I 
108TH CONGRESS 
1ST SESSION H. R. 1345
To provide compensation to members of the reserve components who suffer 
discrepancies between their military and nonmilitary compensation as 
a result of being ordered to serve on active duty for a period of more 
than 30 days, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 19, 2003
Mr. LANTOS (for himself, Mr. WEXLER, Mr. GRAVES, Ms. WATSON, Mr. 
BROWN of Ohio, and Mr. FALEOMAVAEGA) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committees on Government Reform and Armed Services, for 
a period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned 
A BILL 
To provide compensation to members of the reserve compo-
nents who suffer discrepancies between their military 
and nonmilitary compensation as a result of being or-
dered to serve on active duty for a period of more than 
30 days, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Equity for Reservists 
Pay Act of 2003’’.
SEC. 2. NONREDUCTION IN PAY WHILE FEDERAL EM-
PLOYEE IS SERVING ON ACTIVE DUTY IN A 
RESERVE COMPONENT OF THE UNIFORMED 
SERVICES. 
(a) IN GENERAL.—Subchapter IV of chapter 55 of 
title 5, United States Code, is amended by adding at the 
end the following new section: 
‘‘§ 5538. Nonreduction in pay while serving on active 
duty in a reserve component 
‘‘(a) An employee who is also a member of a reserve 
component and is absent from a position of employment 
with the Federal Government under a call or order to 
serve on active duty for a period of more than 30 days 
shall be entitled to receive, for each pay period described 
in subsection (b), an amount equal to the difference (if 
any) between—
‘‘(1) the amount of civilian basic pay that would 
otherwise have been payable to the employee for 
such pay period if the employee’s civilian employ-
ment with the Government had not been interrupted 
by the service on active duty; and 
‘‘(2) the amount of military compensation that 
is payable to the employee for the service on active 
duty and is allocable to such pay period. 
‘‘(b)(1) Amounts under this section shall be payable 
with respect to each pay period (which would otherwise
apply if the employee’s civilian employment had not been 
interrupted) that occurs—
‘‘(A) while the employee serves on active duty 
for a period of more than 30 days; 
‘‘(B) while the employee is hospitalized for, or 
convalescing from, an illness or injury incurred in, 
or aggravated during, the performance of such active 
duty; or 
‘‘(C) during the 14-day period beginning at the 
end of such active duty or the end of the period re-
ferred to in subparagraph (B). 
‘‘(2) Paragraph (1) shall not apply with respect to 
a pay period for which the employee receives civilian basic 
pay (including by taking any annual, military, or other 
paid leave) to which the employee is entitled by virtue of 
the employee’s civilian employment with the Government. 
‘‘(c) Any amount payable under this section to an em-
ployee shall be paid—
‘‘(1) by employing agency of the employee; 
‘‘(2) from the appropriations or fund that 
would be used to pay the employee if the employee 
were in a pay status; and 
‘‘(3) to the extent practicable, at the same time 
and in the same manner as would civilian basic pay
if the employee’s civilian employment had not been 
interrupted. 
‘‘(d) In consultation with Secretary of Defense, the 
Office of Personnel Management shall prescribe such reg-
ulations as may be necessary to carry out this section. 
‘‘(e)(1) In consultation with the Office, the head of 
each agency referred to in section 2302(a)(2)(C)(ii) of this 
title shall prescribe procedures to ensure that the rights 
under this section apply to the employees of such agency. 
‘‘(2) The Administrator of the Federal Aviation Ad-
ministration shall, in consultation with the Office, pre-
scribe procedures to ensure that the rights under this sec-
tion apply to the employees of that agency. 
‘‘(f) In this section: 
‘‘(1) The terms ‘active duty for a period of 
more than 30 days’, ‘member’, and ‘reserve compo-
nent’ have the meanings given such terms in section 
101 of title 37. 
‘‘(2) The term ‘civilian basic pay’ includes any 
amount payable under section 5304 of this title. 
