II 

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. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Strengthening America’s Armed Forces and Military 

6 Family Bill of Rights Act’’. 

7 (b) TABLE OF CONTENTS.—The table of contents for 

8 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

TITLE I—ARMED FORCES MATTERS 
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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. 

1 SEC. 2. FINDINGS. 

2 Congress makes the following findings: 

3 (1) Nearly 150,000 members of the Armed 

4 Forces are engaged in the war in Iraq. 
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1 (2) More than 15,000 members of the Armed 

2 Forces are in Afghanistan fighting al Qaeda and 

3 Taliban remnants. 

4 (3) Several thousand members of the Armed 

5 Forces are deployed in the Balkans. 

6 (4) Thousands of other members of the Armed 

7 Forces are engaged in critical missions around the 

8 world to keep the Nation secure. 

9 (5) More than 180,000 members of the Na10 tional Guard and Reserves are mobilized and de11 ployed around the world to help keep the Nation se12 cure. 

13 (6) Each member of the Armed Forces is sup14 ported by a network of families and loved ones who 

15 sacrifice in their own right for the Nation. 

16 (7) Military families are partners with members 

17 of the Armed Forces in the defense and security of 

18 the Nation. 

19 TITLE I—ARMED FORCES 

20 MATTERS 

21 SEC. 101. INCREASE IN END STRENGTH OF THE ARMY. 

22 (a) STRENGTH FOR FISCAL YEAR 2006.—Effective 

23 on October 1, 2005, section 691(b)(1) of title 10, United 

24 States Code, is amended by striking ‘‘502,400’’ and in25 serting ‘‘522,400’’. 
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1 (b) STRENGTH FOR FISCAL YEARS AFTER FISCAL

2 YEAR 2006.—Effective on October 1, 2006, section 

3 691(b)(1) of such title is amended by striking ‘‘522,400’’ 

4 and inserting ‘‘532,400’’. 

5 SEC. 102. INCREASE IN END STRENGTH OF THE MARINE 

6 CORPS. 

7 (a) STRENGTH FOR FISCAL YEAR 2006.—Effective 

8 on October 1, 2005, section 691(b)(3) of title 10, United 

9 States Code, is amended by striking ‘‘178,000’’ and in10 serting ‘‘183,000’’. 

11 (b) STRENGTH FOR FISCAL YEARS AFTER FISCAL

12 YEAR 2006.—Effective on October 1, 2006, section 

13 691(b)(3) of title 10, United States Code, is amended by 

14 striking ‘‘183,000’’ and inserting ‘‘188,000’’. 

15 TITLE II—BENEFITS FOR MEM16 BERS OF NATIONAL GUARD 

17 AND RESERVE 

18 Subtitle A—Health Care Benefits 

19 SEC. 201. TRICARE COVERAGE FOR MEMBERS OF THE 

20 READY RESERVE. 

21 (a) ELIGIBILITY.—Section 1076b of title 10, United 

22 States Code, is amended to read as follows: 
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1 ‘‘§ 1076b. TRICARE program: coverage for members 

2 of the Ready Reserve 

3 ‘‘(a) ELIGIBILITY.—Members of the Selected Reserve 

4 of the Ready Reserve of a reserve component of the armed 

5 forces and members of the Individual Ready Reserve de6 scribed in subsection 10144(b) of this title are eligible, 

7 subject to subsection (h)(1), to enroll in the following 

8 TRICARE program options: 

9 ‘‘(1) TRICARE Prime. 

10 ‘‘(2) TRICARE Standard. 

11 ‘‘(b) TYPES OF COVERAGE.—(1) A member eligible 

12 under subsection (a) may enroll for either of the following 

13 types of coverage: 

14 ‘‘(A) Self alone coverage. 

15 ‘‘(B) Self and family coverage. 

16 ‘‘(2) An enrollment by a member for self and family 

17 covers the member and the dependents of the member who 

18 are described in subparagraph (A), (D), or (I) of section 

19 1072(2) of this title. 

20 ‘‘(c) OPEN ENROLLMENT PERIODS.—The Secretary 

21 of Defense shall provide for at least one open enrollment 

22 period each year. During an open enrollment period, a 

23 member eligible under subsection (a) may enroll in the 

24 TRICARE program or change or terminate an enrollment 

25 in the TRICARE program. 
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1 ‘‘(d) SCOPE OF CARE.—(1) A member and the de2 pendents of a member enrolled in the TRICARE program 

3 under this section shall be entitled to the same benefits 

4 under this chapter as a member of the uniformed services 

5 on active duty or a dependent of such a member, respec6 tively. 

7 ‘‘(2) Section 1074(c) of this title shall apply with re8 spect to a member enrolled in the TRICARE program 

9 under this section. 

10 ‘‘(e) PREMIUMS.—(1) The Secretary of Defense shall 

11 charge premiums for coverage pursuant to enrollments 

12 under this section. The Secretary shall prescribe for each 

13 of the TRICARE program options referred to in sub14 section (a) a premium for self alone coverage and a pre15 mium for self and family coverage. 

16 ‘‘(2) The monthly amount of the premium in effect 

17 for a month for a type of coverage under this section shall 

18 be the amount equal to 28 percent of the total amount 

19 determined by the Secretary on an appropriate actuarial 

20 basis as being reasonable for the coverage. 

21 ‘‘(3) The premiums payable by a member under this 

22 subsection may be deducted and withheld from basic pay 

23 payable to the member under section 204 of title 37 or 

24 from compensation payable to the member under section 

25 206 of such title. The Secretary shall prescribe the re-
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1 quirements and procedures applicable to the payment of 

2 premiums by members not entitled to such basic pay or 

3 compensation. 

4 ‘‘(4) Amounts collected as premiums under this sub5 section shall be credited to the appropriation available for 

6 the Defense Health Program Account under section 1100 

7 of this title, shall be merged with sums in such Account 

8 that are available for the fiscal year in which collected, 

9 and shall be available under subsection (b) of such section 

10 for such fiscal year. 

11 ‘‘(f) OTHER CHARGES.—A person who receives 

12 health care pursuant to an enrollment in a TRICARE pro13 gram option under this section, including a member who 

14 receives such health care, shall be subject to the same 

15 deductibles, copayments, and other nonpremium charges 

16 for health care as apply under this chapter for health care 

17 provided under the same TRICARE program option to de18 pendents described in subparagraph (A), (D), or (I) of sec19 tion 1072(2) of this title. 

20 ‘‘(g) TERMINATION OF ENROLLMENT.—(1) A mem21 ber enrolled in the TRICARE program under this section 

22 may terminate the enrollment only during an open enroll23 ment period provided under subsection (c), except as pro24 vided in subsection (h)(2). 
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1 ‘‘(2) An enrollment of a member for self alone or for 

2 self and family under this section shall terminate on the 

3 first day of the first month beginning after the date on 

4 which the member ceases to be eligible under subsection 

5 (a). 

6 ‘‘(3) The enrollment of a member under this section 

7 may be terminated on the basis of failure to pay the pre8 mium charged the member under this section. 

9 ‘‘(h) RELATIONSHIP TO TRANSITION TRICARE COV10 ERAGE UPON SEPARATION FROM ACTIVE DUTY.—(1) A 

11 member may not enroll in the TRICARE program under 

12 this section while entitled to transitional health care under 

13 subsection (a) of section 1145 of this title or while author14 ized to receive health care under subsection (c) of such 

15 section. 

