[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 460 Introduced in Senate (IS)]
109th CONGRESS
1st Session
S. 460
To expand and enhance benefits for members of the Armed Forces and
their families, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 18, 2005
Mr. Kerry introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To expand and enhance benefits for members of the Armed Forces and
their families, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Strengthening
America's Armed Forces and Military Family Bill of Rights Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
TITLE I--ARMED FORCES MATTERS
Sec. 101. Increase in end strength of the Army.
Sec. 102. Increase in end strength of the Marine Corps.
TITLE II--BENEFITS FOR MEMBERS OF NATIONAL GUARD AND RESERVE
Subtitle A--Health Care Benefits
Sec. 201. TRICARE coverage for members of the Ready Reserve.
Sec. 202. Allowance for continuation of non-TRICARE health benefits
coverage for certain mobilized reserves.
Subtitle B--Small Business Mobilization Assistance
Sec. 211. Short title.
Sec. 212. Purpose.
Sec. 213. National Guard and Reserve business assistance.
Sec. 214. Veteran entrepreneur loans.
Sec. 215. Grant assistance for military reservists' small businesses.
Subtitle C--Other Mobilization Assistance and Benefits
Sec. 221. Credit for income differential for employment of activated
military reservist and replacement
personnel.
TITLE III--MILITARY FAMILY BENEFITS
Sec. 301. Designation of overpayments to support military families.
Sec. 302. Penalty-free withdrawals from retirement plans for
individuals called to certain active duty.
TITLE IV--DEATH GRATUITY AND OTHER SURVIVOR BENEFITS
Sec. 401. Increased amount of death gratuity.
Sec. 402. Death gratuity excludable from Federal income taxation.
Sec. 403. Extension of period of temporary continuation of basic
allowance for housing for dependents of
members of the Armed Forces who die on
active duty.
TITLE V--VETERANS BENEFITS
Sec. 501. Post-traumatic stress disorder treatment for veterans of
service in Afghanistan and Iraq and the war
on terror.
TITLE VI--REVENUE PROVISION
Sec. 601. Partial repeal of rate reduction in the highest income tax
bracket.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) Nearly 150,000 members of the Armed Forces are engaged
in the war in Iraq.
(2) More than 15,000 members of the Armed Forces are in
Afghanistan fighting al Qaeda and Taliban remnants.
(3) Several thousand members of the Armed Forces are
deployed in the Balkans.
(4) Thousands of other members of the Armed Forces are
engaged in critical missions around the world to keep the
Nation secure.
(5) More than 180,000 members of the National Guard and
Reserves are mobilized and deployed around the world to help
keep the Nation secure.
(6) Each member of the Armed Forces is supported by a
network of families and loved ones who sacrifice in their own
right for the Nation.
(7) Military families are partners with members of the
Armed Forces in the defense and security of the Nation.
TITLE I--ARMED FORCES MATTERS
SEC. 101. INCREASE IN END STRENGTH OF THE ARMY.
(a) Strength for Fiscal Year 2006.--Effective on October 1, 2005,
section 691(b)(1) of title 10, United States Code, is amended by
striking ``502,400'' and inserting ``522,400''.
(b) Strength for Fiscal Years After Fiscal Year 2006.--Effective on
October 1, 2006, section 691(b)(1) of such title is amended by striking
``522,400'' and inserting ``532,400''.
SEC. 102. INCREASE IN END STRENGTH OF THE MARINE CORPS.
(a) Strength for Fiscal Year 2006.--Effective on October 1, 2005,
section 691(b)(3) of title 10, United States Code, is amended by
striking ``178,000'' and inserting ``183,000''.
(b) Strength for Fiscal Years After Fiscal Year 2006.--Effective on
October 1, 2006, section 691(b)(3) of title 10, United States Code, is
amended by striking ``183,000'' and inserting ``188,000''.
TITLE II--BENEFITS FOR MEMBERS OF NATIONAL GUARD AND RESERVE
Subtitle A--Health Care Benefits
SEC. 201. TRICARE COVERAGE FOR MEMBERS OF THE READY RESERVE.
(a) Eligibility.--Section 1076b of title 10, United States Code, is
amended to read as follows:
``Sec. 1076b. TRICARE program: coverage for members of the Ready
Reserve
``(a) Eligibility.--Members of the Selected Reserve of the Ready
Reserve of a reserve component of the armed forces and members of the
Individual Ready Reserve described in subsection 10144(b) of this title
are eligible, subject to subsection (h)(1), to enroll in the following
TRICARE program options:
``(1) TRICARE Prime.
``(2) TRICARE Standard.
``(b) Types of Coverage.--(1) A member eligible under subsection
(a) may enroll for either of the following types of coverage:
``(A) Self alone coverage.
``(B) Self and family coverage.
``(2) An enrollment by a member for self and family covers the
member and the dependents of the member who are described in
subparagraph (A), (D), or (I) of section 1072(2) of this title.
``(c) Open Enrollment Periods.--The Secretary of Defense shall
provide for at least one open enrollment period each year. During an
open enrollment period, a member eligible under subsection (a) may
enroll in the TRICARE program or change or terminate an enrollment in
the TRICARE program.
``(d) Scope of Care.--(1) A member and the dependents of a member
enrolled in the TRICARE program under this section shall be entitled to
the same benefits under this chapter as a member of the uniformed
services on active duty or a dependent of such a member, respectively.
``(2) Section 1074(c) of this title shall apply with respect to a
member enrolled in the TRICARE program under this section.
``(e) Premiums.--(1) The Secretary of Defense shall charge premiums
for coverage pursuant to enrollments under this section. The Secretary
shall prescribe for each of the TRICARE program options referred to in
subsection (a) a premium for self alone coverage and a premium for self
and family coverage.
