence: "Such service shall include any period (not to exceed 14 days) of direct transit to the combat zone.".

   Inserted: (b) Removal of Limitation on Exclusion for Commissioned Officers.--

   Inserted: (1) In general.--Subsection (b) of section 112 of the Internal Revenue Code of 1986 (relating to certain combat zone compensation of members of the Armed Forces) is repealed.

   Inserted: (2) Conforming amendments.--

   Inserted: (A) Section 112(a) of such Code is amended--

   Inserted: (i) by striking "below the grade of commissioned officer", and

   Inserted: (ii) by striking "Enlisted Personnel" in the heading and inserting "In General".

   Inserted: (B) Section 112(c) of such Code is amended by striking paragraphs (1) and (5) and by redesignating paragraphs (2), (3), and (4) as paragraphs (1), (2), and (3), respectively.

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to months beginning after December 31, 2002.

   Inserted: SEC. ____. AVAILABILITY OF CERTAIN TAX BENEFITS FOR MEMBERS OF THE ARMED FORCES PERFORMING SERVICES AT GUANTANAMO BAY NAVAL STATION, CUBA, AND ON THE ISLAND OF DIEGO GARCIA.

   Inserted: (a) General Rule.--In the case of a member of the Armed Forces of the United States who is entitled to special pay under section 305 of title 37, United States Code (relating to special pay: hardship duty pay), for services performed as a member of the Joint Task Force Guantanamo at Guantanamo Bay Naval Station, Cuba, or for services performed on the Island of Diego Garcia as part of Operation Iraqi Freedom, such member shall be treated in the same manner as if such services were in a combat zone (as determined under section 112 of the Internal Revenue Code of 1986) for purposes of the following provisions of such Code:

   Show 11 more inserted paragraphsShow less

   Inserted: (1) Section 2(a)(3) (relating to special rule where deceased spouse was in missing status).

   Inserted: (2) Section 112 (relating to the exclusion of certain combat pay of members of the Armed Forces).

   Inserted: (3) Section 692 (relating to income taxes of members of Armed Forces on death).

   Inserted: (4) Section 2201 (relating to members of the Armed Forces dying in combat zone or by reason of combat-zone-incurred wounds, etc.).

   Inserted: (5) Section 3401(a)(1) (defining wages relating to combat pay for members of the Armed Forces).

   Inserted: (6) Section 4253(d) (relating to the taxation of phone service originating from a combat zone from members of the Armed Forces).

   Inserted: (7) Section 6013(f)(1) (relating to joint return where individual is in missing status).

   Inserted: (8) Section 7508 (relating to time for performing certain acts postponed by reason of service in combat zone).

   Inserted: (b) Effective Dates.--

   Inserted: (1) In general.--Except as provided in paragraph (2), this section shall take effect on January 1, 2003.

   Inserted: (2) Withholding.--Subsection (a)(5) shall apply to remuneration paid after December 31, 2002.

   Original wording

   On page 281, between lines 2 and 3, insert the following:

Read automatically from the Congressional Record. Check the original before relying on it.

As printed