16 ‘‘(2) A member who enrolls in the TRICARE pro17 gram under this section within 90 days after the date of 

18 the termination of the member’s entitlement or eligibility 

19 to receive health care under subsection (a) or (c) of section 

20 1145 of this title may terminate the enrollment at any 

21 time within one year after the date of the enrollment. 

22 ‘‘(i) REGULATIONS.—The Secretary of Defense, in 

23 consultation with the other administering Secretaries, 

24 shall prescribe regulations for the administration of this 

25 section.’’. 
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1 (b) DEFINITIONS.— 

2 (1) TRICARE OPTIONS.—Section 1072 of title 

3 10, United States Code, is amended by adding at 

4 the end the following new paragraphs: 

5 ‘‘(10) The term ‘TRICARE Prime’ means the 

6 managed care option of the TRICARE program. 

7 ‘‘(11) The term ‘TRICARE Standard’ means 

8 the Civilian Health and Medical Program of the 

9 Uniformed Services option under the TRICARE pro10 gram.’’. 

11 (2) CONFORMING AMENDMENTS.— 

12 (A) Section 1076d(f) of such title is 

13 amended— 

14 (i) by striking ‘‘(f) DEFINITIONS.—’’ 

15 and all that follows through ‘‘(1) The’’ and 

16 inserting ‘‘(f) IMMEDIATE FAMILY DE17 FINED.—In this section, the’’; and 

18 (ii) by striking paragraph (2). 

19 (B) Section 1097a(f) of such title is 

20 amended by striking ‘‘DEFINITIONS.—In this 

21 section:’’ and all that follows through ‘‘(2) The 

22 term’’ and inserting ‘‘CATCHMENT AREA DE23 FINED.—In this section, the term’’. 

24 (c) PERIOD FOR IMPLEMENTATION.—Section 1076b 

25 of title 10, United States Code (as added by subsection 
10 

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1 (a)), shall apply with respect to months that begin on or 

2 after the date that is 180 days after the date of the enact3 ment of this Act. 

4 (d) COORDINATION WITH OVERLAPPING AUTHOR5 ITY.— 

6 (1) REPEAL.—Effective one year after the date 

7 of the enactment of this Act— 

8 (A) section 1076d of title 10, United 

9 States Code, is repealed; and 

10 (B) the table of sections at the beginning 

11 of chapter 55 of such title is amended by strik12 ing the item relating to section 1076d. 

13 (2) TRANSITION COVERAGE.—The Secretary of 

14 Defense shall provide for an orderly transition to 

15 TRICARE coverage under section 1076b of title 10, 

16 United States Code (as amended by subsection (a)), 

17 for persons enrolled for TRICARE coverage under 

18 section 1076d of such title before the repeal of such 

19 section takes effect under paragraph (1)(A). 

20 SEC. 202. ALLOWANCE FOR CONTINUATION OF NON21 TRICARE HEALTH BENEFITS COVERAGE FOR 

22 CERTAIN MOBILIZED RESERVES. 

23 (a) PAYMENT OF PREMIUMS.— 

24 (1) REQUIREMENT TO PAY PREMIUMS.—Chap25 ter 55 of title 10, United States Code, is amended 
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1 by inserting after section 1078a the following new 

2 section: 

3 ‘‘§ 1078b. Continuation of non-TRICARE health bene4 fits plan coverage for certain Reserves 

5 called or ordered to active duty and their 

6 dependents 

7 ‘‘(a) PAYMENT OF PREMIUMS.—The Secretary con8 cerned shall pay the applicable premium to continue in 

9 force any qualified health benefits plan coverage for an 

10 eligible reserve component member for the benefits cov11 erage continuation period if timely elected by the member 

12 in accordance with regulations prescribed under sub13 section (j). 

14 ‘‘(b) ELIGIBLE MEMBER.—A member of a reserve 

15 component is eligible for payment of the applicable pre16 mium for continuation of qualified health benefits plan 

17 coverage under subsection (a) while serving on active duty 

18 pursuant to a call or order issued under a provision of 

19 law referred to in section 101(a)(13)(B) of this title dur20 ing a war or national emergency declared by the President 

21 or Congress. 

22 ‘‘(c) QUALIFIED HEALTH BENEFITS PLAN COV23 ERAGE.—For the purposes of this section, health benefits 

24 plan coverage for a member called or ordered to active 

25 duty is qualified health benefits plan coverage if— 
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1 ‘‘(1) the coverage was in force on the date on 

2 which the Secretary notified the member that 

3 issuance of the call or order was pending or, if no 

4 such notification was provided, the date of the call 

5 or order; 

6 ‘‘(2) on such date, the coverage applied to the 

7 member and dependents of the member described in 

8 subparagraph (A), (D), or (I) of section 1072(2) of 

9 this title; and 

10 ‘‘(3) the coverage has not lapsed. 

11 ‘‘(d) APPLICABLE PREMIUM.—The applicable pre12 mium payable under this section for continuation of health 

13 benefits plan coverage in the case of a member is the 

14 amount of the premium payable by the member for the 

15 coverage of the member and dependents. 

16 ‘‘(e) MAXIMUM AMOUNT.—The total amount that 

17 may be paid for the applicable premium of a health bene18 fits plan for a member under this section in a fiscal year 

19 may not exceed the amount determined by multiplying— 

20 ‘‘(1) the sum of one plus the number of the 

21 member’s dependents covered by the health benefits 

22 plan, by 

23 ‘‘(2) the per capita cost of providing TRICARE 

24 coverage and benefits for dependents under this 
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1 chapter for such fiscal year, as determined by the 

2 Secretary of Defense. 

3 ‘‘(f) BENEFITS COVERAGE CONTINUATION PE4 RIOD.—The benefits coverage continuation period under 

5 this section for qualified health benefits plan coverage in 

6 the case of a member called or ordered to active duty is 

7 the period that— 

8 ‘‘(1) begins on the date of the call or order; and 

9 ‘‘(2) ends on the earlier of the date on which— 

10 ‘‘(A) the member’s eligibility for transi11 tional health care under section 1145(a) of this 

12 title terminates under paragraph (3) of such 

13 section; or 

14 ‘‘(B) the member elects to terminate the 

15 continued qualified health benefits plan cov16 erage of the dependents of the member. 

17 ‘‘(g) EXTENSION OF PERIOD OF COBRA COV18 ERAGE.—Notwithstanding any other provision of law— 

19 ‘‘(1) any period of coverage under a COBRA 

20 continuation provision (as defined in section 

21 9832(d)(1) of the Internal Revenue Code of 1986) 

22 for a member under this section shall be deemed to 

23 be equal to the benefits coverage continuation period 

24 for such member under this section; and 
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1 ‘‘(2) with respect to the election of any period 

2 of coverage under a COBRA continuation provision 

3 (as so defined), rules similar to the rules under sec4 tion 4980B(f)(5)(C) of such Code shall apply. 

5 ‘‘(h) NONDUPLICATION OF BENEFITS.—A dependent 

6 of a member who is eligible for benefits under qualified 

7 health benefits plan coverage paid on behalf of a member 

8 by the Secretary concerned under this section is not eligi9 ble for benefits under the TRICARE program during a 

10 period of the coverage for which so paid. 

11 ‘‘(i) REVOCABILITY OF ELECTION.—A member who 

12 makes an election under subsection (a) may revoke the 

13 election. Upon such a revocation, the member’s depend14 ents shall become eligible for benefits under the 

15 TRICARE program as provided for under this chapter. 

16 ‘‘(j) REGULATIONS.—The Secretary of Defense shall 

17 prescribe regulations for carrying out this section. The 

18 regulations shall include such requirements for making an 

19 election of payment of applicable premiums as the Sec20 retary considers appropriate.’’. 