``(2) The monthly amount of the premium in effect for a month for a
type of coverage under this section shall be the amount equal to 28
percent of the total amount determined by the Secretary on an
appropriate actuarial basis as being reasonable for the coverage.
``(3) The premiums payable by a member under this subsection may be
deducted and withheld from basic pay payable to the member under
section 204 of title 37 or from compensation payable to the member
under section 206 of such title. The Secretary shall prescribe the
requirements and procedures applicable to the payment of premiums by
members not entitled to such basic pay or compensation.
``(4) Amounts collected as premiums under this subsection shall be
credited to the appropriation available for the Defense Health Program
Account under section 1100 of this title, shall be merged with sums in
such Account that are available for the fiscal year in which collected,
and shall be available under subsection (b) of such section for such
fiscal year.
``(f) Other Charges.--A person who receives health care pursuant to
an enrollment in a TRICARE program option under this section, including
a member who receives such health care, shall be subject to the same
deductibles, copayments, and other nonpremium charges for health care
as apply under this chapter for health care provided under the same
TRICARE program option to dependents described in subparagraph (A),
(D), or (I) of section 1072(2) of this title.
``(g) Termination of Enrollment.--(1) A member enrolled in the
TRICARE program under this section may terminate the enrollment only
during an open enrollment period provided under subsection (c), except
as provided in subsection (h)(2).
``(2) An enrollment of a member for self alone or for self and
family under this section shall terminate on the first day of the first
month beginning after the date on which the member ceases to be
eligible under subsection (a).
``(3) The enrollment of a member under this section may be
terminated on the basis of failure to pay the premium charged the
member under this section.
``(h) Relationship to Transition TRICARE Coverage Upon Separation
From Active Duty.--(1) A member may not enroll in the TRICARE program
under this section while entitled to transitional health care under
subsection (a) of section 1145 of this title or while authorized to
receive health care under subsection (c) of such section.
``(2) A member who enrolls in the TRICARE program under this
section within 90 days after the date of the termination of the
member's entitlement or eligibility to receive health care under
subsection (a) or (c) of section 1145 of this title may terminate the
enrollment at any time within one year after the date of the
enrollment.
``(i) Regulations.--The Secretary of Defense, in consultation with
the other administering Secretaries, shall prescribe regulations for
the administration of this section.''.
(b) Definitions.--
(1) Tricare options.--Section 1072 of title 10, United
States Code, is amended by adding at the end the following new
paragraphs:
``(10) The term `TRICARE Prime' means the managed care
option of the TRICARE program.
``(11) The term `TRICARE Standard' means the Civilian
Health and Medical Program of the Uniformed Services option
under the TRICARE program.''.
(2) Conforming amendments.--
(A) Section 1076d(f) of such title is amended--
(i) by striking ``(f) Definitions.--'' and
all that follows through ``(1) The'' and
inserting ``(f) Immediate Family Defined.--In
this section, the''; and
(ii) by striking paragraph (2).
(B) Section 1097a(f) of such title is amended by
striking ``Definitions.--In this section:'' and all
that follows through ``(2) The term'' and inserting
``Catchment Area Defined.--In this section, the term''.
(c) Period for Implementation.--Section 1076b of title 10, United
States Code (as added by subsection (a)), shall apply with respect to
months that begin on or after the date that is 180 days after the date
of the enactment of this Act.
(d) Coordination With Overlapping Authority.--
(1) Repeal.--Effective one year after the date of the
enactment of this Act--
(A) section 1076d of title 10, United States Code,
is repealed; and
(B) the table of sections at the beginning of
chapter 55 of such title is amended by striking the
item relating to section 1076d.
(2) Transition coverage.--The Secretary of Defense shall
provide for an orderly transition to TRICARE coverage under
section 1076b of title 10, United States Code (as amended by
subsection (a)), for persons enrolled for TRICARE coverage
under section 1076d of such title before the repeal of such
section takes effect under paragraph (1)(A).
SEC. 202. ALLOWANCE FOR CONTINUATION OF NON-TRICARE HEALTH BENEFITS
COVERAGE FOR CERTAIN MOBILIZED RESERVES.
(a) Payment of Premiums.--
(1) Requirement to pay premiums.--Chapter 55 of title 10,
United States Code, is amended by inserting after section 1078a
the following new section:
``Sec. 1078b. Continuation of non-TRICARE health benefits plan coverage
for certain Reserves called or ordered to active duty and
their dependents
``(a) Payment of Premiums.--The Secretary concerned shall pay the
applicable premium to continue in force any qualified health benefits
plan coverage for an eligible reserve component member for the benefits
coverage continuation period if timely elected by the member in
accordance with regulations prescribed under subsection (j).
``(b) Eligible Member.--A member of a reserve component is eligible
for payment of the applicable premium for continuation of qualified
health benefits plan coverage under subsection (a) while serving on
active duty pursuant to a call or order issued under a provision of law
referred to in section 101(a)(13)(B) of this title during a war or
national emergency declared by the President or Congress.
``(c) Qualified Health Benefits Plan Coverage.--For the purposes of
this section, health benefits plan coverage for a member called or
ordered to active duty is qualified health benefits plan coverage if--
``(1) the coverage was in force on the date on which the
Secretary notified the member that issuance of the call or
order was pending or, if no such notification was provided, the
date of the call or order;
``(2) on such date, the coverage applied to the member and
dependents of the member described in subparagraph (A), (D), or
(I) of section 1072(2) of this title; and
``(3) the coverage has not lapsed.
