I
108TH CONGRESS
1ST SESSION
H. R. 2168
To amend title 10, United States Code, to revise the age and service require-
ments for eligibility to receive retired pay for non-regular service; to
provide TRICARE eligibility for members of the Selected Reserve of
the Ready Reserve and their families; to amend the Internal Revenue
Code of 1986 to allow employers a credit against income tax with
respect to employees who participate in the military reserve components
and to allow a comparable credit for participating reserve component
self-employed individuals, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 20, 2003
Mr. ISRAEL introduced the following bill; which was referred to the Committee
on Armed Services, and in addition to the Committee on Ways and
Means, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned
A BILL
To amend title 10, United States Code, to revise the age
and service requirements for eligibility to receive retired
pay for non-regular service; to provide TRICARE eligi-
bility for members of the Selected Reserve of the Ready
Reserve and their families; to amend the Internal Rev-
enue Code of 1986 to allow employers a credit against
income tax with respect to employees who participate
in the military reserve components and to allow a com-
parable credit for participating reserve component self-
employed individuals, and for other purposes.
October 5, 1994, the number of years of qualifying
service under this subparagraph shall be eight; and
‘‘(C) is not entitled, under any other provision
of law, to retired pay from an armed force or re-
tainer pay as a member of the Fleet Reserve or the
Fleet Marine Corps Reserve.
‘‘(2) The combinations of minimum age and min-
imum years of service required of a person under subpara-
graph (A) of paragraph (1) for entitlement to retired pay
as provided in such paragraph are as follows:
‘‘Age, in years, is
The minimum years of service
at least:
required for that age is:
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20.’’.
(b) 20-YEAR LETTER.—Subsection (d) of such sec-
tion is amended by striking ‘‘the years of service required
for eligibility for retired pay under this chapter’’ in the
first sentence and inserting ‘‘20 years of service computed
under section 12732 of this title.’’.
(c) EFFECTIVE DATE.—This section and the amend-
ments made by this subsection (a) shall take effect on the
first day of the first month beginning on or after the date
of the enactment of this Act and shall apply with respect
to retired pay payable for that month and subsequent
months.
SEC. 2. EXPANDED ELIGIBILITY OF READY RESERVISTS
FOR TRICARE.
(a) ELIGIBILITY.—Chapter 55 of title 10, United
States Code, is amended by inserting after section 1097b
the following new section:
‘‘§ 1097c. TRICARE program: Reserves not on active
duty
‘‘(a) ELIGIBILITY.—A member of the Selected Re-
serve of the Ready Reserve of the armed forces not other-
wise eligible for enrollment in the TRICARE program
under this chapter for the same benefits as a member of
the armed forces eligible under section 1074(a) of this title
may enroll for self or for self and family for the same ben-
efits under this section.
‘‘(b) PREMIUMS.—(1) An enlisted member of the
armed forces enrolled in the TRICARE program under
this section shall pay an annual premium of $330 for self
only coverage and $560 for self and family coverage for
which enrolled under this section.
‘‘(2) An officer of the armed forces enrolled in the
TRICARE program under this section shall pay an annual
premium of $380 for self only coverage and $610 for self
and family coverage for which enrolled under this sec-
tion.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of such chapter is amended by inserting
after the item relating to section 1097b the following new
item:
‘‘1097c. Section 101 head.’’.
SEC. 3. CREDIT FOR EMPLOYMENT OF RESERVE COMPO-
NENT PERSONNEL.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter 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. RESERVE COMPONENT EMPLOYMENT CREDIT.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the reserve component employment credit determined
under this section is an amount equal to the sum of—
‘‘(1) the employment credit with respect to all
qualified employees of the taxpayer, plus
‘‘(2) the self-employment credit of a qualified
self-employed taxpayer.