21 (2) CLERICAL AMENDMENT.—The table of sec22 tions at the beginning of such chapter is amended 

23 by inserting after the item relating to section 1078a 

24 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.’’. 
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1 (b) APPLICABILITY.—Section 1078b of title 10, 

2 United States Code (as added by subsection (a)), shall 

3 apply with respect to calls or orders of members of reserve 

4 components of the Armed Forces to active duty as de5 scribed in subsection (b) of such section, that are issued 

6 by the Secretary of a military department on or after the 

7 date of the enactment of this Act. 

8 Subtitle B—Small Business 

9 Mobilization Assistance 

10 SEC. 211. SHORT TITLE. 

11 This subtitle may be cited as the ‘‘National Reservist 

12 Enterprise Transition and Sustainability Act of 2005’’. 

13 SEC. 212. PURPOSE. 

14 The purpose of this subtitle is to establish a program 

15 to— 

16 (1) provide managerial, financial, planning, de17 velopment, technical, and regulatory assistance to 

18 small business concerns owned and operated by 

19 members of the National Guard and Reserve; 

20 (2) provide managerial, financial, planning, de21 velopment, technical, and regulatory assistance to 

22 the temporary heads of small business concerns 

23 owned and operated by members of the National 

24 Guard and Reserve; 
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1 (3) create a partnership between the Small 

2 Business Administration, the Department of De3 fense, and the Department of Veterans Affairs to as4 sist small business concerns owned and operated by 

5 members of the National Guard and Reserve; 

6 (4) utilize the service delivery network of Small 

7 Business Development Centers to expand the access 

8 of small business concerns owned and operated by 

9 members of the National Guard and Reserve to pro10 grams providing business management, development, 

11 financial, procurement, technical, regulatory, and 

12 marketing assistance; 

13 (5) utilize the service delivery network of Small 

14 Business Development Centers to quickly respond to 

15 an activation of members of the National Guard and 

16 Reserve that own and operate small business con17 cerns; and 

18 (6) utilize the service delivery network of Small 

19 Business Development Centers to assist members of 

20 the National Guard and Reserve that own and oper21 ate small business concerns in preparing for future 

22 military activations. 
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1 SEC. 213. NATIONAL GUARD AND RESERVE BUSINESS AS2 SISTANCE. 

3 (a) IN GENERAL.—Section 21(a)(1) of the Small 

4 Business Act (15 U.S.C. 648(a)(1)) is amended by adding 

5 ‘‘any Small Business Development Center providing enter6 prise transition and sustainability assistance to members 

7 of the National Guard or Reserve under section 37,’’ after 

8 ‘‘any women’s business center operating pursuant to sec9 tion 29,’’. 

10 (b) PROGRAM.—The Small Business Act (15 U.S.C. 

11 631 et seq.) is amended 

12 (1) by redesignating section 37 (15 U.S.C. 631 

13 note) as section 38; and 

14 (2) by inserting after section 36 the following: 

15 ‘‘SEC. 37. NATIONAL GUARD AND RESERVE ENTERPRISE 

16 TRANSITION AND SUSTAINABILITY. 

17 ‘‘(a) IN GENERAL.—The Administrator shall estab18 lish a program to provide business planning assistance to 

19 small business concerns owned and operated by members 

20 of the National Guard and Reserve. 

21 ‘‘(b) DEFINITIONS.—In this section— 

22 ‘‘(1) the terms ‘activated’ and ‘activation’ mean 

23 having received an order placing a member of the 

24 National Guard and Reserve on active duty, as de25 fined by section 101(1) of title 10, United States 

26 Code; 
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1 ‘‘(2) the term ‘Administrator’ means the Ad2 ministrator of the Small Business Administration, 

3 acting through the Associate Administrator for 

4 Small Business Development Centers; 

5 ‘‘(3) the term ‘Association’ means the associa6 tion established pursuant to section 21(a)(3)(A); 

7 ‘‘(4) the term ‘enterprise transition and sus8 tainability assistance’ means assistance provided by 

9 a Small Business Development Center to a small 

10 business concern owned and operated by a member 

11 of the National Guard and Reserve, who has been 

12 activated or is likely to be activated in the next 12 

13 months, to develop and implement a business strat14 egy for the period while the owner is on active duty 

15 and six months following the return of the owner; 

16 ‘‘(5) the term ‘member of the National Guard 

17 and Reserve’ means any person who is currently— 

18 ‘‘(A) a member of a reserve component of 

19 the armed forces, as defined by section 10101 

20 of title 10, United States Code; and 

21 ‘‘(B) on active status, as defined by section 

22 101(d)(4) of title 10, United States Code; 

23 ‘‘(6) the term ‘Small Business Development 

24 Center’ means a small business development center 
19 

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1 as described in section 21 of the Small Business Act 

2 (15 U.S.C. 648); and 

3 ‘‘(7) the term ‘State’ means each of the several 

4 States of the United States, the District of Colum5 bia, the Commonwealth of Puerto Rico, the Virgin 

6 Islands, American Samoa, and Guam. 

7 ‘‘(c) AUTHORITY.—The Administrator may award 

8 grants, in accordance with the regulations developed pur9 suant to subsection (d), to eligible Small Business Devel10 opment Centers to assist small business concerns owned 

11 and operated by members of the National Guard and Re12 serve by— 

13 ‘‘(1) providing management, development, fi14 nancing, procurement, technical, regulatory, and 

15 marketing assistance; 

16 ‘‘(2) providing access to information and re17 sources, including current Federal and State busi18 ness assistance programs; 

19 ‘‘(3) distributing contact information provided 

20 by the Department of Defense regarding activated 

21 members of the National Guard and Reserve to cor22 responding State directors; 

23 ‘‘(4) offering free, one-on-one, in-depth coun24 seling regarding management, development, financ25 ing, procurement, regulations, and marketing; 
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1 ‘‘(5) assisting in developing a long-term plan 

2 for possible future activation; and 

3 ‘‘(6) providing enterprise transition and sus4 tainability assistance. 

5 ‘‘(d) RULEMAKING.— 

6 ‘‘(1) IN GENERAL.—The Administrator, in con7 sultation with the Association and after notice and 

8 an opportunity for comment, shall promulgate regu9 lations to carry out the provisions of this section. 

10 ‘‘(2) DEADLINE.—The Administrator shall pro11 mulgate final regulations not later than 180 days of 

12 the date of enactment of the National Reservist En13 terprise Transition and Sustainability Act of 2005. 

14 ‘‘(3) CONTENTS.—The regulations developed by 

15 the Administrator under this subsection shall estab16 lish— 

17 ‘‘(A) procedures for identifying, in con18 sultation with the Department of Defense, 

19 States that have had a recent activation of 

20 members of the National Guard and Reserve; 

21 ‘‘(B) priorities for the types of assistance 

22 to be provided under the program authorized by 

23 this section; 
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1 ‘‘(C) standards relating to educational, 

2 technical, and support services to be provided 

3 by a grantee; 

4 ‘‘(D) standards relating to any national 

5 service delivery and support function to be pro6 vided by a grantee; 

7 ‘‘(E) standards relating to any work plan 

8 that the Administrator may require a grantee 

9 to develop; and 

10 ‘‘(F) standards relating to the educational, 

11 technical, and professional competency of any 

12 expert or other assistance provider to whom a 

13 small business concern may be referred for as14 sistance by a grantee. 