``(d) Applicable Premium.--The applicable premium payable under
this section for continuation of health benefits plan coverage in the
case of a member is the amount of the premium payable by the member for
the coverage of the member and dependents.
``(e) Maximum Amount.--The total amount that may be paid for the
applicable premium of a health benefits plan for a member under this
section in a fiscal year may not exceed the amount determined by
multiplying--
``(1) the sum of one plus the number of the member's
dependents covered by the health benefits plan, by
``(2) the per capita cost of providing TRICARE coverage and
benefits for dependents under this chapter for such fiscal
year, as determined by the Secretary of Defense.
``(f) Benefits Coverage Continuation Period.--The benefits coverage
continuation period under this section for qualified health benefits
plan coverage in the case of a member called or ordered to active duty
is the period that--
``(1) begins on the date of the call or order; and
``(2) ends on the earlier of the date on which--
``(A) the member's eligibility for transitional
health care under section 1145(a) of this title
terminates under paragraph (3) of such section; or
``(B) the member elects to terminate the continued
qualified health benefits plan coverage of the
dependents of the member.
``(g) Extension of Period of COBRA Coverage.--Notwithstanding any
other provision of law--
``(1) any period of coverage under a COBRA continuation
provision (as defined in section 9832(d)(1) of the Internal
Revenue Code of 1986) for a member under this section shall be
deemed to be equal to the benefits coverage continuation period
for such member under this section; and
``(2) with respect to the election of any period of
coverage under a COBRA continuation provision (as so defined),
rules similar to the rules under section 4980B(f)(5)(C) of such
Code shall apply.
``(h) Nonduplication of Benefits.--A dependent of a member who is
eligible for benefits under qualified health benefits plan coverage
paid on behalf of a member by the Secretary concerned under this
section is not eligible for benefits under the TRICARE program during a
period of the coverage for which so paid.
``(i) Revocability of Election.--A member who makes an election
under subsection (a) may revoke the election. Upon such a revocation,
the member's dependents shall become eligible for benefits under the
TRICARE program as provided for under this chapter.
``(j) Regulations.--The Secretary of Defense shall prescribe
regulations for carrying out this section. The regulations shall
include such requirements for making an election of payment of
applicable premiums as the Secretary considers appropriate.''.
(2) Clerical amendment.--The table of sections at the
beginning of such chapter is amended by inserting after the
item relating to section 1078a the following new item:
``1078b. Continuation of non-TRICARE health benefits plan coverage for
certain Reserves called or ordered to
active duty and their dependents.''.
(b) Applicability.--Section 1078b of title 10, United States Code
(as added by subsection (a)), shall apply with respect to calls or
orders of members of reserve components of the Armed Forces to active
duty as described in subsection (b) of such section, that are issued by
the Secretary of a military department on or after the date of the
enactment of this Act.
Subtitle B--Small Business Mobilization Assistance
SEC. 211. SHORT TITLE.
This subtitle may be cited as the ``National Reservist Enterprise
Transition and Sustainability Act of 2005''.
SEC. 212. PURPOSE.
The purpose of this subtitle is to establish a program to--
(1) provide managerial, financial, planning, development,
technical, and regulatory assistance to small business concerns
owned and operated by members of the National Guard and
Reserve;
(2) provide managerial, financial, planning, development,
technical, and regulatory assistance to the temporary heads of
small business concerns owned and operated by members of the
National Guard and Reserve;
(3) create a partnership between the Small Business
Administration, the Department of Defense, and the Department
of Veterans Affairs to assist small business concerns owned and
operated by members of the National Guard and Reserve;
(4) utilize the service delivery network of Small Business
Development Centers to expand the access of small business
concerns owned and operated by members of the National Guard
and Reserve to programs providing business management,
development, financial, procurement, technical, regulatory, and
marketing assistance;
(5) utilize the service delivery network of Small Business
Development Centers to quickly respond to an activation of
members of the National Guard and Reserve that own and operate
small business concerns; and
(6) utilize the service delivery network of Small Business
Development Centers to assist members of the National Guard and
Reserve that own and operate small business concerns in
preparing for future military activations.
SEC. 213. NATIONAL GUARD AND RESERVE BUSINESS ASSISTANCE.
(a) In General.--Section 21(a)(1) of the Small Business Act (15
U.S.C. 648(a)(1)) is amended by adding ``any Small Business Development
Center providing enterprise transition and sustainability assistance to
members of the National Guard or Reserve under section 37,'' after
``any women's business center operating pursuant to section 29,''.
(b) Program.--The Small Business Act (15 U.S.C. 631 et seq.) is
amended
(1) by redesignating section 37 (15 U.S.C. 631 note) as
section 38; and
(2) by inserting after section 36 the following:
``SEC. 37. NATIONAL GUARD AND RESERVE ENTERPRISE TRANSITION AND
SUSTAINABILITY.
``(a) In General.--The Administrator shall establish a program to
provide business planning assistance to small business concerns owned
and operated by members of the National Guard and Reserve.
``(b) Definitions.--In this section--
``(1) the terms `activated' and `activation' mean having
received an order placing a member of the National Guard and
Reserve on active duty, as defined by section 101(1) of title
10, United States Code;
``(2) the term `Administrator' means the Administrator of
the Small Business Administration, acting through the Associate
Administrator for Small Business Development Centers;
``(3) the term `Association' means the association
established pursuant to section 21(a)(3)(A);
``(4) the term `enterprise transition and sustainability
assistance' means assistance provided by a Small Business
Development Center to a small business concern owned and
operated by a member of the National Guard and Reserve, who has
been activated or is likely to be activated in the next 12
months, to develop and implement a business strategy for the
period while the owner is on active duty and six months
following the return of the owner;
``(5) the term `member of the National Guard and Reserve'
means any person who is currently--
``(A) a member of a reserve component of the armed
forces, as defined by section 10101 of title 10, United
States Code; and
``(B) on active status, as defined by section
101(d)(4) of title 10, United States Code;
``(6) the term `Small Business Development Center' means a
small business development center as described in section 21 of
the Small Business Act (15 U.S.C. 648); and
``(7) the term `State' means each of the several States of
the United States, the District of Columbia, the Commonwealth
of Puerto Rico, the Virgin Islands, American Samoa, and Guam.
