110th CONGRESS
1st Session
S. 326
To amend the Internal Revenue Code of 1986 to provide a special
period of limitation when uniformed services retirement pay is reduced as
result of award of disability compensation.
IN THE SENATE OF THE UNITED STATES
January 17, 2007
Mrs. LINCOLN (for herself, Mr. THOMAS, Mr. BINGAMAN, Mr. DURBIN, Ms. MIKULSKI,
Mr. AKAKA, Mr. PRYOR, Ms. KLOBUCHAR, Mr. ENZI, Mr. HARKIN, Mr. ROCKEFELLER,
and Mr. KERRY) introduced the following bill; which was read twice and referred
to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to provide a special
period of limitation when uniformed services retirement pay is reduced as
result of award of disability compensation.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Disabled Veterans Tax Fairness Act of 2007'.
SEC. 2. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED SERVICES RETIRED PAY
IS REDUCED AS A RESULT OF AWARD OF DISABILITY COMPENSATION.
(a) In General- Subsection (d) of section 6511 (relating to special rules
applicable to income taxes) is amended by adding at the end the following
new paragraph:
`(8) SPECIAL RULES WHEN UNIFORMED SERVICES RETIRED PAY IS REDUCED AS A
RESULT OF AWARD OF DISABILITY COMPENSATION-
`(A) PERIOD OF LIMITATION ON FILING CLAIM- If the claim for credit or
refund relates to an overpayment of tax imposed by subtitle A on account
of--
`(i) the reduction of uniformed services retired pay computed under
section 1406 or 1407 of title 10, United States Code, or
`(ii) the waiver of such pay under section 5305 of title 38 of such
Code,
as a result of an award of compensation under title 38 of such Code
pursuant to a determination by the Secretary of Veterans Affairs, the
3-year period of limitation prescribed in subsection (a) shall be extended,
for purposes of permitting a credit or refund based upon the amount
of such reduction or waiver, until the end of the 1-year period beginning
on the date of such determination.
`(B) LIMITATION TO 5 TAXABLE YEARS- Subparagraph (A) shall not apply
with respect to any taxable year which began more than 5 years before
the date of such determination.'.
(b) Effective Date- The amendment made by subsection (a) shall apply to
claims for credit or refund filed after the date of the enactment of this
Act.
(c) Transition Rules- In the case of a determination described in paragraph
(8) of section 6511(d) of the Internal Revenue Code of 1986 (as added by
this section) which is made by the Secretary of Veterans Affairs after December
31, 2000, and before the date of the enactment of this Act, such paragraph--
(1) shall not apply with respect to any taxable year which began before
January 1, 2001, and
(2) shall be applied by substituting `the date of the enactment of the
Disabled Veterans Tax Fairness Act of 2007' for `the date of such determination'
in subparagraph (A) thereof.
END