15 ‘‘(e) APPLICATION.— 

16 ‘‘(1) IN GENERAL.—Each eligible Small Busi17 ness Development Center desiring a grant under this 

18 section shall submit an application to the Adminis19 trator at such time, in such manner, and accom20 panied by such information as the Administrator 

21 may reasonably require. 

22 ‘‘(2) CONTENTS.—Each application submitted 

23 pursuant to paragraph (1) shall describe— 

24 ‘‘(A) the activities for which the applicant 

25 seeks assistance under this section; and 
22 

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1 ‘‘(B) how the applicant plans to allocate 

2 funds within its network. 

3 ‘‘(3) MATCHING NOT REQUIRED.—Subpara4 graphs (A) and (B) of section 21(a)(4), requiring 

5 matching funds, shall not apply to grants awarded 

6 under this section. 

7 ‘‘(4) ELIGIBILITY.—A Small Business Develop8 ment Center is eligible to receive a grant under this 

9 section if it is accredited under section 21(k). 

10 ‘‘(f) AWARD OF GRANTS.— 

11 ‘‘(1) DEADLINE.—The Administrator shall 

12 award grants not later than 60 days after the pro13 mulgation of final rules and regulations under sub14 section (d). 

15 ‘‘(2) AMOUNT.—Each Small Business Develop16 ment Center awarded a grant under this section 

17 shall receive a grant in an amount— 

18 ‘‘(A) not less than $150,000 per fiscal 

19 year; and 

20 ‘‘(B) not greater than $500,000 per fiscal 

21 year. 

22 ‘‘(g) REPORT.— 

23 ‘‘(1) IN GENERAL.—The Government Account24 ability Office shall— 
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1 ‘‘(A) initiate an evaluation of the program 

2 not later than 30 months after the disburse3 ment of the first grant under the program; and 

4 ‘‘(B) submit a report not later than 6 

5 months after the initiation of the evaluation 

6 under paragraph (1) to— 

7 ‘‘(i) the Administrator; 

8 ‘‘(ii) the Committee on Small Busi9 ness and Entrepreneurship of the Senate; 

10 and 

11 ‘‘(iii) the Committee on Small Busi12 ness of the House of Representatives. 

13 ‘‘(2) CONTENTS.—The report under paragraph 

14 (1) shall— 

15 ‘‘(A) address the results of the evaluation; 

16 and 

17 ‘‘(B) recommend changes to law, if any, 

18 that it believes would be necessary or advisable 

19 to achieve the goals of this section. 

20 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.— 

21 ‘‘(1) IN GENERAL.—There are authorized to be 

22 appropriated to carry out this section— 

23 ‘‘(A) $5,000,000 for the first fiscal year 

24 beginning after the date of enactment of the 
24 

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1 National Reservist Enterprise Transition and 

2 Sustainability Act of 2005; 

3 ‘‘(B) $5,000,000 for each of the 3 fiscal 

4 years following the fiscal year described in sub5 paragraph (A) 

6 ‘‘(2) LIMITATION ON USE OF OTHER FUNDS.— 

7 The Administrator may carry out the program au8 thorized by this section only with amounts appro9 priated in advance specifically to carry out this sec10 tion.’’. 

11 SEC. 214. VETERAN ENTREPRENEUR LOANS. 

12 (a) AUTHORIZATION.—The first sentence of section 

13 7(a) of the Small Business Act (15 U.S.C. 636) is amend14 ed by inserting ‘‘new veteran entrepreneurs under para15 graph (32) and’’ after ‘‘loans to any qualified small busi16 ness concern, including’’; 

17 (b) SPECIFICATIONS.—Section 7(a) of the Small 

18 Business Act (15 U.S.C. 636(a)) is amended by adding 

19 after paragraph 31 the following: 

20 ‘‘(32) VETERAN ENTREPRENEUR LOANS.—Each 

21 loan to a new veteran entrepreneur under this sub22 section shall— 

23 ‘‘(A) be made directly to the new veteran 

24 entrepreneur; 

25 ‘‘(B) not exceed $100,000; and 
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1 ‘‘(C) be made at the same interest rate as 

2 loans made under the second proviso of the un3 numbered paragraph of subsection (b).’’. 

4 (3) DEFINITIONS.—Section 3(q) of the Small 

5 Business Act (15 U.S.C. 632(q)) is amended by add6 ing after paragraph (4) the following: 

7 ‘‘(5) NEW VETERAN ENTREPRENEUR.—The 

8 term ‘new veteran entrepreneur’ means a person 

9 who— 

10 ‘‘(A) is a veteran; 

11 ‘‘(B) is establishing a new small business 

12 concern or established a new small business 

13 concern within the 6 month period preceding 

14 the request for a loan; and 

15 ‘‘(C) does not own or control any other 

16 business.’’. 

17 SEC. 215. GRANT ASSISTANCE FOR MILITARY RESERVISTS’

18 SMALL BUSINESSES. 

19 (a) AUTHORIZATION OF GRANTS.—Section 

20 7(b)(3)(B) of the Small Business Act (15 U.S.C. 

21 636(b)(3)(B)) is amended by inserting ‘‘or grants’’ after 

22 ‘‘or a deferred basis)’’. 

23 (b) GRANT SPECIFICATIONS.—Section 7(b)(3) of the 

24 Small Business Act (15 U.S.C. 636(b)(3)) is amended by 

25 inserting after subparagraph (F) the following: 
26 

•S 460 IS 

1 ‘‘(G) Grants made under subparagraph (B)— 

2 ‘‘(i) may be awarded in addition to any 

3 loan made under subparagraph (B); 

4 ‘‘(ii) shall not exceed $25,000; and 

5 ‘‘(iii) shall be made only to a small busi6 ness concern— 

7 ‘‘(I) that provides a business plan 

8 demonstrating viability for not less than 3 

9 future years; 

10 ‘‘(II) with 10 or fewer employees; 

11 ‘‘(III) that has not received another 

12 grant under subparagraph (B) in the pre13 vious 2 years.’’. 

14 (c) AUTHORIZATION OF APPROPRIATIONS.—Section 

15 20(e)(2) of the Small Business Act (15 U.S.C. 631 note) 

16 is amended by inserting after subparagraph (B) the fol17 lowing: 

18 ‘‘(C) GRANT ASSISTANCE FOR MILITARY

19 RESERVISTS’ SMALL BUSINESSES.—There are 

20 authorized to be appropriated for grants under 

21 section 7(b)(3)(B)— 

22 ‘‘(i) $5,000,000 for the first fiscal 

23 year beginning after the date of enactment 

24 of the National Reservist Enterprise Tran25 sition and Sustainability Act of 2005; and 
27 

•S 460 IS 

1 ‘‘(ii) $5,000,000 for each of the 2 fis2 cal years following the fiscal year described 

3 in clause (i).’’. 

4 Subtitle C—Other Mobilization 

5 Assistance and Benefits 

6 SEC. 221. CREDIT FOR INCOME DIFFERENTIAL FOR EM7 PLOYMENT OF ACTIVATED MILITARY RE8 SERVIST AND REPLACEMENT PERSONNEL. 

9 (a) IN GENERAL.—Subpart B of part IV of sub10 chapter A of chapter 1 of the Internal Revenue Code of 

11 1986 (relating to foreign tax credit, etc.) is amended by 

12 adding at the end the following new section: 

13 ‘‘SEC. 30B. EMPLOYER WAGE CREDIT FOR ACTIVATED MILI14 TARY RESERVISTS. 