``(c) Authority.--The Administrator may award grants, in accordance
with the regulations developed pursuant to subsection (d), to eligible
Small Business Development Centers to assist small business concerns
owned and operated by members of the National Guard and Reserve by--
``(1) providing management, development, financing,
procurement, technical, regulatory, and marketing assistance;
``(2) providing access to information and resources,
including current Federal and State business assistance
programs;
``(3) distributing contact information provided by the
Department of Defense regarding activated members of the
National Guard and Reserve to corresponding State directors;
``(4) offering free, one-on-one, in-depth counseling
regarding management, development, financing, procurement,
regulations, and marketing;
``(5) assisting in developing a long-term plan for possible
future activation; and
``(6) providing enterprise transition and sustainability
assistance.
``(d) Rulemaking.--
``(1) In general.--The Administrator, in consultation with
the Association and after notice and an opportunity for
comment, shall promulgate regulations to carry out the
provisions of this section.
``(2) Deadline.--The Administrator shall promulgate final
regulations not later than 180 days of the date of enactment of
the National Reservist Enterprise Transition and Sustainability
Act of 2005.
``(3) Contents.--The regulations developed by the
Administrator under this subsection shall establish--
``(A) procedures for identifying, in consultation
with the Department of Defense, States that have had a
recent activation of members of the National Guard and
Reserve;
``(B) priorities for the types of assistance to be
provided under the program authorized by this section;
``(C) standards relating to educational, technical,
and support services to be provided by a grantee;
``(D) standards relating to any national service
delivery and support function to be provided by a
grantee;
``(E) standards relating to any work plan that the
Administrator may require a grantee to develop; and
``(F) standards relating to the educational,
technical, and professional competency of any expert or
other assistance provider to whom a small business
concern may be referred for assistance by a grantee.
``(e) Application.--
``(1) In general.--Each eligible Small Business Development
Center desiring a grant under this section shall submit an
application to the Administrator at such time, in such manner,
and accompanied by such information as the Administrator may
reasonably require.
``(2) Contents.--Each application submitted pursuant to
paragraph (1) shall describe--
``(A) the activities for which the applicant seeks
assistance under this section; and
``(B) how the applicant plans to allocate funds
within its network.
``(3) Matching not required.--Subparagraphs (A) and (B) of
section 21(a)(4), requiring matching funds, shall not apply to
grants awarded under this section.
``(4) Eligibility.--A Small Business Development Center is
eligible to receive a grant under this section if it is
accredited under section 21(k).
``(f) Award of Grants.--
``(1) Deadline.--The Administrator shall award grants not
later than 60 days after the promulgation of final rules and
regulations under subsection (d).
``(2) Amount.--Each Small Business Development Center
awarded a grant under this section shall receive a grant in an
amount--
``(A) not less than $150,000 per fiscal year; and
``(B) not greater than $500,000 per fiscal year.
``(g) Report.--
``(1) In general.--The Government Accountability Office
shall--
``(A) initiate an evaluation of the program not
later than 30 months after the disbursement of the
first grant under the program; and
``(B) submit a report not later than 6 months after
the initiation of the evaluation under paragraph (1)
to--
``(i) the Administrator;
``(ii) the Committee on Small Business and
Entrepreneurship of the Senate; and
``(iii) the Committee on Small Business of
the House of Representatives.
``(2) Contents.--The report under paragraph (1) shall--
``(A) address the results of the evaluation; and
``(B) recommend changes to law, if any, that it
believes would be necessary or advisable to achieve the
goals of this section.
``(h) Authorization of Appropriations.--
``(1) In general.--There are authorized to be appropriated
to carry out this section--
``(A) $5,000,000 for the first fiscal year
beginning after the date of enactment of the National
Reservist Enterprise Transition and Sustainability Act
of 2005;
``(B) $5,000,000 for each of the 3 fiscal years
following the fiscal year described in subparagraph (A)
``(2) Limitation on use of other funds.--The Administrator
may carry out the program authorized by this section only with
amounts appropriated in advance specifically to carry out this
section.''.
SEC. 214. VETERAN ENTREPRENEUR LOANS.
(a) Authorization.--The first sentence of section 7(a) of the Small
Business Act (15 U.S.C. 636) is amended by inserting ``new veteran
entrepreneurs under paragraph (32) and'' after ``loans to any qualified
small business concern, including'';
(b) Specifications.--Section 7(a) of the Small Business Act (15
U.S.C. 636(a)) is amended by adding after paragraph 31 the following:
``(32) Veteran entrepreneur loans.--Each loan to a new
veteran entrepreneur under this subsection shall--
``(A) be made directly to the new veteran
entrepreneur;
``(B) not exceed $100,000; and
``(C) be made at the same interest rate as loans
made under the second proviso of the unnumbered
paragraph of subsection (b).''.
(3) Definitions.--Section 3(q) of the Small Business Act
(15 U.S.C. 632(q)) is amended by adding after paragraph (4) the
following:
``(5) New veteran entrepreneur.--The term `new veteran
entrepreneur' means a person who--
``(A) is a veteran;
``(B) is establishing a new small business concern
or established a new small business concern within the
6 month period preceding the request for a loan; and
``(C) does not own or control any other
business.''.