‘‘(b) EMPLOYMENT CREDIT.—For purposes of this
section—
‘‘(1) IN
GENERAL.—The employment credit
with respect to a qualified employee of the taxpayer
for any taxable year is equal to the excess, if any,
of—
‘‘(A) the qualified employee’s average daily
qualified compensation for the taxable year,
over
‘‘(B) the average daily military pay and al-
lowances received by the qualified employee
during the taxable year,
while participating in qualified reserve component
duty to the exclusion of the qualified employee’s nor-
mal employment duties for the number of days the
qualified employee participates in qualified reserve
component duty during the taxable year, including
time spent in a travel status. The employment cred-
it, with respect to all qualified employees, is equal to
the sum of the employment credits for each qualified
employee under this subsection.
‘‘(2) AVERAGE
DAILY
QUALIFIED
COMPENSA-
TION AND AVERAGE DAILY MILITARY PAY AND AL-
LOWANCES.—As used with respect to a qualified
employee—
‘‘(A) the term ‘average daily qualified com-
pensation’ means the qualified compensation of
the qualified employee for the taxable year di-
vided by the difference between—
‘‘(i) 365, and
‘‘(ii) the number of days the qualified
employee participates in qualified reserve
component duty during the taxable year,
including time spent in a travel status, and
‘‘(B) the term ‘average daily military pay
and allowances’ means—
‘‘(i) the amount paid to the qualified
employee during the taxable year as mili-
tary pay and allowances on account of the
qualified employee’s participation in quali-
fied reserve component duty, divided by
‘‘(ii) the total number of days the
qualified employee participates in qualified
reserve component duty, including time
spent in travel status.
‘‘(3) QUALIFIED COMPENSATION.—When used
with respect to the compensation paid or that would
have been paid to a qualified employee for any pe-
riod during which the qualified employee participates
in qualified reserve component duty, the term ‘quali-
fied compensation’ means—
‘‘(A) compensation which is normally con-
tingent on the qualified employee’s presence for
work and which would be deductible from the
taxpayer’s gross income under section 162(a)(1)
if the qualified employee were present and re-
ceiving such compensation,
‘‘(B) compensation which is not character-
ized by the taxpayer as vacation or holiday pay,
or as sick leave or pay, or as any other form
of pay for a nonspecific leave of absence, and
with respect to which the number of days the
qualified employee participates in qualified re-
serve component duty does not result in any re-
duction in the amount of vacation time, sick
leave, or other nonspecific leave previously cred-
ited to or earned by the qualified employee, and
‘‘(C) group health plan costs (if any) with
respect to the qualified employee.
‘‘(4) QUALIFIED EMPLOYEE.—The term ‘quali-
fied employee’ means a person who—
‘‘(A) has been an employee of the taxpayer
for the 21-day period immediately preceding the
period during which the employee participates
in qualified reserve component duty, and
‘‘(B) is a member of the Ready Reserve of
a reserve component of an Armed Force of the
United States as defined in sections 10142 and
10101 of title 10, United States Code.
the taxpayer for such year (within the meaning
of section 162(l)) divided by the difference
between—
‘‘(i) 365, and
‘‘(ii) the number of days the taxpayer
participates in qualified reserve component
duty during the taxable year, including
time spent in a travel status, and
‘‘(B) the term ‘average daily military pay
and allowances’ means—
‘‘(i) the amount paid to the taxpayer
during the taxable year as military pay
and allowances on account of the tax-
payer’s participation in qualified reserve
component duty, divided by
‘‘(ii) the total number of days the tax-
payer participates in qualified reserve com-
ponent duty, including time spent in travel
status.
‘‘(3) QUALIFIED SELF-EMPLOYED TAXPAYER.—
The term ‘qualified self-employed taxpayer’ means a
taxpayer who—
‘‘(A) has net earnings from self-employ-
ment (as defined in section 1402) for the tax-
able year, and
‘‘(B) is a member of the Ready Reserve of
a reserve component of an Armed Force of the
United States.
‘‘(d) CREDIT IN ADDITION TO DEDUCTION.—The
employment credit provided in this section is in addition
to any deduction otherwise allowable with respect to com-
pensation actually paid to a qualified employee during any
period the qualified employee participates in qualified re-
serve component duty to the exclusion of normal employ-
ment duties.
‘‘(e) LIMITATIONS.—
‘‘(1) MAXIMUM CREDIT.—
‘‘(A) IN GENERAL.—The credit allowed by
subsection (a) for the taxable year shall not ex-
ceed $25,000 with respect to each qualified em-
ployee.
