To amend title 10, United States Code, to authorize taxpayers to designate a portion of their income tax payments to a National Military Family Relief Fund to be used by the Secretary of Defense to assist the families of members of the Armed Forces who are serving in, or have served in, Iraq or Afghanistan.

Summary: Establishes in the Treasury the National Military Family Relief Fund to make grants to Armed Forces members who are serving, or have served, in Iraq or Afghanistan to assist the families of such members.

Amends the Internal Revenue Code to: (1) allow every individual taxpayer to designate $1 or more of any overpayment to be paid to the Fund; and (2) in addition to any payment of income tax liability, make a contribution of an additional amount which shall be paid over to the Fund.

SECTION 1. NATIONAL MILITARY FAMILY RELIEF FUND TO ASSIST FAMILIES OF 
              MEMBERS OF THE ARMED FORCES WHO ARE SERVING IN, OR HAVE 
              SERVED IN, IRAQ OR AFGHANISTAN.

    (a) In General.--Subchapter I of chapter 88 of title 10, United 
States Code, is amended by inserting after section 1781b the following 
new section:
``Sec. 1781c. National Military Family Relief Fund to assist military 
              families
    ``(a) Establishment.--There is established in the Treasury a fund, 
which shall be known as the `National Military Family Relief Fund' (in 
this section referred to as the `Fund').
    ``(b) Credits to Fund.--There are hereby appropriated to the Fund 
in each fiscal year an amount equal to the amounts designated for 
deposit in the Fund under section 6098 of the Internal Revenue Code of 
1986 in the taxable year ending in that fiscal year.
    ``(c) Use of Fund.--The Secretary of Defense shall use amounts in 
the Fund, without further specific authorization in law, to make grants 
to members of the Armed Forces who are serving in, or have served in, 
Iraq or Afghanistan to assist the families of such members.
    ``(d) Grant Criteria.--The Secretary of Defense shall prescribe the 
criteria under which grant applications will be solicited and grants 
will be made and the purposes for which grants may be used.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such subchapter is amended by inserting after the item relating to 
section 1781b the following new item:

``1781c. National Military Family Relief Fund to assist military 
                            families.''.

SEC. 2. DESIGNATION OF INCOME TAX PAYMENTS TO NATIONAL MILITARY FAMILY 
              RELIEF FUND.

    (a) In General.--Subchapter A of chapter 61 of the Internal Revenue 
Code of 1986 (relating to information and returns) is amended by adding 
at the end the following new part:

  ``PART IX--DESIGNATION OF INCOME TAX PAYMENTS TO NATIONAL MILITARY 
                           FAMILY RELIEF FUND

``Sec. 6098. Designation to National Military Family Relief Fund.

``SEC. 6098. DESIGNATION TO NATIONAL MILITARY FAMILY RELIEF FUND.

    ``(a) In General.--Every individual (other than a nonresident 
alien), with respect to each taxpayer's return for the taxable year of 
the tax imposed by chapter 1--
            ``(1) whose adjusted income tax liability for the taxable 
        year is $1 or more may designate that a specified portion (not 
        less than $1) of any overpayment of tax shall be paid over to, 
        and
            ``(2) in addition to any payment of income tax liability, 
        may make a contribution of an additional amount which shall be 
        paid over to,
the National Military Family Relief Fund, established under section 
1781c of title 10, United States Code.
    ``(b) Adjusted Income Tax Liability.--For purposes of subsection 
(a), the term `adjusted income tax liability' means, for any individual 
for any taxable year, the excess (if any) of--
            ``(1) the income tax liability (as defined in section 
        6096(b)) of the individual for the taxable year, over
            ``(2) any amount designated by the individual (and, in the 
        case of a joint return, any amount designated by the 
        individual's spouse) under section 6096(a) for such taxable 
        year.
    ``(c) Manner and Time of Designation and Contribution.--A 
designation and contribution under subsection (a) may be made with 
respect to any taxable year--
            ``(1) at the time of filing the return of the tax imposed 
        by chapter 1 for such taxable year, or
            ``(2) at any other time (after the time of filing the 
        return of the tax imposed by chapter 1 for such taxable year) 
        specified in regulations prescribed by the Secretary.
Such designation shall be made in such manner as the Secretary 
prescribes by regulations except that, if such designation is made at 
the time of filing the return of the tax imposed by chapter 1 for such 
taxable year, such designation shall be made either on the first page 
of the return or on the page bearing the taxpayer's signature.
    ``(d) Overpayments Treated as Refunded.--For purposes of this 
title, any portion of an overpayment of tax designated under subsection 
(a) 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.''.
    (b) Clerical Amendment.--The table of parts for subchapter A of 
chapter 61 of such Code is amended by adding at the end the following 
new item:

  ``Part IX--Designation of Income Tax Payments to National Military 
                           Family Relief Fund

``Sec. 6098. Designation to National Military Family Relief Fund.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.