SEC. 215. GRANT ASSISTANCE FOR MILITARY RESERVISTS' SMALL BUSINESSES.
(a) Authorization of Grants.--Section 7(b)(3)(B) of the Small
Business Act (15 U.S.C. 636(b)(3)(B)) is amended by inserting ``or
grants'' after ``or a deferred basis)''.
(b) Grant Specifications.--Section 7(b)(3) of the Small Business
Act (15 U.S.C. 636(b)(3)) is amended by inserting after subparagraph
(F) the following:
``(G) Grants made under subparagraph (B)--
``(i) may be awarded in addition to any loan made
under subparagraph (B);
``(ii) shall not exceed $25,000; and
``(iii) shall be made only to a small business
concern--
``(I) that provides a business plan
demonstrating viability for not less than 3
future years;
``(II) with 10 or fewer employees;
``(III) that has not received another grant
under subparagraph (B) in the previous 2
years.''.
(c) Authorization of Appropriations.--Section 20(e)(2) of the Small
Business Act (15 U.S.C. 631 note) is amended by inserting after
subparagraph (B) the following:
``(C) Grant assistance for military reservists'
small businesses.--There are authorized to be
appropriated for grants under section 7(b)(3)(B)--
``(i) $5,000,000 for the first fiscal year
beginning after the date of enactment of the
National Reservist Enterprise Transition and
Sustainability Act of 2005; and
``(ii) $5,000,000 for each of the 2 fiscal
years following the fiscal year described in
clause (i).''.
Subtitle C--Other Mobilization Assistance and Benefits
SEC. 221. CREDIT FOR INCOME DIFFERENTIAL FOR EMPLOYMENT OF ACTIVATED
MILITARY RESERVIST AND REPLACEMENT PERSONNEL.
(a) In General.--Subpart B of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to foreign tax credit,
etc.) is amended by adding at the end the following new section:
``SEC. 30B. EMPLOYER WAGE CREDIT FOR ACTIVATED MILITARY RESERVISTS.
``(a) General Rule.--There shall be allowed as a credit against the
tax imposed by this chapter for the taxable year an amount equal to the
sum of--
``(1) in the case of a small business employer, the
employment credit with respect to all qualified employees and
qualified replacement employees of the taxpayer, plus
``(2) the self-employment credit of a qualified self-
employed taxpayer.
``(b) Employment Credit.--For purposes of this section--
``(1) Qualified employees.--
``(A) In general.--The employment credit with
respect to a qualified employee of the taxpayer for any
taxable year is equal to 50 percent of the lesser of--
``(i) the excess, if any, of--
``(I) the qualified employee's
average daily qualified compensation
for the taxable year, over
``(II) the average daily military
pay and allowances received by the
qualified employee during the taxable
year, while participating in qualified
reserve component duty to the exclusion
of the qualified employee's normal
employment duties for the number of
days the qualified employee
participates in qualified reserve
component duty during the taxable year,
including time spent in a travel
status, or
``(ii) $30,000.
The employment credit, with respect to all qualified
employees, is equal to the sum of the employment
credits for each qualified employee under this
subsection.
``(B) Average daily qualified compensation and
average daily military pay and allowances.--As used
with respect to a qualified employee--
``(i) the term `average daily qualified
compensation' means the qualified compensation
of the qualified employee for the taxable year
divided by the difference between--
``(I) 365, and
``(II) the number of days the
qualified employee participates in
qualified reserve component duty during
the taxable year, including time spent
in a travel status, and
``(ii) the term `average daily military pay
and allowances' means--
``(I) the amount paid to the
qualified employee during the taxable
year as military pay and allowances on
account of the qualified employee's
participation in qualified reserve
component duty, divided by
``(II) the total number of days the
qualified employee participates in
qualified reserve component duty,
including time spent in travel status.
``(C) Qualified compensation.--When used with
respect to the compensation paid or that would have
been paid to a qualified employee for any period during
which the qualified employee participates in qualified
reserve component duty, the term `qualified
compensation' means--
``(i) compensation which is normally
contingent on the qualified employee's presence
for work and which would be deductible from the
taxpayer's gross income under section 162(a)(1)
if the qualified employee were present and
receiving such compensation,
``(ii) compensation which is not
characterized by the taxpayer as vacation or
holiday pay, or as sick leave or pay, or as any
other form of pay for a nonspecific leave of
absence, and with respect to which the number
of days the qualified employee participates in
qualified reserve component duty does not
result in any reduction in the amount of
vacation time, sick leave, or other nonspecific
leave previously credited to or earned by the
qualified employee, and
``(iii) group health plan costs (if any)
with respect to the qualified employee.
``(D) Qualified employee.--The term `qualified
employee' means a person who--
``(i) has been an employee of the taxpayer
for the 91-day period immediately preceding the
period during which the employee participates
in qualified reserve component duty, and
``(ii) is a member of the Ready Reserve of
a reserve component of an Armed Force of the
United States as defined in sections 10142 and
10101 of title 10, United States Code.
``(2) Qualified replacement employees.--
``(A) In general.--The employment credit with
respect to a qualified replacement employee of the
taxpayer for any taxable year is equal to 50 percent of
the lesser of--
``(i) the individual's qualified
compensation attributable to service rendered
as a qualified replacement employee, or
``(ii) $12,000.
The employment credit, with respect to all qualified
replacement employees, is equal to the sum of the
employment credits for each qualified replacement
employee under this subsection.