‘‘(3) The term ‘employing agency’, as used with 
respect to an employee entitled to any payments 
under this section, means the agency or other entity 
of the Government (including an agency referred to 
in section 2302(a)(2)(C)(ii) of this title) with respect
to which the employee has reemployment rights 
under chapter 43 of title 38. 
‘‘(4) The term ‘military compensation’ has the 
meaning given the term ‘pay’ in section 101(21) of 
title 37.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
at the beginning of chapter 55 of title 5, United States 
Code, is amended by inserting after the item relating to 
section 5537 the following new item:
‘‘5538. Nonreduction in pay while serving on active duty in a reserve compo-
nent.’’.
(c) APPLICATION OF AMENDMENT.—Section 5538 of 
title 5, United States Code, as added by subsection (a), 
shall apply with respect to pay periods (as described in 
subsection (b) of such section) beginning on or after the 
date of the enactment of this Act. 
SEC. 3. ASSISTANCE FOR STATE AND LOCAL GOVERN-
MENTS THAT CONTINUE TO PAY EMPLOYEES 
WHO SERVE ON ACTIVE DUTY IN A RESERVE 
COMPONENT OF THE UNIFORMED SERVICES. 
(a) IN GENERAL.—Chapter 17 of title 37, United 
States Code, is amended by adding at the end the fol-
lowing new section:
‘‘§ 910. Assistance for State and local governments 
that continue to pay employees who 
serve on active duty 
‘‘(a) CONTINUATION OF CIVILIAN BASIC PAY.—It is 
the purpose of this section to encourage States and local 
governments to continue to pay a portion of the civilian 
compensation of those employees who are also members 
of a reserve component and are absent from a position 
of employment with the State or local government under 
a call or order to serve on active duty for a period of more 
than 30 days so that the employees receive compensation 
in an amount that, when taken together with their military 
pay, is at least equal to their civilian compensation. 
‘‘(b) REIMBURSEMENT OFFERED.—(1) At the re-
quest of a State or local government that continues to pay 
all or a portion of the civilian compensation of an employee 
described in subsection (a), the Secretary concerned shall 
reimburse the State or local government for 50 percent 
of the civilian compensation paid by the State or local gov-
ernment for each pay period described in subsection (c), 
but not to exceed 50 percent of the difference (if any) be-
tween—
‘‘(A) the amount of civilian compensation that 
would otherwise have been payable to the employee 
for such pay period if the employee’s civilian employ-
‘‘(1) while the employee serves on active duty 
for a period of more than 30 days; 
‘‘(2) while the employee is hospitalized for, or 
convalescing from, an illness or injury incurred in, 
or aggravated during, the performance of such active 
duty; or 
‘‘(3) during the 14-day period beginning at the 
end of such active duty or the end of the period re-
ferred to in subparagraph (B). 
‘‘(d) EFFECT OF FAILURE TO RETURN TO EMPLOY-
MENT.—(1) If an employee described in subsection (a), 
with respect to whom reimbursement is provided to a 
State or local government under this section, fails to re-
port or apply for employment or reemployment with the 
State or local government by the end of the period referred 
to in subsection (c)(3), the employee shall refund to the 
Secretary concerned the total amount of the reimburse-
ment provided with respect to the employee. 
‘‘(2) Subject to paragraph (3), an obligation to re-
fund moneys to the United States imposed under para-
graph (1) is for all purposes a debt owed to the United 
States. 
‘‘(3) The Secretary concerned may waive, in whole 
or in part, a refund required under paragraph (1) if the 
Secretary concerned determines that recovery would be
against equity and good conscience or would be contrary 
to the best interests of the United States. 
‘‘(4) A discharge in bankruptcy under title 11 that 
is entered less than five years after the end of the period 
referred to in subsection (c)(3) does not discharge the em-
ployee from a debt arising under paragraph (1). This 
paragraph applies to any case commenced under title 11 
after the date of the enactment of this section. 
‘‘(e) REGULATIONS.—The Secretaries concerned shall 
prescribe regulations to carry out this section. 
