I
106TH CONGRESS
1ST SESSION
H. R. 1870
To amend the Internal Revenue Code of 1986 to allow a deduction for
contributions to a volunteer firefighter savings account.
IN THE HOUSE OF REPRESENTATIVES
MAY 19, 1999
Mr. LARSON (for himself and Mr. WELDON of Pennsylvania) 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 allow a
deduction for contributions to a volunteer firefighter sav-
ings account.
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 ‘‘Volunteer Firefighter’s
Relief Act’’.
SEC. 2. DEDUCTION FOR CONTRIBUTIONS TO VOLUNTEER
FIREFIGHTER SAVINGS ACCOUNTS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
additional itemized deductions for individuals) is amended
by redesignating section 222 as section 223 and by insert-
ing after section 221 the following new section:
‘‘SEC. 222. CONTRIBUTIONS TO VOLUNTEER FIREFIGHTER
SAVINGS ACCOUNTS.
‘‘(a) DEDUCTION ALLOWED.—
‘‘(1) IN GENERAL.—In the case of an individual
who is a qualified volunteer firefighter, there shall be
allowed as a deduction for the taxable year an
amount equal to the contributions of the individual
to a volunteer firefighter savings account of the indi-
vidual for the taxable year.
‘‘(2) 
MAXIMUM
ANNUAL
AMOUNT.—The
amount allowable as a deduction under subsection
(a) to any individual for a taxable year shall not ex-
ceed $500.
‘‘(b) QUALIFIED VOLUNTEER FIREFIGHTER.—For
purposes of this section, the term ‘qualified volunteer fire-
fighter’ means an individual who, on the last day of the
taxable year, is a member in good standing of a qualified
volunteer fire department (as defined in section 150(e)).
‘‘(c) 
VOLUNTEER
FIREFIGHTER
SAVINGS
AC-
COUNT.—For purposes of this section, the term ‘volunteer
firefighter savings account’ means a trust created or orga-
nized in the United States for the exclusive benefit of an
individual and the individual’s beneficiaries, but only if the
written governing instrument creating the trust meets the
following requirements:
‘‘(1) No contribution will be accepted unless it
is in cash.
‘‘(2) The trustee is a bank (as defined in sec-
tion 408(n)) or another person who demonstrates to
the satisfaction of the Secretary that the manner in
which that person will administer the trust will be
consistent with the requirements of this section.
‘‘(3) No part of the trust assets will be invested
in life insurance contracts.
‘‘(4) The assets of the trust will not be commin-
gled with other property except in a common trust
fund or common investment fund.
‘‘(5) The interest of an individual in the bal-
ance of the individual’s account is nonforfeitable.
‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, any amount paid or distrib-
uted out of a volunteer firefighter savings account
shall be included in the gross income of the payee
or distributee for the taxable year in which the pay-
ment or distribution is received in the manner pro-
vided under section 72.
‘‘(2) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.—Paragraph (1) shall
not apply to the distribution of any contribution paid
during a taxable year to a volunteer firefighter sav-
ings account to the extent that such contribution ex-
ceeds the amount allowable as a deduction under
subsection (a) if—
‘‘(A) such distribution is received on or be-
fore the day prescribed by law (including exten-
sions of time) for filing such individual’s return
for such taxable year,
‘‘(B) no deduction is allowed under sub-
section (a) with respect to such excess contribu-
tion, and
‘‘(C) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.
Any net income described in subparagraph (C) shall
be included in the gross income of the individual for
the taxable year in which such excess contribution
was made.
‘‘(3) ROLLOVER CONTRIBUTIONS.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
not apply to any amount paid or distributed to
an account holder from a volunteer firefighter
sentence, any such account is subject to the taxes
imposed by section 511 (relating to imposition of tax
on unrelated business income of charitable, etc. or-
ganizations).
‘‘(2) LOSS OF EXEMPTION OF ACCOUNT WHERE
INDIVIDUAL
ENGAGES
IN
PROHIBITED
TRANS-
ACTION.—
‘‘(A) IN GENERAL.—If the individual for
whose benefit a volunteer firefighter savings ac-
count is established or any individual who con-
tributes to such account engages in any trans-
action prohibited by section 4975 with respect
to the account, the account shall cease to be a
volunteer firefighter savings account as of the
first day of the taxable year (of the individual
so engaging in such transaction) during which
such transaction occurs.
‘‘(B) ACCOUNT TREATED AS DISTRIBUTING
ALL ITS ASSETS.—In any case in which any ac-
count ceases to be a volunteer firefighter sav-
ings account by reason of subparagraph (A) as
of the first day of any taxable year, paragraph
(1) of subsection (d) shall apply as if there was
a distribution on such first day in an amount
equal to the fair market value (on such first
day) of all assets in the account (on such first
day).
‘‘(3) EFFECT OF PLEDGING ACCOUNT AS SECU-
RITY.—If, during any taxable year, the individual for
whose benefit a volunteer firefighter savings account
is established uses the account or any portion there-
of as security for a loan, the portion so used shall
be treated as distributed to the individual so using
such portion.