``(B) Qualified compensation.--When used with
respect to the compensation paid to a qualified
replacement employee, the term `qualified compensation'
means--
``(i) compensation which is normally
contingent on the qualified replacement
employee's presence for work and which is
deductible from the taxpayer's gross income
under section 162(a)(1),
``(ii) compensation which is not
characterized by the taxpayer as vacation or
holiday pay, or as sick leave or pay, or as any
other form of pay for a nonspecific leave of
absence, and
``(iii) group health plan costs (if any)
with respect to the qualified replacement
employee.
``(C) Qualified replacement employee.--The term
`qualified replacement employee' means an individual
who is hired to replace a qualified employee or a
qualified self-employed taxpayer, but only with respect
to the period during which such employee or taxpayer
participates in qualified reserve component duty,
including time spent in travel status.
``(c) Self-Employment Credit.--For purposes of this section--
``(1) In general.--The self-employment credit of a
qualified self-employed taxpayer for any taxable year is equal
to 50 percent of the lesser of--
``(A) the excess, if any, of--
``(i) the self-employed taxpayer's average
daily self-employment income for the taxable
year over
``(ii) the average daily military pay and
allowances received by the taxpayer during the
taxable year, while participating in qualified
reserve component duty to the exclusion of the
taxpayer's normal self-employment duties for
the number of days the taxpayer participates in
qualified reserve component duty during the
taxable year, including time spent in a travel
status, or
``(B) $30,000.
``(2) Average daily self-employment income and average
daily military pay and allowances.--As used with respect to a
self-employed taxpayer--
``(A) the term `average daily self-employment
income' means the self-employment income (as defined in
section 1402(b)) of the taxpayer for the taxable year
plus the amount paid for insurance which constitutes
medical care for the taxpayer for such year (within the
meaning of section 162(l)) divided by the difference
between--
``(i) 365, and
``(ii) the number of days the taxpayer
participates in qualified reserve component
duty during the taxable year, including time
spent in a travel status, and
``(B) the term `average daily military pay and
allowances' means--
``(i) the amount paid to the taxpayer
during the taxable year as military pay and
allowances on account of the taxpayer's
participation in qualified reserve component
duty, divided by
``(ii) the total number of days the
taxpayer participates in qualified reserve
component duty, including time spent in travel
status.
``(3) Qualified self-employed taxpayer.--The term
`qualified self-employed taxpayer' means a taxpayer who--
``(A) has net earnings from self-employment (as
defined in section 1402(a)) for the taxable year, and
``(B) is a member of the Ready Reserve of a reserve
component of an Armed Force of the United States.
``(d) Credit in Addition to Deduction.--The employment credit or
the self-employment credit provided in this section is in addition to
any deduction otherwise allowable with respect to compensation actually
paid to a qualified employee, qualified replacement employee, or
qualified self-employed taxpayer during any period the qualified
employee or qualified self-employed taxpayer participates in qualified
reserve component duty to the exclusion of normal employment duties.
``(e) Coordination With Other Credits.--The amount of credit
otherwise allowable under sections 51(a) and 1396(a) with respect to
any employee shall be reduced by the credit allowed by this section
with respect to such employee.
``(f) Limitations.--
``(1) Application with other credits.--The credit allowed
under subsection (a) for any taxable year shall not exceed the
excess (if any) of--
``(A) the regular tax for the taxable year reduced
by the sum of the credits allowable under subpart A and
sections 27, 29, and 30, over
``(B) the tentative minimum tax for the taxable
year.
``(2) 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--
``(A) 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
``(B) the 2 succeeding taxable years.
``(3) Disallowance with respect to persons ordered to
active duty for training.--No credit shall be allowed under
subsection (a) to a taxpayer with respect to any period by
taking into account any person who is called or ordered to
active duty for any of the following types of duty:
``(A) Active duty for training under any provision
of title 10, United States Code.
``(B) Training at encampments, maneuvers, outdoor
target practice, or other exercises under chapter 5 of
title 32, United States Code.
``(C) Full-time National Guard duty, as defined in
section 101(d)(5) of title 10, United States Code.
``(g) General Definitions and Special Rules.--For purposes of this
section--
``(1) Small business employer.--
``(A) In general.--The term `small business
employer' means, with respect to any taxable year, any
employer who employed an average of 50 or fewer
employees on business days during such taxable year.
``(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.
``(2) Military pay and allowances.--The term `military pay'
means pay as that term is defined in section 101(21) of title
37, United States Code, and the term `allowances' means the
allowances payable to a member of the Armed Forces of the
United States under chapter 7 of that title.
``(3) Qualified reserve component duty.--The term
`qualified reserve component duty' includes only active duty
performed, as designated in the reservist's military orders, in
support of a contingency operation as defined in section
101(a)(13) of title 10, United States Code.
``(4) Special rules for certain manufacturers.--
``(A) In general.--In the case of any qualified
manufacturer--
``(i) subsections (b)(1)(A)(ii) and
(c)(1)(B) shall be applied by substituting
`$40,000' for `$30,000',
``(ii) subsection (b)(2)(A)(ii) shall be
applied by substituting `$20,000' for
`$12,000', and
``(iii) paragraph (1)(A) of this subsection
shall be applied by substituting `100' for
`50'.
``(B) Qualified manufacturer.--For purposes of this
paragraph, the term `qualified manufacturer' means any
person if--
``(i) the primary business of such person
is classified in sector 31, 32, or 33 of the
North American Industrial Classification
System, and
``(ii) all of such person's facilities
which are used for production in such business
are located in the United States.