15 ‘‘(a) GENERAL RULE.—There shall be allowed as a 

16 credit against the tax imposed by this chapter for the tax17 able year an amount equal to the sum of— 

18 ‘‘(1) in the case of a small business employer, 

19 the employment credit with respect to all qualified 

20 employees and qualified replacement employees of 

21 the taxpayer, plus 

22 ‘‘(2) the self-employment credit of a qualified 

23 self-employed taxpayer. 

24 ‘‘(b) EMPLOYMENT CREDIT.—For purposes of this 

25 section— 
28 

•S 460 IS 

1 ‘‘(1) QUALIFIED EMPLOYEES.— 

2 ‘‘(A) IN GENERAL.—The employment cred3 it with respect to a qualified employee of the 

4 taxpayer for any taxable year is equal to 50 

5 percent of the lesser of— 

6 ‘‘(i) the excess, if any, of— 

7 ‘‘(I) the qualified employee’s av8 erage daily qualified compensation for 

9 the taxable year, over 

10 ‘‘(II) the average daily military 

11 pay and allowances received by the 

12 qualified employee during the taxable 

13 year, while participating in qualified 

14 reserve component duty to the exclu15 sion of the qualified employee’s nor16 mal employment duties for the num17 ber of days the qualified employee 

18 participates in qualified reserve com19 ponent duty during the taxable year, 

20 including time spent in a travel sta21 tus, or 

22 ‘‘(ii) $30,000. 

23 The employment credit, with respect to all 

24 qualified employees, is equal to the sum of the 
29 

•S 460 IS 

1 employment credits for each qualified employee 

2 under this subsection. 

3 ‘‘(B) AVERAGE DAILY QUALIFIED COM4 PENSATION AND AVERAGE DAILY MILITARY PAY

5 AND ALLOWANCES.—As used with respect to a 

6 qualified employee— 

7 ‘‘(i) the term ‘average daily qualified 

8 compensation’ means the qualified com9 pensation of the qualified employee for the 

10 taxable year divided by the difference be11 tween— 

12 ‘‘(I) 365, and 

13 ‘‘(II) the number of days the 

14 qualified employee participates in 

15 qualified reserve component duty dur16 ing the taxable year, including time 

17 spent in a travel status, and 

18 ‘‘(ii) the term ‘average daily military 

19 pay and allowances’ means— 

20 ‘‘(I) the amount paid to the 

21 qualified employee during the taxable 

22 year as military pay and allowances 

23 on account of the qualified employee’s 

24 participation in qualified reserve com25 ponent duty, divided by 
30 

•S 460 IS 

1 ‘‘(II) the total number of days 

2 the qualified employee participates in 

3 qualified reserve component duty, in4 cluding time spent in travel status. 

5 ‘‘(C) QUALIFIED COMPENSATION.—When 

6 used with respect to the compensation paid or 

7 that would have been paid to a qualified em8 ployee for any period during which the qualified 

9 employee participates in qualified reserve com10 ponent duty, the term ‘qualified compensation’ 

11 means— 

12 ‘‘(i) compensation which is normally 

13 contingent on the qualified employee’s 

14 presence for work and which would be de15 ductible from the taxpayer’s gross income 

16 under section 162(a)(1) if the qualified 

17 employee were present and receiving such 

18 compensation, 

19 ‘‘(ii) compensation which is not char20 acterized by the taxpayer as vacation or 

21 holiday pay, or as sick leave or pay, or as 

22 any other form of pay for a nonspecific 

23 leave of absence, and with respect to which 

24 the number of days the qualified employee 

25 participates in qualified reserve component 
31 

•S 460 IS 

1 duty does not result in any reduction in 

2 the amount of vacation time, sick leave, or 

3 other nonspecific leave previously credited 

4 to or earned by the qualified employee, and 

5 ‘‘(iii) group health plan costs (if any) 

6 with respect to the qualified employee. 

7 ‘‘(D) QUALIFIED EMPLOYEE.—The term 

8 ‘qualified employee’ means a person who— 

9 ‘‘(i) has been an employee of the tax10 payer for the 91-day period immediately 

11 preceding the period during which the em12 ployee participates in qualified reserve 

13 component duty, and 

14 ‘‘(ii) is a member of the Ready Re15 serve of a reserve component of an Armed 

16 Force of the United States as defined in 

17 sections 10142 and 10101 of title 10, 

18 United States Code. 

19 ‘‘(2) QUALIFIED REPLACEMENT EMPLOYEES.— 

20 ‘‘(A) IN GENERAL.—The employment cred21 it with respect to a qualified replacement em22 ployee of the taxpayer for any taxable year is 

23 equal to 50 percent of the lesser of— 
32 

•S 460 IS 

1 ‘‘(i) the individual’s qualified com2 pensation attributable to service rendered 

3 as a qualified replacement employee, or 

4 ‘‘(ii) $12,000. 

5 The employment credit, with respect to all 

6 qualified replacement employees, is equal to the 

7 sum of the employment credits for each quali8 fied replacement employee under this sub9 section. 

10 ‘‘(B) QUALIFIED COMPENSATION.—When 

11 used with respect to the compensation paid to 

12 a qualified replacement employee, the term 

13 ‘qualified compensation’ means— 

14 ‘‘(i) compensation which is normally 

15 contingent on the qualified replacement 

16 employee’s presence for work and which is 

17 deductible from the taxpayer’s gross in18 come under section 162(a)(1), 

19 ‘‘(ii) compensation which is not char20 acterized by the taxpayer as vacation or 

21 holiday pay, or as sick leave or pay, or as 

22 any other form of pay for a nonspecific 

23 leave of absence, and 
33 

•S 460 IS 

1 ‘‘(iii) group health plan costs (if any) 

2 with respect to the qualified replacement 

3 employee. 

4 ‘‘(C) QUALIFIED REPLACEMENT EM5 PLOYEE.—The term ‘qualified replacement em6 ployee’ means an individual who is hired to re7 place a qualified employee or a qualified self8 employed taxpayer, but only with respect to the 

9 period during which such employee or taxpayer 

10 participates in qualified reserve component 

11 duty, including time spent in travel status. 

12 ‘‘(c) SELF-EMPLOYMENT CREDIT.—For purposes of 

13 this section— 

14 ‘‘(1) IN GENERAL.—The self-employment credit 

15 of a qualified self-employed taxpayer for any taxable 

16 year is equal to 50 percent of the lesser of— 

17 ‘‘(A) the excess, if any, of— 

18 ‘‘(i) the self-employed taxpayer’s aver19 age daily self-employment income for the 

20 taxable year over 

21 ‘‘(ii) the average daily military pay 

22 and allowances received by the taxpayer 

23 during the taxable year, while participating 

24 in qualified reserve component duty to the 

25 exclusion of the taxpayer’s normal self-em-
34 

•S 460 IS 

1 ployment duties for the number of days the 

2 taxpayer participates in qualified reserve 

3 component duty during the taxable year, 

4 including time spent in a travel status, or 

5 ‘‘(B) $30,000. 