‘‘(B) CONTROLLED
GROUPS.—For pur-
poses of applying the limitation in subpara-
graph (A)—
‘‘(i) all members of a controlled group
shall be treated as one taxpayer, and
‘‘(ii) such limitations shall be allo-
cated among the members of such group in
such manner as the Secretary may pre-
scribe.
For purposes of this subparagraph, all persons
treated as a single employer under subsection
(a) or (b) of section 52 or subsection (m) or (o)
of section 414 shall be treated as members of
a controlled group.
‘‘(2) DISALLOWANCE FOR FAILURE TO COMPLY
WITH EMPLOYMENT OR REEMPLOYMENT RIGHTS OF
MEMBERS OF THE RESERVE COMPONENTS OF THE
ARMED FORCES OF THE UNITED STATES.—No credit
shall be allowed under subsection (a) to a taxpayer
for—
‘‘(A) any taxable year in which the tax-
payer is under a final order, judgment, or other
process issued or required by a district court of
the United States under section 4323 of title 38
of the United States Code with respect to a vio-
lation of chapter 43 of such title, and
‘‘(B) the 2 succeeding taxable years.
‘‘(3) DISALLOWANCE WITH RESPECT TO PER-
SONS ORDERED TO ACTIVE DUTY FOR TRAINING.—
No credit shall be allowed under subsection (a) to a
taxpayer with respect to any period for which the
person on whose behalf the credit would otherwise be
allowable is called or ordered to active duty for any
of the following types of duty:
‘‘(A) active duty for training under any
provision of title 10, United States Code,
‘‘(B) training at encampments, maneuvers,
outdoor target practice, or other exercises under
chapter 5 of title 32, United States Code, or
‘‘(C) full-time National Guard duty, as de-
fined in section 101(d)(5) of title 10, United
States Code.
‘‘(f) GENERAL DEFINITIONS AND SPECIAL RULES.—
‘‘(1) MILITARY
PAY
AND
ALLOWANCES.—The
term ‘military pay’ means pay as that term is de-
fined in section 101(21) of title 37, United States
Code, and the term ‘allowances’ means the allow-
ances payable to a member of the Armed Forces of
the United States under chapter 7 of that title.
‘‘(2) 
QUALIFIED
RESERVE
COMPONENT
DUTY.—The term ‘qualified reserve component duty’
includes only active duty performed, as designated in
the reservist’s military orders, in support of a con-
tingency operation as defined in section 101(a)(13)
of title 10, United States Code.
‘‘(3) NORMAL
EMPLOYMENT
AND
SELF-EM-
PLOYMENT DUTIES.—A person shall be deemed to
be participating in qualified reserve component duty
to the exclusion of normal employment or self-em-
ployment duties if the person does not engage in or
undertake any substantial activity related to the per-
son’s normal employment or self-employment duties
while participating in qualified reserve component
duty unless in an authorized leave status or other
authorized absence from military duties. If a person
engages in or undertakes any substantial activity re-
lated to the person’s normal employment or self-em-
ployment duties at any time while participating in a
period of qualified reserve component duty, unless
during a period of authorized leave or other author-
ized absence from military duties, the person shall
be deemed to have engaged in or undertaken such
activity for the entire period of qualified reserve
component duty.
‘‘(4) CERTAIN RULES TO APPLY.—Rules similar
to the rules of subsections (c), (d), and (e) of section
52 shall apply for purposes of this section.’’.
(b) CONFORMING AMENDMENT.—Section 38(b) of
such Code (relating to general business credit) is
amended—
(1) by striking ‘‘plus’’ at the end of paragraph
(14),
(2) by striking the period at the end of para-
graph (15) and inserting ‘‘, plus’’, and
(3) by adding at the end the following new
paragraph:
‘‘(16) the reserve component employment credit
determined under section 45G(a).’’.
(c) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
of such Code is amended by inserting after the item relat-
ing to section 45F the following new item:
‘‘Sec. 45G. Reserve component employment credit.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2002.
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