II 

109TH CONGRESS 

1ST SESSION S. 417 

To amend the Internal Revenue Code of 1986 to provide for a refundable 

wage differential credit for activated military reservists. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 17, 2005 

Mr. DORGAN (for himself and Mr. SHELBY) 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 a refundable wage differential credit for activated 

military reservists.

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 ‘‘Military Reserve Mobi5 lization Income Security Act of 2005’’. 

6 SEC. 2. REFUNDABLE CREDIT FOR ACTIVATED MILITARY 

7 RESERVISTS. 

8 (a) IN GENERAL.—Subpart C of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 

10 1986 is amended by redesignating section 36 as section 
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1 37 and by inserting after section 35 the following new sec2 tion: 

3 ‘‘SEC. 36. WAGE DIFFERENTIAL FOR ACTIVATED RESERV4 ISTS. 

5 ‘‘(a) IN GENERAL.—In the case of a qualified reserv6 ist, there shall be allowed as a credit against the tax im7 posed by this subtitle an amount equal to the qualified 

8 active duty wage differential of such qualified reservist for 

9 the taxable year. 

10 ‘‘(b) QUALIFIED ACTIVE DUTY WAGE DIFFEREN11 TIAL.—For purposes of this section— 

12 ‘‘(1) IN GENERAL.—The term ‘qualified active 

13 duty wage differential’ means the daily wage dif14 ferential of the qualified active duty reservist multi15 plied by the number of days such qualified reservist 

16 participates in qualified reserve component duty dur17 ing the taxable year, including time spent in a travel 

18 status. 

19 ‘‘(2) DAILY WAGE DIFFERENTIAL.—The daily 

20 wage differential is an amount equal to the lesser 

21 of— 

22 ‘‘(A) the excess of— 

23 ‘‘(i) the qualified reservist’s average 

24 daily qualified compensation, over 
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1 ‘‘(ii) the qualified reservist’s average 

2 daily military pay while participating in 

3 qualified reserve component duty to the ex4 clusion of the qualified reservist’s normal 

5 employment duties, or 

6 ‘‘(B) $54.80. 

7 ‘‘(3) AVERAGE DAILY QUALIFIED COMPENSA8 TION.— 

9 ‘‘(A) IN GENERAL.—The term ‘average 

10 daily qualified compensation’ means— 

11 ‘‘(i) the qualified compensation of the 

12 qualified reservist for the one-year period 

13 ending on the day before the date the 

14 qualified reservist begins qualified reserve 

15 component duty, divided by 

16 ‘‘(ii) 365. 

17 ‘‘(B) QUALIFIED COMPENSATION.—The 

18 term ‘qualified compensation’ means— 

19 ‘‘(i) compensation which is normally 

20 contingent on the qualified reservist’s pres21 ence for work and which would be includ22 ible in gross income, and 

23 ‘‘(ii) compensation which is not char24 acterized by the qualified reservist’s em25 ployer as vacation or holiday pay, or as 
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1 sick leave or pay, or as any other form of 

2 pay for a nonspecific leave of absence. 

3 ‘‘(4) AVERAGE DAILY MILITARY PAY AND AL4 LOWANCES.— 

5 ‘‘(A) IN GENERAL.—The term ‘average 

6 daily military pay and allowances’ means— 

7 ‘‘(i) the amount paid to the qualified 

8 reservist during the taxable year as mili9 tary pay and allowances on account of the 

10 qualified reservist’s participation in quali11 fied reserve component duty, determined as 

12 of the date the qualified reservist begins 

13 qualified reserve component duty, divided 

14 by 

15 ‘‘(ii) the total number of days the 

16 qualified reservist participates in qualified 

17 reserve component duty during the taxable 

18 year, including time spent in travel status. 

19 ‘‘(B) MILITARY PAY AND ALLOWANCES.—

20 The term ‘military pay’ means pay as that term 

21 is defined in section 101(21) of title 37, United 

22 States Code, and the term ‘allowances’ means 

23 the allowances payable to a member of the 

24 Armed Forces of the United States under chap25 ter 7 of that title. 
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1 ‘‘(5) QUALIFIED RESERVE COMPONENT

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

3 means— 

4 ‘‘(A) active duty performed, as designated 

5 in the reservist’s military orders, in support of 

6 a contingency operation as defined in section 

7 101(a)(13) of title 10, United States Code, or 

8 ‘‘(B) full-time National Guard duty (as de9 fined in section 101(19) of title 32, United 

10 States Code) which is ordered pursuant to a re11 quest by the President, for a period under 1 or 

12 more orders described in subparagraph (A) or 

13 (B) of more than 90 consecutive days. 

14 ‘‘(c) QUALIFIED RESERVIST.—For purposes of this 

15 section— 

16 ‘‘(1) IN GENERAL.—The term ‘qualified reserv17 ist’ means an individual who is engaged in normal 

18 employment and is a member of— 

19 ‘‘(A) the National Guard (as defined by 

20 section 101(c)(1) of title 10, United States 

21 Code), or 

22 ‘‘(B) the Ready Reserve (as defined by sec23 tion 10142 of title 10, United States Code). 

24 ‘‘(2) NORMAL EMPLOYMENT.—The term ‘nor25 mal employment duties’ includes self-employment. 
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1 ‘‘(d) DISALLOWANCE WITH RESPECT TO PERSONS

2 ORDERED TO ACTIVE DUTY FOR TRAINING.—No credit 

3 shall be allowed under subsection (a) to a qualified reserv4 ist who is called or ordered to active duty for any of the 

5 following types of duty: 

6 ‘‘(1) Active duty for training under any provi7 sion of title 10, United States Code. 

8 ‘‘(2) Training at encampments, maneuvers, out9 door target practice, or other exercises under chap10 ter 5 of title 32, United States Code. 

11 ‘‘(3) Full-time National Guard duty, as defined 

12 in section 101(d)(5) of title 10, United States Code. 

13 ‘‘(e) CREDIT INCLUDED IN GROSS INCOME.—Gross 

14 income includes the amount of the credit allowed the tax15 payer under this section.’’. 

16 (b) CONFORMING AMENDMENTS.— 

17 (1) Paragraph (2) of section 1324(b) of title 

18 31, United States Code, is amended by inserting be19 fore the period ‘‘, or from section 36 of such Code’’. 

20 (2) The table of sections for subpart C of part 

21 IV of chapter 1 of the Internal Revenue Code of 

22 1986 is amended by striking the last item and in23 serting the following new items:

‘‘Sec. 36. Wage differential for activated reservists. 

‘‘Sec. 37. Overpayments of tax.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2004.

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