II 

109TH CONGRESS 

2D SESSION S. 2503 

To amend the Internal Revenue Code of 1986 to provide for an extension 

of the period of limitation to file claims for refunds on account of 

disability determinations by the Department of Veterans Affairs. 

IN THE SENATE OF THE UNITED STATES 

APRIL 4, 2006 

Mrs. LINCOLN (for herself and Mr. THOMAS) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for an extension of the period of limitation to file claims 

for refunds on account of disability determinations by 

the Department of Veterans Affairs. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Disabled Veterans Tax 

5 Fairness Act of 2006’’. 


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•S 2503 IS

1 SEC. 2. SPECIAL PERIOD OF LIMITATION WHEN UNI2 FORMED SERVICES RETIRED PAY IS RE3 DUCED AS A RESULT OF AWARD OF DIS4 ABILITY COMPENSATION. 

5 (a) IN GENERAL.—Subsection (d) of section 6511 of 

6 the Internal Revenue Code of 1986 (relating to special 

7 rules applicable to income taxes) is amended by adding 

8 at the end the following new paragraph: 

9 ‘‘(8) SPECIAL RULES WHEN UNIFORMED SERV10 ICES RETIRED PAY IS REDUCED AS A RESULT OF

11 AWARD OF DISABILITY COMPENSATION.— 

12 ‘‘(A) PERIOD OF LIMITATION ON FILING

13 CLAIM.—If the claim for credit or refund re14 lates to an overpayment of tax imposed by sub15 title A on account of— 

16 ‘‘(i) the reduction of uniformed serv17 ices retired pay computed under section 

18 1406 or 1407 of title 10, United States 

19 Code, or 

20 ‘‘(ii) the waiver of such pay under sec21 tion 5305 of title 38 of such Code, 

22 as a result of an award of compensation under 

23 title 38 of such Code pursuant to a determina24 tion by the Secretary of Veterans Affairs, the 3- 

25 year period of limitation prescribed in sub26 section (a) shall be extended, for purposes of 


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•S 2503 IS

1 permitting a credit or refund based upon the 

2 amount of such reduction or waiver, until the 

3 end of the 1-year period beginning on the date 

4 of such determination. 

5 ‘‘(B) LIMITATION TO 15 TAXABLE

6 YEARS.—Subparagraph (A) shall not apply with 

7 respect to any taxable year which began more 

8 than 15 years before the date of such deter9 mination.’’. 

10 (b) EFFECTIVE DATE.—The amendment made by 

11 subsection (a) shall apply to claims for credit or refund 

12 filed after the date of the enactment of this Act. 

13 (c) TRANSITION RULES.—In the case of a determina14 tion described in paragraph (8) of section 6511(d) of the 

15 Internal Revenue Code of 1986 (as added by this section) 

16 which is made by the Secretary of Veterans Affairs after 

17 December 31, 1989, and before the date of the enactment 

18 of this Act, such paragraph— 

19 (1) shall not apply with respect to any taxable 

20 year which began before December 31, 1989, and 

21 (2) shall be applied by substituting ‘‘the date of 

22 the enactment of the Disabled Veterans Tax Fair23 ness Act of 2006’’ for ‘‘the date of such determina24 tion’’ in subparagraph (A) thereof. 

Æ 


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