``(5) Carryback and carryforward allowed.--
``(A) In general.--If the credit allowable under
subsection (a) for a taxable year exceeds the amount of
the limitation under subsection (f)(1) for such taxable
year (in this paragraph referred to as the `unused
credit year'), such excess shall be a credit carryback
to each of the 3 taxable years preceding the unused
credit year and a credit carryforward to each of the 20
taxable years following the unused credit year.
``(B) Rules.--Rules similar to the rules of section
39 shall apply with respect to the credit carryback and
credit carryforward under subparagraph (A).
``(6) Certain rules to apply.--Rules similar to the rules
of subsections (c), (d), and (e) of section 52 shall apply.''.
(b) Conforming Amendment.--Section 55(c)(2) of the Internal Revenue
Code of 1986 is amended by inserting ``30B(f)(1),'' after
``30(b)(3),''.
(c) Clerical Amendment.--The table of sections for subpart B of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end of 30A the following new item:
``Sec. 30B. Employer wage credit for activated military reservists.''.
(d) Effective Date; Special Rule.--
(1) Effective date.--The amendments made by this section
shall apply to amounts paid after September 11, 2001, in
taxable years ending after such date.
(2) Waiver of limitations.--If refund or credit of any
overpayment of tax resulting from the amendments 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.
TITLE III--MILITARY FAMILY BENEFITS
SEC. 301. DESIGNATION OF OVERPAYMENTS TO SUPPORT MILITARY FAMILIES.
(a) Designation.--
(1) In general.--Subchapter A of chapter 61 of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new part:
``PART IX--DESIGNATION OF OVERPAYMENTS TO SUPPORT MILITARY FAMILIES
``Sec. 6097. Designation.
``SEC. 6097. DESIGNATION.
``(a) In General.--In the case of an individual, with respect to
each taxpayer's return for the taxable year of the tax imposed by
chapter 1, such taxpayer may designate that--
``(1) a specified portion (not less than $1 and in whole
dollars) of any overpayment of tax for such taxable year, and
``(2) any contribution (not less than $1 and in whole
dollars) which the taxpayer forwards in money with such return,
be paid over to the American Military Family Relief Fund.
``(b) Manner and Time of Designation.--A designation under
subsection (a) may be made with respect to any taxable year only at the
time of filing the return of the tax imposed by chapter 1 for such
taxable year. Such designation shall be made in such manner as the
Secretary prescribes by regulations except that such designation shall
be made either on the first page of the return or on the page bearing
the taxpayer's signature.
``(c) Overpayments Treated as Refunded.--For purposes of this
title, any portion of an overpayment of tax designated under subsection
(a)(1) shall be treated as--
``(1) being refunded to the taxpayer as of the last date
prescribed for filing the return of tax imposed by chapter 1
(determined without regard to extensions) or, if later, the
date the return is filed, and
``(2) a contribution made by such taxpayer on such date to
the United States.
``(d) Termination.--This section shall not apply to designations
made after December 31, 2009.''.
(2) Transfers to american military family relief fund.--The
Secretary of the Treasury shall, from time to time, transfer to
the American Military Family Relief Fund the amounts designated
under section 6097 of the Internal Revenue Code of 1986.
(3) Clerical Amendment.--The table of parts for subchapter
A of chapter 61 of the Internal Revenue Code of 1986 is amended
by adding at the end the following new item:
``Part IX. Designation of overpayments to
support military families.''.
(b) American Military Family Relief Fund.--
(1) In General.--Subchapter A of chapter 98 of the Internal
Revenue Code of 1986 (relating to trust fund code) is amended
by adding at the end the following new section:
``SEC. 9511. AMERICAN MILITARY FAMILY RELIEF FUND.
``(a) Establishment.--There is established in the Treasury of the
United States a trust fund to be known as the `American Military Family
Relief Fund', consisting of such amounts as may be appropriated or
credited to such Fund as provided in this section or section 9602(b).
``(b) Transfers to Fund.--There are hereby appropriated to the
American Military Family Relief Fund amounts equivalent to the amounts
designated under section 6097.
``(c) Expenditures.--
``(1) In general.--Amounts in the American Military Family
Relief Fund shall be available to the Secretary of Defense for
making distributions to, or for the benefit of, individuals and
family members of individuals who serve, or have served, in the
Armed Forces of the United States for needs not met by other
laws or programs, including costs and unmet needs associated
with deployments, injury, or death.
``(2) Criteria for distributions.--
``(A) In general.--The Secretary of Defense, after
consultation with appropriate military and veterans
organizations, shall establish criteria for the
distribution of amounts in the American Military Family
Relief Fund.
``(B) Distributions to certain organizations.--Such
distributions may be made to organizations serving
individuals and family members described in paragraph
(1). Not more than 5 percent of any distribution to
such an organization may be used for overhead or
indirect costs.
``(d) Reports.--Not later than December 1 (beginning in 2005)--
``(1) the Secretary of the Treasury shall report to
Congress the amount of contributions designated to the American
Military Family Relief Fund in the preceding fiscal year, and
``(2) the Secretary of Defense shall report to Congress on
the administration, distribution, and use of funds from the
American Military Family Relief Fund in the preceding fiscal
year.''.
(2) Clerical amendment.--The table of sections for such
subchapter is amended by adding at the end the following new
item:
``Sec. 9511. American Military Family
Relief Fund.''.
(c) Effective Dates.--
(1) Subsection (a).--The amendments made by subsection (a)
shall apply to taxable years beginning after December 31, 2004.
(2) Subsection (b).--The amendments made by subsection (b)
shall take effect on the date of the enactment of this Act.
SEC. 302. PENALTY-FREE WITHDRAWALS FROM RETIREMENT PLANS FOR
INDIVIDUALS CALLED TO CERTAIN ACTIVE DUTY.
