SECTION 1. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This Act may be cited as the ‘‘He-
roes Earnings Assistance and Relief Tax Act of 2007’’. 
(b) REFERENCE.—Except as otherwise expressly pro-
vided, whenever in this Act an amendment or repeal is ex-
pressed in terms of an amendment to, or repeal of, a section 
or other provision, the reference shall be considered to be 
made to a section or other provision of the Internal Revenue 
Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title, etc. 
TITLE I—BENEFITS FOR MILITARY AND VOLUNTEER 
FIREFIGHTERS 
Sec. 101. Election to include combat pay as earned income for purposes of earned 
income tax credit. 
Sec. 102. Modification of mortgage revenue bonds for veterans. 
Sec. 103. Survivor and disability payments with respect to qualified military 
service. 
Sec. 104. Treatment of differential military pay as wages. 
Sec. 105. Exclusion from income for benefits provided to volunteer firefighters and 
emergency medical responders. 
Sec. 106. Special period of limitation when uniformed services retired pay is re-
duced as a result of award of disability compensation. 
Sec. 107. Distributions from retirement plans to individuals called to active duty. 
Sec. 108. Disclosure of return information relating to veterans programs made 
permanent. 
Sec. 109. Contributions of military death gratuities to Roth IRAs and Education 
Savings Accounts. 
Sec. 110. Suspension of 5-year period during service with the Peace Corps. 
TITLE II—IMPROVEMENTS IN SUPPLEMENTAL SECURITY INCOME 
Sec. 201. Treatment of uniformed service cash remuneration as earned income. 
Sec. 202. State annuities for blind veterans to be disregarded in determining sup-
plemental security income benefits. 
Sec. 203. Exclusion of AmeriCorps benefits for purposes of determining supple-
mental security income eligibility and benefit amounts. 
Sec. 204. Effective date. 
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TITLE III—REVENUE PROVISIONS 
Sec. 301. Modification of penalty for failure to file partnership returns. 
Sec. 302. Penalty for failure to file S corporation returns. 
Sec. 303. Increase in information return penalties. 
Sec. 304. Increase in minimum penalty on failure to file a return of tax. 
TITLE I—BENEFITS FOR MILI-
TARY AND VOLUNTEER FIRE-
FIGHTERS 
SEC. 101. ELECTION TO INCLUDE COMBAT PAY AS EARNED 
INCOME FOR PURPOSES OF EARNED INCOME 
TAX CREDIT. 
(a) IN GENERAL.—Clause (vi) of section 32(c)(2)(B) 
(defining earned income) is amended to read as follows: 
‘‘(vi) a taxpayer may elect to treat 
amounts excluded from gross income by rea-
son of section 112 as earned income.’’. 
(b) SUNSET NOT APPLICABLE.—Section 105 of the 
Working Families Tax Relief Act of 2004 (relating to appli-
cation of EGTRRA sunset to this title) shall not apply to 
section 104(b) of such Act. 
(c) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years ending after December 
31, 2007. 
SEC. 102. MODIFICATION OF MORTGAGE REVENUE BONDS 
FOR VETERANS. 
(a) QUALIFIED MORTGAGE BONDS USED TO FINANCE 
RESIDENCES FOR VETERANS WITHOUT REGARD TO FIRST- 
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TIME HOMEBUYER REQUIREMENT.—Subparagraph (D) of 
section 143(d)(2) (relating to exceptions) is amended by 
striking ‘‘and before January 1, 2008’’. 
(b) INCREASE IN BOND LIMITATION FOR ALASKA, OR-
EGON, AND WISCONSIN.—Clause (ii) of section 143(l)(3)(B) 
(relating to State veterans limit) is amended by striking 
‘‘$25,000,000’’ each place it appears and inserting 
‘‘$100,000,000’’. 
(c) DEFINITION OF QUALIFIED VETERAN.—Paragraph 
(4) of section 143(l) (defining qualified veteran) is amended 
to read as follows: 
‘‘(4) QUALIFIED VETERAN.—For purposes of this 
subsection, the term ‘qualified veteran’ means any 
veteran who— 
‘‘(A) served on active duty, and 
‘‘(B) applied for the financing before the 
date 25 years after the last date on which such 
veteran left active service.’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to bonds issued after December 31, 2007. 
SEC. 103. SURVIVOR AND DISABILITY PAYMENTS WITH RE-
SPECT TO QUALIFIED MILITARY SERVICE. 
(a) PLAN QUALIFICATION REQUIREMENT FOR DEATH 
BENEFITS UNDER USERRA-QUALIFIED ACTIVE MILITARY 
SERVICE.—Subsection (a) of section 401 (relating to re-
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quirements for qualification) is amended by inserting after 
paragraph (36) the following new paragraph: 
‘‘(37) DEATH BENEFITS UNDER USERRA-QUALI-
FIED ACTIVE MILITARY SERVICE.—A trust shall not 
constitute a qualified trust unless the plan provides 
that, in the case of a participant who dies while per-
forming qualified military service (as defined in sec-
tion 414(u)), the survivors of the participant are enti-
tled to any additional benefits (other than benefit ac-
cruals relating to the period of qualified military 
service) provided under the plan had the participant 
resumed and then terminated employment on account 
of death.’’. 
(b) TREATMENT IN THE CASE OF DEATH OR DIS-
ABILITY RESULTING FROM ACTIVE MILITARY SERVICE FOR 
BENEFIT ACCRUAL PURPOSES.—Subsection (u) of section 
414 (relating to special rules relating to veterans’ reemploy-
ment rights under USERRA) is amended by redesignating 
paragraphs (9) and (10) as paragraphs (10) and (11), re-
spectively, and by inserting after paragraph (8) the fol-
lowing new paragraph: 
‘‘(9) TREATMENT IN THE CASE OF DEATH OR 
DISABILITY RESULTING FROM ACTIVE MILITARY SERV-
ICE.— 
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‘‘(A) IN
GENERAL.—For benefit accrual 
purposes, an employer sponsoring a retirement 
plan may treat an individual who dies or be-
comes disabled (as defined under the terms of the 
plan) while performing qualified military service 
with respect to the employer maintaining the 
plan as if the individual has resumed employ-
ment in accordance with the individual’s reem-
ployment rights under chapter 43 of title 38, 
United States Code, on the day preceding death 
or disability (as the case may be) and termi-
nated employment on the actual date of death or 
disability. In the case of any such treatment, 
and subject to subparagraphs (B) and (C), any 
full or partial compliance by such plan with re-
spect to the benefit accrual requirements of para-
graph (8) with respect to such individual shall 
be treated for purposes of paragraph (1) as if 
such compliance were required under such chap-
ter 43. 
‘‘(B) NONDISCRIMINATION REQUIREMENT.— 
Subparagraph (A) shall apply only if all indi-
viduals performing qualified military service 
with respect to the employer maintaining the 
plan (as determined under subsections (b), (c), 
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