6 ‘‘(2) AVERAGE DAILY SELF-EMPLOYMENT IN7 COME AND AVERAGE DAILY MILITARY PAY AND AL8 LOWANCES.—As used with respect to a self-em9 ployed taxpayer— 

10 ‘‘(A) the term ‘average daily self-employ11 ment income’ means the self-employment in12 come (as defined in section 1402(b)) of the tax13 payer for the taxable year plus the amount paid 

14 for insurance which constitutes medical care for 

15 the taxpayer for such year (within the meaning 

16 of section 162(l)) divided by the difference be17 tween— 

18 ‘‘(i) 365, and 

19 ‘‘(ii) the number of days the taxpayer 

20 participates in qualified reserve component 

21 duty during the taxable year, including 

22 time spent in a travel status, and 

23 ‘‘(B) the term ‘average daily military pay 

24 and allowances’ means— 
35 

•S 460 IS 

1 ‘‘(i) the amount paid to the taxpayer 

2 during the taxable year as military pay 

3 and allowances on account of the tax4 payer’s participation in qualified reserve 

5 component duty, divided by 

6 ‘‘(ii) the total number of days the tax7 payer participates in qualified reserve com8 ponent duty, including time spent in travel 

9 status. 

10 ‘‘(3) QUALIFIED SELF-EMPLOYED TAXPAYER.— 

11 The term ‘qualified self-employed taxpayer’ means a 

12 taxpayer who— 

13 ‘‘(A) has net earnings from self-employ14 ment (as defined in section 1402(a)) for the 

15 taxable year, and 

16 ‘‘(B) is a member of the Ready Reserve of 

17 a reserve component of an Armed Force of the 

18 United States. 

19 ‘‘(d) CREDIT IN ADDITION TO DEDUCTION.—The 

20 employment credit or the self-employment credit provided 

21 in this section is in addition to any deduction otherwise 

22 allowable with respect to compensation actually paid to a 

23 qualified employee, qualified replacement employee, or 

24 qualified self-employed taxpayer during any period the 

25 qualified employee or qualified self-employed taxpayer par-
36 

•S 460 IS 

1 ticipates in qualified reserve component duty to the exclu2 sion of normal employment duties. 

3 ‘‘(e) COORDINATION WITH OTHER CREDITS.—The 

4 amount of credit otherwise allowable under sections 51(a) 

5 and 1396(a) with respect to any employee shall be reduced 

6 by the credit allowed by this section with respect to such 

7 employee. 

8 ‘‘(f) LIMITATIONS.— 

9 ‘‘(1) APPLICATION WITH OTHER CREDITS.— 

10 The credit allowed under subsection (a) for any tax11 able year shall not exceed the excess (if any) of— 

12 ‘‘(A) the regular tax for the taxable year 

13 reduced by the sum of the credits allowable 

14 under subpart A and sections 27, 29, and 30, 

15 over 

16 ‘‘(B) the tentative minimum tax for the 

17 taxable year. 

18 ‘‘(2) DISALLOWANCE FOR FAILURE TO COMPLY

19 WITH EMPLOYMENT OR REEMPLOYMENT RIGHTS OF

20 MEMBERS OF THE RESERVE COMPONENTS OF THE

21 ARMED FORCES OF THE UNITED STATES.—No credit 

22 shall be allowed under subsection (a) to a taxpayer 

23 for— 

24 ‘‘(A) any taxable year, beginning after the 

25 date of the enactment of this section, in which 
37 

•S 460 IS 

1 the taxpayer is under a final order, judgment, 

2 or other process issued or required by a district 

3 court of the United States under section 4323 

4 of title 38 of the United States Code with re5 spect to a violation of chapter 43 of such title, 

6 and 

7 ‘‘(B) the 2 succeeding taxable years. 

8 ‘‘(3) DISALLOWANCE WITH RESPECT TO PER9 SONS ORDERED TO ACTIVE DUTY FOR TRAINING.— 

10 No credit shall be allowed under subsection (a) to a 

11 taxpayer with respect to any period by taking into 

12 account any person who is called or ordered to active 

13 duty for any of the following types of duty: 

14 ‘‘(A) Active duty for training under any 

15 provision of title 10, United States Code. 

16 ‘‘(B) Training at encampments, maneu17 vers, outdoor target practice, or other exercises 

18 under chapter 5 of title 32, United States Code. 

19 ‘‘(C) Full-time National Guard duty, as 

20 defined in section 101(d)(5) of title 10, United 

21 States Code. 

22 ‘‘(g) GENERAL DEFINITIONS AND SPECIAL RULES.— 

23 For purposes of this section— 

24 ‘‘(1) SMALL BUSINESS EMPLOYER.— 
38 

•S 460 IS 

1 ‘‘(A) IN GENERAL.—The term ‘small busi2 ness employer’ means, with respect to any tax3 able year, any employer who employed an aver4 age of 50 or fewer employees on business days 

5 during such taxable year. 

6 ‘‘(B) CONTROLLED GROUPS.—For pur7 poses of subparagraph (A), all persons treated 

8 as a single employer under subsection (b), (c), 

9 (m), or (o) of section 414 shall be treated as a 

10 single employer. 

11 ‘‘(2) MILITARY PAY AND ALLOWANCES.—The 

12 term ‘military pay’ means pay as that term is de13 fined in section 101(21) of title 37, United States 

14 Code, and the term ‘allowances’ means the allow15 ances payable to a member of the Armed Forces of 

16 the United States under chapter 7 of that title. 

17 ‘‘(3) QUALIFIED RESERVE COMPONENT

18 DUTY.—The term ‘qualified reserve component duty’ 

19 includes only active duty performed, as designated in 

20 the reservist’s military orders, in support of a con21 tingency operation as defined in section 101(a)(13) 

22 of title 10, United States Code. 

23 ‘‘(4) SPECIAL RULES FOR CERTAIN MANUFAC24 TURERS.— 
39 

•S 460 IS 

1 ‘‘(A) IN GENERAL.—In the case of any 

2 qualified manufacturer— 

3 ‘‘(i) subsections (b)(1)(A)(ii) and 

4 (c)(1)(B) shall be applied by substituting 

5 ‘$40,000’ for ‘$30,000’, 

6 ‘‘(ii) subsection (b)(2)(A)(ii) shall be 

7 applied by substituting ‘$20,000’ for 

8 ‘$12,000’, and 

9 ‘‘(iii) paragraph (1)(A) of this sub10 section shall be applied by substituting 

11 ‘100’ for ‘50’. 

12 ‘‘(B) QUALIFIED MANUFACTURER.—For 

13 purposes of this paragraph, the term ‘qualified 

14 manufacturer’ means any person if— 

15 ‘‘(i) the primary business of such per16 son is classified in sector 31, 32, or 33 of 

17 the North American Industrial Classifica18 tion System, and 

19 ‘‘(ii) all of such person’s facilities 

20 which are used for production in such busi21 ness are located in the United States. 

22 ‘‘(5) CARRYBACK AND CARRYFORWARD AL23 LOWED.— 

24 ‘‘(A) IN GENERAL.—If the credit allowable 

25 under subsection (a) for a taxable year exceeds 
40 

•S 460 IS 

1 the amount of the limitation under subsection 

2 (f)(1) for such taxable year (in this paragraph 

3 referred to as the ‘unused credit year’), such 

4 excess shall be a credit carryback to each of the 

5 3 taxable years preceding the unused credit 

6 year and a credit carryforward to each of the 

7 20 taxable years following the unused credit 

8 year. 

9 ‘‘(B) RULES.—Rules similar to the rules of 

10 section 39 shall apply with respect to the credit 

11 carryback and credit carryforward under sub12 paragraph (A). 

13 ‘‘(6) CERTAIN RULES TO APPLY.—Rules similar 

14 to the rules of subsections (c), (d), and (e) of section 

15 52 shall apply.’’. 

