I 
108TH CONGRESS 
1ST SESSION 
H. R. 117
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 7, 2003
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 serv-
ing in combat zones the tax treatment allowed to mem-
bers of the Armed Forces serving in combat zones.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. TAX TREATMENT OF CIVILIAN EMPLOYEES OF 
DEPARTMENT 
OF 
DEFENSE 
IN 
COMBAT 
ZONES. 
(a) EXCLUSION
OF
COMBAT
ZONE
COMPENSA-
TION.—
(1) IN
GENERAL.—Subsection (d) of section 
112 of the Internal Revenue Code of 1986 (relating 
to prisoners of war, etc.) is amended by adding at 
the end the following new paragraph: 
‘‘(4) CIVILIAN EMPLOYEES OF DEPARTMENT OF 
DEFENSE.—
‘‘(A) SERVICE IN COMBAT ZONE.—Gross 
income does not include so much of the com-
pensation as does not exceed the maximum en-
listed amount received for active service as a ci-
vilian employee of the Department of Defense 
serving in support of the Armed Forces of the 
United States for any month during any part of 
which such employee—
‘‘(i) served in a combat zone, 
‘‘(ii) was hospitalized as a result of 
wounds, disease, or injury incurred while 
serving in a combat zone, or 
‘‘(iii) is in a missing status as a result 
of such service. 
Clause (ii) shall not apply for any month begin-
ning more than 2 years after the date of the 
termination of combatant activities in such 
zone.
‘‘(B) MISSING STATUS.—For purposes of 
this paragraph, the terms ‘active service’ and 
‘missing status’ have the respective meanings 
given to such terms by section 5561 of title 5 
of the United States Code.’’. 
(2) CLERICAL AMENDMENTS.—
(A) The heading for section 112 of such 
Code is amended to read as follows: 
‘‘SEC. 112. CERTAIN COMBAT ZONE COMPENSATION.’’. 
(B) The item relating to section 112 in the 
table of sections for part III of subchapter B of 
chapter 1 of such Code is amended to read as 
follows:
‘‘Sec. 112. Certain combat zone compensation.’’.
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2002. 
(b) ADDITIONAL ESTATE TAX NOT TO APPLY.—
(1) IN
GENERAL.—Subsection (b) of section 
2201 of such Code is amended by inserting ‘‘or 
while in service as a civilian employee of the Depart-
ment of Defense serving in support of the Armed 
Forces of the United States,’’ after ‘‘United 
States,’’. 
(2) CLERICAL AMENDMENTS.—
(A) The heading for section 2201 of such 
Code is amended by inserting ‘‘AND DEPART-
MENT OF DEFENSE CIVILIANS’’ after ‘‘MEM-
BERS OF THE ARMED FORCES’’. 
(B) The item relating to section 2201 in 
the table of sections for subchapter C of chap-
ter 11 of such Code is amended to read as fol-
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.’’.
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to decedents dying 
after December 31, 2002. 
(c) NO TAX ON TOLL TELEPHONE SERVICE IN COM-
BAT ZONE.—
(1) IN
GENERAL.—Subsection (d) of section 
4253 of such Code (relating to servicemen in combat 
zone) is amended by inserting ‘‘, or from a civilian 
employee of the Department of Defense,’’ after 
‘‘United States’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply with respect to 
amounts paid after the date of the enactment of this 
Act for services rendered on or after such date.
Æ