(a) In General.--Paragraph (2) of section 72(t) of the Internal
Revenue Code of 1986 (relating to 10-percent additional tax on early
distributions from qualified retirement plans) is amended by adding at
the end the following new subparagraph:
``(G) Distributions from retirement plans to
individuals called to certain active duty.--
``(i) In general.--Any qualified active
duty distribution.
``(ii) Qualified active duty
distribution.--For purposes of this
subparagraph, the term `qualified active duty
distribution' means any distribution to a
covered member of the Armed Forces if--
``(I) such distribution is from any
qualified retirement plan (as defined
in section 4974(c)), and
``(II) such distribution is made
during the period of the assignment to
temporary duty described in clause
(iii)(I) or the period of the order or
call to active duty described in clause
(iii)(II).
``(iii) Covered member of the armed
forces.--For purposes of this subparagraph, the
term `covered member of the Armed Forces' means
an individual who--
``(I) by reason of being a regular
member of the Armed Forces of the
United States is assigned to temporary
duty at a location other than the
member's permanent duty station for a
period in excess of 90 days, or
``(II) by reason of being a member
of a reserve component (as defined in
section 101 of title 37, United States
Code) is ordered or called to active
duty for a period in excess of 179 days
or for an indefinite period.
``(iv) Application of subparagraph.--This
subparagraph applies to individuals assigned to
temporary duty or ordered or called to active
duty after September 11, 2001.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to distributions after September 11, 2001.
TITLE IV--DEATH GRATUITY AND OTHER SURVIVOR BENEFITS
SEC. 401. INCREASED AMOUNT OF DEATH GRATUITY.
(a) Amount of Death Gratuity.--Section 1478(a) of title 10, United
States Code, is amended by striking ``$12,000'' in the first sentence
and inserting ``$250,000''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect as of September 11, 2001, and shall apply with respect to
deaths occurring on or after that date.
SEC. 402. DEATH GRATUITY EXCLUDABLE FROM FEDERAL INCOME TAXATION.
(a) In General.--Paragraph (1) of section 134(b) of the Internal
Revenue Code of 1986 (relating to certain military benefits) is amended
by adding at the end the following new flush sentence:
``Such term shall include any death gratuity to which the
limitation in section 1478(a) of title 10, United States Code,
applies.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to amounts paid with respect to deaths occurring on or after
September 11, 2001.
SEC. 403. EXTENSION OF PERIOD OF TEMPORARY CONTINUATION OF BASIC
ALLOWANCE FOR HOUSING FOR DEPENDENTS OF MEMBERS OF THE
ARMED FORCES WHO DIE ON ACTIVE DUTY.
Section 403(l) of title 37, United States Code, is amended by
striking ``180 days'' each place it appears and inserting ``365 days''.
TITLE V--VETERANS BENEFITS
SEC. 501. POST-TRAUMATIC STRESS DISORDER TREATMENT FOR VETERANS OF
SERVICE IN AFGHANISTAN AND IRAQ AND THE WAR ON TERROR.
(a) Enhanced Capacity for Department of Veterans Affairs.--Using
funds available to the Secretary of Veterans Affairs for fiscal year
2006 for ``Medical Care'', the Secretary shall employ at least one
psychiatrist and a complementary clinical team at each medical center
of the Department of Veterans Affairs in order to conduct a specialized
program for the diagnosis and treatment of post-traumatic stress
disorder and to employ additional mental health services specialists at
the medical center.
(b) Outreach at the Community Level.--
(1) Program.--The Secretary of Veterans Affairs shall,
within the authorities of the Secretary under title 38, United
States Code, carry out a program to provide outreach at the
community level to veterans who participated in Operation Iraqi
Freedom or Operation Enduring Freedom who are or may be
suffering from post-traumatic stress disorder.
(2) Program sites.--The program shall be carried out on a
nation-wide basis through facilities of the Department of
Veterans Affairs.
(3) Program content.--The program shall provide for
individualized case management to be conducted on a one-on-one
basis, counseling, education, and group therapy to help
participants cope with post-traumatic stress disorder. The
program--
(A) shall emphasize early identification of
veterans who may be experiencing symptoms of post-
traumatic stress disorder; and
(B) shall include group-oriented, peer-to-peer
settings for treatment.
(c) Report on PTSD Outreach.--
(1) In general.--Not later than December 31, 2006, the
Secretary of Veterans Affairs shall submit to Congress a report
on the outreach conducted by the Department of Veterans Affairs
during fiscal year 2006 to veterans who participated in
Operation Iraqi Freedom or Operation Enduring Freedom who are
or may be suffering from post-traumatic stress disorder on the
programs of the Department that address post-traumatic stress
disorder, including the outreach conducted under subsection
(b).
(2) Elements.--The report under paragraph (1) shall
include--
(A) description of the outreach referred to in that
paragraph; and
(B) an assessment of the effectiveness of such
outreach.
TITLE VI--REVENUE PROVISION
SEC. 601. PARTIAL REPEAL OF RATE REDUCTION IN THE HIGHEST INCOME TAX
BRACKET.
Section 1(i)(2) of the Internal Revenue Code of 1986 is amended by
adding at the end the following flush sentence:
``In the case of taxable years beginning during calendar year
2005 and thereafter, the final item in the fourth column in the
preceding table shall be applied by substituting for `35.0%'
such rate as the Secretary determines is necessary to provide
sufficient revenues to offset the Federal outlays required to
implement the provisions of, and the amendments made by, the
Strengthening America's Armed Forces and Military Family Bill
of Rights Act.''.
<all>