16 (b) CONFORMING AMENDMENT.—Section 55(c)(2) of 

17 the Internal Revenue Code of 1986 is amended by insert18 ing ‘‘30B(f)(1),’’ after ‘‘30(b)(3),’’. 

19 (c) CLERICAL AMENDMENT.—The table of sections 

20 for subpart B of part IV of subchapter A of chapter 1 

21 of the Internal Revenue Code of 1986 is amended by add22 ing at the end of 30A the following new item: 

‘‘Sec. 30B. Employer wage credit for activated military reservists.’’. 

23 (d) EFFECTIVE DATE; SPECIAL RULE.— 

24 (1) EFFECTIVE DATE.—The amendments made 

25 by this section shall apply to amounts paid after 
41 

•S 460 IS 

1 September 11, 2001, in taxable years ending after 

2 such date. 

3 (2) WAIVER OF LIMITATIONS.—If refund or 

4 credit of any overpayment of tax resulting from the 

5 amendments made by this section is prevented at 

6 any time before the close of the 1-year period begin7 ning on the date of the enactment of this Act by the 

8 operation of any law or rule of law (including res ju9 dicata), such refund or credit may nevertheless be 

10 made or allowed if claim therefor is filed before the 

11 close of such period. 

12 TITLE III—MILITARY FAMILY 

13 BENEFITS 

14 SEC. 301. DESIGNATION OF OVERPAYMENTS TO SUPPORT 

15 MILITARY FAMILIES. 

16 (a) DESIGNATION.— 

17 (1) IN GENERAL.—Subchapter A of chapter 61 

18 of the Internal Revenue Code of 1986 is amended by 

19 adding at the end the following new part: 

20 ‘‘PART IX—DESIGNATION OF OVERPAYMENTS TO 

21 SUPPORT MILITARY FAMILIES 

‘‘Sec. 6097. Designation. 

22 ‘‘SEC. 6097. DESIGNATION. 

23 ‘‘(a) IN GENERAL.—In the case of an individual, with 

24 respect to each taxpayer’s return for the taxable year of 
42 

•S 460 IS 

1 the tax imposed by chapter 1, such taxpayer may des2 ignate that— 

3 ‘‘(1) a specified portion (not less than $1 and 

4 in whole dollars) of any overpayment of tax for such 

5 taxable year, and 

6 ‘‘(2) any contribution (not less than $1 and in 

7 whole dollars) which the taxpayer forwards in money 

8 with such return, 

9 be paid over to the American Military Family Relief Fund. 

10 ‘‘(b) MANNER AND TIME OF DESIGNATION.—A des11 ignation under subsection (a) may be made with respect 

12 to any taxable year only at the time of filing the return 

13 of the tax imposed by chapter 1 for such taxable year. 

14 Such designation shall be made in such manner as the 

15 Secretary prescribes by regulations except that such des16 ignation shall be made either on the first page of the re17 turn or on the page bearing the taxpayer’s signature. 

18 ‘‘(c) OVERPAYMENTS TREATED AS REFUNDED.—For 

19 purposes of this title, any portion of an overpayment of 

20 tax designated under subsection (a)(1) shall be treated 

21 as— 

22 ‘‘(1) being refunded to the taxpayer as of the 

23 last date prescribed for filing the return of tax im24 posed by chapter 1 (determined without regard to 
43 

•S 460 IS 

1 extensions) or, if later, the date the return is filed, 

2 and 

3 ‘‘(2) a contribution made by such taxpayer on 

4 such date to the United States. 

5 ‘‘(d) TERMINATION.—This section shall not apply to 

6 designations made after December 31, 2009.’’. 

7 (2) TRANSFERS TO AMERICAN MILITARY FAM8 ILY RELIEF FUND.—The Secretary of the Treasury 

9 shall, from time to time, transfer to the American 

10 Military Family Relief Fund the amounts designated 

11 under section 6097 of the Internal Revenue Code of 

12 1986. 

13 (3) CLERICAL AMENDMENT.—The table of 

14 parts for subchapter A of chapter 61 of the Internal 

15 Revenue Code of 1986 is amended by adding at the 

16 end the following new item: 

‘‘Part IX. Designation of overpayments to support military families.’’. 

17 (b) AMERICAN MILITARY FAMILY RELIEF FUND.— 

18 (1) IN GENERAL.—Subchapter A of chapter 98 

19 of the Internal Revenue Code of 1986 (relating to 

20 trust fund code) is amended by adding at the end 

21 the following new section: 

22 ‘‘SEC. 9511. AMERICAN MILITARY FAMILY RELIEF FUND. 

23 ‘‘(a) ESTABLISHMENT.—There is established in the 

24 Treasury of the United States a trust fund to be known 
44 

•S 460 IS 

1 as the ‘American Military Family Relief Fund’, consisting 

2 of such amounts as may be appropriated or credited to 

3 such Fund as provided in this section or section 9602(b). 

4 ‘‘(b) TRANSFERS TO FUND.—There are hereby ap5 propriated to the American Military Family Relief Fund 

6 amounts equivalent to the amounts designated under sec7 tion 6097. 

8 ‘‘(c) EXPENDITURES.— 

9 ‘‘(1) IN GENERAL.—Amounts in the American 

10 Military Family Relief Fund shall be available to the 

11 Secretary of Defense for making distributions to, or 

12 for the benefit of, individuals and family members of 

13 individuals who serve, or have served, in the Armed 

14 Forces of the United States for needs not met by 

15 other laws or programs, including costs and unmet 

16 needs associated with deployments, injury, or death. 

17 ‘‘(2) CRITERIAFOR DISTRIBUTIONS.— 

18 ‘‘(A) IN GENERAL.—The Secretary of De19 fense, after consultation with appropriate mili20 tary and veterans organizations, shall establish 

21 criteria for the distribution of amounts in the 

22 American Military Family Relief Fund. 

23 ‘‘(B) DISTRIBUTIONS TO CERTAIN ORGANI24 ZATIONS.—Such distributions may be made to 

25 organizations serving individuals and family 
45 

•S 460 IS 

1 members described in paragraph (1). Not more 

2 than 5 percent of any distribution to such an 

3 organization may be used for overhead or indi4 rect costs. 

5 ‘‘(d) REPORTS.—Not later than December 1 (begin6 ning in 2005)— 

7 ‘‘(1) the Secretary of the Treasury shall report 

8 to Congress the amount of contributions designated 

9 to the American Military Family Relief Fund in the 

10 preceding fiscal year, and 

11 ‘‘(2) the Secretary of Defense shall report to 

12 Congress on the administration, distribution, and 

13 use of funds from the American Military Family Re14 lief Fund in the preceding fiscal year.’’. 

15 (2) CLERICAL AMENDMENT.—The table of sec16 tions for such subchapter is amended by adding at 

17 the end the following new item: 

‘‘Sec. 9511. American Military Family Relief Fund.’’. 

18 (c) EFFECTIVE DATES.— 

19 (1) SUBSECTION (a).—The amendments made 

20 by subsection (a) shall apply to taxable years begin21 ning after December 31, 2004. 

