I 

109TH CONGRESS 

1ST SESSION H. R. 294 

To amend the Internal Revenue Code of 1986 to extend to civilian employees 

of the Department of Defense serving in combat zones the tax treatment 

allowed to members of the Armed Forces serving in combat zones. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 20, 2005 

Mr. HEFLEY introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to extend 

to civilian employees of the Department of Defense serving in combat zones the tax treatment allowed to members of the Armed Forces serving in combat zones. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. TAX TREATMENT OF CIVILIAN EMPLOYEES OF 

4 DEPARTMENT OF DEFENSE IN COMBAT 

5 ZONES. 

6 (a) EXCLUSION OF COMBAT ZONE COMPENSA7 TION.— 
2 

•HR 294 IH 

1 (1) IN GENERAL.—Subsection (d) of section 

2 112 of the Internal Revenue Code of 1986 (relating 

3 to prisoners of war, etc.) is amended by adding at 

4 the end the following new paragraph: 

5 ‘‘(4) CIVILIAN EMPLOYEES OF DEPARTMENT OF

6 DEFENSE.— 

7 ‘‘(A) SERVICE IN COMBAT ZONE.—Gross 

8 income does not include so much of compensa9 tion as does not exceed the maximum enlisted 

10 amount received for active service as a civilian 

11 employee of the Department of Defense serving 

12 in support of the Armed Forces of the United 

13 States for any month during any part of which 

14 such employee— 

15 ‘‘(i) served in a combat zone, 

16 ‘‘(ii) was hospitalized as a result of 

17 wounds, disease, or injury incurred while 

18 serving in a combat zone, or 

19 ‘‘(iii) is in a missing status as a result 

20 of such service. 

21 Clause (ii) shall not apply for any month begin22 ning more than 2 years after the date of the 

23 termination of combatant activities in such 

24 zone. 
3 

•HR 294 IH 

1 ‘‘(B) MISSING STATUS.—For purposes of 

2 this paragraph, the terms ‘active service’ and 

3 ‘missing status’ have the respective meanings 

4 given to such terms by section 5561 of title 5 

5 of the United States Code.’’. 

6 (2) CLERICAL AMENDMENTS.— 

7 (A) The heading for section 112 of such 

8 Code is amended to read as follows: 

9 ‘‘SEC. 112. CERTAIN COMBAT ZONE COMPENSATION.’’. 

10 (B) The item relating to section 112 in the 

11 table of sections for part III of subchapter B of 

12 chapter 1 of such Code is amended to read as 

13 follows: 

‘‘Sec. 112. Certain combat zone compensation.’’. 

14 (3) EFFECTIVE DATE.—The amendments made 

15 by this subsection shall apply to taxable years begin16 ning after December 31, 2004. 

17 (b) ADDITIONAL ESTATE TAX NOT TO APPLY.— 

18 (1) IN GENERAL.—Subsection (b) of section 

19 2201 of such Code is amended by inserting ‘‘or 

20 while in service as a civilian employee of the Depart21 ment of Defense serving in support of the Armed 

22 Forces of the United States,’’ after ‘‘United 

23 States,’’. 

24 (2) CLERICAL AMENDMENTS.— 
4 

•HR 294 IH 

1 (A) The heading for section 2201 of such 

2 Code is amended by inserting ‘‘AND DEPART3 MENT OF DEFENSE CIVILIANS’’ after ‘‘MEM4 BERS OF THE ARMED FORCES’’. 

5 (B) The item relating to section 2201 in 

6 the table of sections for subchapter C of chap7 ter 11 of such Code is amended to read as fol8 lows: 

‘‘Sec. 2201. Members of the Armed Forces and Department of Defense civilians 

dying in combat zone or by reason of combat-zone-incurred 

wounds, etc.’’. 

9 (3) EFFECTIVE DATE.—The amendments made 

10 by this subsection shall apply to decedents dying 

11 after December 31, 2004. 

12 (c) NO TAX ON TOLL TELEPHONE SERVICE IN COM13 BAT ZONE.— 

14 (1) IN GENERAL.—Subsection (d) of section 

15 4253 of such Code (relating to servicemen in combat 

16 zone) is amended by inserting ‘‘, or from a civilian 

17 employee of the Department of Defense,’’ after 

18 ‘‘United States’’. 

19 (2) EFFECTIVE DATE.—The amendment made 

20 by this subsection shall apply with respect to 

21 amounts paid after the date of the enactment of this 

22 Act for services rendered on or after such date. 

Æ