‘‘(f) SPECIAL RULES.—
‘‘(1) TIME
WHEN
CONTRIBUTIONS
DEEMED
MADE.—A taxpayer shall be deemed to have made a
contribution to a volunteer firefighter savings ac-
count on the last day of the preceding taxable year
if the contribution is made on account of such tax-
able year and is made not later than the time pre-
scribed by law for filing the return for such taxable
year (not including extensions thereof).
‘‘(2) DEATH AND DIVORCE.—Rules similar to
the rules of sections 401(a)(9), 401(a)(11), and
408(d)(6) shall apply for purposes of this section.
‘‘(3) COMMUNITY PROPERTY LAWS.—This sec-
tion shall be applied without regard to any commu-
nity property laws.
‘‘(g) REPORTS.—The trustee of a volunteer fire-
fighter savings account shall make such reports regarding
such account to the Secretary and to the account holder
with respect to contributions, distributions, and such other
matters as the Secretary may require under regulations.
The reports required by this subsection shall be filed at
such time and in such manner and furnished to such indi-
viduals at such time and in such manner as may be re-
quired by those regulations.’’.
(b) ALLOWANCE OF DEDUCTION IN COMPUTING AD-
JUSTED GROSS INCOME.—Subsection (a) of section 62 of
such Code (defining adjusted gross income) is amended
by inserting after paragraph (17) the following new para-
graph:
‘‘(18) CONTRIBUTIONS
TO
VOLUNTEER
FIRE-
FIGHTER
SAVINGS
ACCOUNTS.—The deduction al-
lowed by section 222(a).’’.
(c) ADDITIONAL TAX ON EARLY DISTRIBUTIONS.—
Subsection (t) of section 72 of such Code (relating to 10-
percent additional tax on early distributions from qualified
retirement plans) is amended—
(1) in paragraph (1) by inserting ‘‘or a volun-
teer firefighter savings account’’ after ‘‘section
4974(c))’’, and
(2) in the heading by striking ‘‘QUALIFIED RE-
TIREMENT PLANS’’ and inserting ‘‘CERTAIN TAX-
FAVORED PLANS’’.
(d) TAX ON EXCESS CONTRIBUTIONS.—Section 4973
of such Code (relating to tax on excess contributions to
certain tax-favored accounts and annuities) is amended—
(1) in subsection (a) by striking ‘‘or’’ at the end
of paragraph (3), by inserting ‘‘or’’ at the end of
paragraph (4), and by inserting after paragraph (4)
the following new paragraph:
‘‘(5) an investment savings account (within the
meaning of section 222(c)),’’, and
(2) by adding at the end the following new sub-
section:
‘‘(g) EXCESS CONTRIBUTIONS TO VOLUNTEER FIRE-
FIGHTER SAVINGS ACCOUNTS.—For purposes of this sec-
tion, in the case of a volunteer firefighter savings account,
the term ‘excess contributions’ means the sum of—
‘‘(1) the aggregate amount contributed for the
taxable year to the account which is not allowable as
a deduction under section 222 for such taxable year,
and
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by—
‘‘(A) the distributions out of the accounts
which were included in gross income under sec-
tion 222(d)(1) for the taxable year, over
‘‘(B) the amount contributed to the ac-
counts for the taxable year.
For purposes of this subsection, any contribution
which is distributed out of the investment savings
account in a distribution to which section 222(d)(2)
applies shall be treated as an amount not contrib-
uted.’’.
(e) TAX ON PROHIBITED TRANSACTIONS.—Section
4975 of such Code (relating to prohibited transactions)
is amended—
(1) by adding at the end of subsection (c) the
following new paragraph:
‘‘(6) SPECIAL
RULE
FOR
VOLUNTEER
FIRE-
FIGHTER
SAVINGS
ACCOUNTS.—An individual for
whose benefit a volunteer firefighter savings account
is established and any contributor to such account
shall be exempt from the tax imposed by this section
with respect to any transaction concerning such ac-
count (which would otherwise be taxable under this
section) if, with respect to such transaction, the ac-
count ceases to be a volunteer firefighter savings ac-
count by reason of the application of section 222 to
such account.’’, and
(2) in subsection (e)(1), by striking ‘‘or’’ at the
end of subparagraph (E), by redesignating subpara-
graph (F) as subparagraph (G), and by inserting
after subparagraph (E) the following new subpara-
graph:
‘‘(F) a volunteer firefighter savings ac-
count described in section 222, or’’.
(f) FAILURE TO PROVIDE REPORTS ON VOLUNTEER
FIREFIGHTER SAVINGS ACCOUNTS.—Paragraph (2) of
section 6693(a) of such Code (relating to failure to provide
reports on certain tax-favored accounts or annuities) is
amended by striking ‘‘and’’ at the end of subparagraph
(C), by striking the period at the end of subparagraph (D)
and inserting ‘‘, and’’, and by adding at the end the fol-
lowing new subparagraph:
‘‘(E) section 222(g) (relating to volunteer
firefighter savings accounts).’’.
(g) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 408(a) is amended
by inserting ‘‘222(d)(3),’’ before ‘‘402(c)’’.
(2) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by
striking the item relating to section 222 and insert-
ing the following new items:
‘‘Sec. 222. Contributions to volunteer firefighter savings accounts.
‘‘Sec. 223. Cross reference.’’
(h) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
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