22 (2) SUBSECTION (b).—The amendments made 

23 by subsection (b) shall take effect on the date of the 

24 enactment of this Act. 
46 

•S 460 IS 

1 SEC. 302. PENALTY-FREE WITHDRAWALS FROM RETIRE2 MENT PLANS FOR INDIVIDUALS CALLED TO 

3 CERTAIN ACTIVE DUTY. 

4 (a) IN GENERAL.—Paragraph (2) of section 72(t) of 

5 the Internal Revenue Code of 1986 (relating to 10-percent 

6 additional tax on early distributions from qualified retire7 ment plans) is amended by adding at the end the following 

8 new subparagraph: 

9 ‘‘(G) DISTRIBUTIONS FROM RETIREMENT

10 PLANS TO INDIVIDUALS CALLED TO CERTAIN

11 ACTIVE DUTY.— 

12 ‘‘(i) IN GENERAL.—Any qualified ac13 tive duty distribution. 

14 ‘‘(ii) QUALIFIED ACTIVE DUTY DIS15 TRIBUTION.—For purposes of this sub16 paragraph, the term ‘qualified active duty 

17 distribution’ means any distribution to a 

18 covered member of the Armed Forces if— 

19 ‘‘(I) such distribution is from any 

20 qualified retirement plan (as defined 

21 in section 4974(c)), and 

22 ‘‘(II) such distribution is made 

23 during the period of the assignment to 

24 temporary duty described in clause 

25 (iii)(I) or the period of the order or 
47 

•S 460 IS 

1 call to active duty described in clause 

2 (iii)(II). 

3 ‘‘(iii) COVERED MEMBER OF THE

4 ARMED FORCES.—For purposes of this 

5 subparagraph, the term ‘covered member 

6 of the Armed Forces’ means an individual 

7 who— 

8 ‘‘(I) by reason of being a regular 

9 member of the Armed Forces of the 

10 United States is assigned to tem11 porary duty at a location other than 

12 the member’s permanent duty station 

13 for a period in excess of 90 days, or 

14 ‘‘(II) by reason of being a mem15 ber of a reserve component (as de16 fined in section 101 of title 37, 

17 United States Code) is ordered or 

18 called to active duty for a period in 

19 excess of 179 days or for an indefinite 

20 period. 

21 ‘‘(iv) APPLICATION OF SUBPARA22 GRAPH.—This subparagraph applies to in23 dividuals assigned to temporary duty or or24 dered or called to active duty after Sep25 tember 11, 2001.’’. 
48 

•S 460 IS 

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

2 subsection (a) shall apply to distributions after September 

3 11, 2001. 

4 TITLE IV—DEATH GRATUITY 

5 AND OTHER SURVIVOR BENE6 FITS 

7 SEC. 401. INCREASED AMOUNT OF DEATH GRATUITY. 

8 (a) AMOUNT OF DEATH GRATUITY.—Section 

9 1478(a) of title 10, United States Code, is amended by 

10 striking ‘‘$12,000’’ in the first sentence and inserting 

11 ‘‘$250,000’’. 

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

13 subsection (a) shall take effect as of September 11, 2001, 

14 and shall apply with respect to deaths occurring on or 

15 after that date. 

16 SEC. 402. DEATH GRATUITY EXCLUDABLE FROM FEDERAL 

17 INCOME TAXATION. 

18 (a) IN GENERAL.—Paragraph (1) of section 134(b) 

19 of the Internal Revenue Code of 1986 (relating to certain 

20 military benefits) is amended by adding at the end the 

21 following new flush sentence: 

22 ‘‘Such term shall include any death gratuity to 

23 which the limitation in section 1478(a) of title 10, 

24 United States Code, applies.’’. 
49 

•S 460 IS 

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

2 subsection (a) shall apply to amounts paid with respect 

3 to deaths occurring on or after September 11, 2001. 

4 SEC. 403. EXTENSION OF PERIOD OF TEMPORARY CON5 TINUATION OF BASIC ALLOWANCE FOR 

6 HOUSING FOR DEPENDENTS OF MEMBERS OF 

7 THE ARMED FORCES WHO DIE ON ACTIVE 

8 DUTY. 

9 Section 403(l) of title 37, United States Code, is 

10 amended by striking ‘‘180 days’’ each place it appears and 

11 inserting ‘‘365 days’’. 

12 TITLE V—VETERANS BENEFITS 

13 SEC. 501. POST-TRAUMATIC STRESS DISORDER TREAT14 MENT FOR VETERANS OF SERVICE IN AF15 GHANISTAN AND IRAQ AND THE WAR ON TER16 ROR. 

17 (a) ENHANCED CAPACITY FOR DEPARTMENT OF

18 VETERANS AFFAIRS.—Using funds available to the Sec19 retary of Veterans Affairs for fiscal year 2006 for ‘‘Med20 ical Care’’, the Secretary shall employ at least one psychia21 trist and a complementary clinical team at each medical 

22 center of the Department of Veterans Affairs in order to 

23 conduct a specialized program for the diagnosis and treat24 ment of post-traumatic stress disorder and to employ addi-
50 

•S 460 IS 

1 tional mental health services specialists at the medical cen2 ter. 

3 (b) OUTREACH AT THE COMMUNITY LEVEL.— 

4 (1) PROGRAM.—The Secretary of Veterans Af5 fairs shall, within the authorities of the Secretary 

6 under title 38, United States Code, carry out a pro7 gram to provide outreach at the community level to 

8 veterans who participated in Operation Iraqi Free9 dom or Operation Enduring Freedom who are or 

10 may be suffering from post-traumatic stress dis11 order. 

12 (2) PROGRAM SITES.—The program shall be 

13 carried out on a nation-wide basis through facilities 

14 of the Department of Veterans Affairs. 

15 (3) PROGRAM CONTENT.—The program shall 

16 provide for individualized case management to be 

17 conducted on a one-on-one basis, counseling, edu18 cation, and group therapy to help participants cope 

19 with post-traumatic stress disorder. The program— 

20 (A) shall emphasize early identification of 

21 veterans who may be experiencing symptoms of 

22 post-traumatic stress disorder; and 

23 (B) shall include group-oriented, peer-to24 peer settings for treatment. 

25 (c) REPORT ON PTSD OUTREACH.— 
51 

•S 460 IS 

1 (1) IN GENERAL.—Not later than December 31, 

2 2006, the Secretary of Veterans Affairs shall submit 

3 to Congress a report on the outreach conducted by 

4 the Department of Veterans Affairs during fiscal 

5 year 2006 to veterans who participated in Operation 

6 Iraqi Freedom or Operation Enduring Freedom who 

7 are or may be suffering from post-traumatic stress 

8 disorder on the programs of the Department that 

9 address post-traumatic stress disorder, including the 

10 outreach conducted under subsection (b). 

11 (2) ELEMENTS.—The report under paragraph 

12 (1) shall include— 

13 (A) description of the outreach referred to 

14 in that paragraph; and 

15 (B) an assessment of the effectiveness of 

16 such outreach. 

17 TITLE VI—REVENUE PROVISION 

18 SEC. 601. PARTIAL REPEAL OF RATE REDUCTION IN THE 

19 HIGHEST INCOME TAX BRACKET. 

20 Section 1(i)(2) of the Internal Revenue Code of 1986 

21 is amended by adding at the end the following flush sen22 tence: 

23 ‘‘In the case of taxable years beginning during cal24 endar year 2005 and thereafter, the final item in the 

25 fourth column in the preceding table shall be applied 
52 

•S 460 IS 

1 by substituting for ‘35.0%’ such rate as the Sec2 retary determines is necessary to provide sufficient 

3 revenues to offset the Federal outlays required to 

4 implement the provisions of, and the amendments 

5 made by, the Strengthening America’s Armed 

6 Forces and Military Family Bill of Rights Act.’’. 

Æ