‘‘(f) DEFINITIONS.—In this section: 
‘‘(1) The term ‘civilian compensation’ means 
the wages or salary that an employee of a State or 
local government normally receives from the employ-
ee’s employment by the State or local government. 
‘‘(2) The term ‘local government’ means an 
agency or political subdivision of a State. 
‘‘(3) The term ‘military pay’ has the meaning 
given the term ‘pay’ in section 101(21) of this title. 
‘‘(4) The term ‘State’ means each of the several 
States of the United States, the District of Colum-
bia, the Commonwealth of Puerto Rico, Guam, the 
Virgin Islands, and other territories or possessions 
of the United States.’’.
(b) CLERICAL AMENDMENT.—The table of sections 
at the beginning of chapter 17 of title 37, United States 
Code, is amended by inserting after the item relating to 
section 909 the following new item:
‘‘910. Assistance for State and local governments that continue to pay employ-
ees who serve on active duty.’’.
(c) APPLICATION OF AMENDMENT.—Section 910 of 
title 37, United States Code, as added by subsection (a), 
shall apply with respect to pay periods (as described in 
subsection (b) of such section) beginning on or after the 
date of the enactment of this Act. 
SEC. 4. ACTIVE-DUTY RESERVE COMPONENT EMPLOYEE 
CREDIT 
ADDED 
TO 
GENERAL 
BUSINESS 
CREDIT. 
(a) ADDITION OF CREDIT.—Subpart D of part IV of 
subchapter A of chapter 1 of the Internal Revenue Code 
of 1986 (relating to business-related credits) is amended 
by adding at the end the following new section: 
‘‘SEC. 45G. ACTIVE-DUTY RESERVE COMPONENT EMPLOYEE 
CREDIT. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
in the case of an employer, the active-duty reserve compo-
nent employee credit determined under this section for the 
taxable year is an amount equal to 50 percent of the com-
pensation paid by the employer to an employee who is also 
a member of a reserve component during the taxable year
when the employee was absent from employment for a rea-
son described in subsection (b), but not to exceed 50 per-
cent of the difference (if any) between—
‘‘(1) the amount of compensation that would 
otherwise have been payable to the employee during 
such absence if the employee’s employment with the 
employer had not been interrupted by the employee’s 
absence; and 
‘‘(2) the amount of military pay that is payable 
to the employee during the absence. 
‘‘(b) COVERED PAY PERIODS.—Subsection (a) shall 
apply with respect to an employee who is also a member 
of a reserve component—
‘‘(1) while the employee serves on active duty 
for a period of more than 30 days; 
‘‘(2) while the employee is hospitalized for, or 
convalescing from, an illness or injury incurred in, 
or aggravated during, the performance of such active 
duty; or 
‘‘(3) during the 14-day period beginning at the 
end of such active duty or the end of the period re-
ferred to in subparagraph (B). 
‘‘(c) LIMITATION.—No credit shall be allowed under 
subsection (a) with respect to an employee on any day on 
which the employee was not scheduled to work (for a rea-
son other than such service on active duty) and ordinarily 
would not have worked. 
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) The terms ‘active duty for a period of 
more than 30 days’, ‘member’, and ‘reserve compo-
nent’ have the meanings given such terms in section 
101 of title 37, United States Code. 
‘‘(2) The term ‘compensation’ means any remu-
neration for employment, whether in cash or in kind, 
which is paid or incurred by a taxpayer and which 
is deductible from the taxpayer’s gross income under 
section 162(a)(1).’’. 
(b) CREDIT TO BE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38 of such Code (re-
lating to general business credit) is amended by striking 
‘‘plus’’ at the end of paragraph (14), by striking the period 
at the end of paragraph (15) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(16) the active-duty reserve component em-
ployee credit determined under section 45G(a).’’. 
(c) CONFORMING AMENDMENT.—The table of sec-
tions for subpart D of part IV of subchapter A of chapter 
1 of the Internal Revenue Code of 1986 is amended by 
inserting after the item relating to section 45F the fol-
lowing new item:
‘‘Sec. 45G. Active-duty reserve component employee credit.’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2001.
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