To provide compensation to members of the reserve components who suffer discrepancies between their military and nonmilitary compensation as a result of being ordered to serve on active duty for a period of more than 30 days, and for other purposes.

March 19, 2003

Mr. LANTOS (for himself, Mr. WEXLER, Mr. GRAVES, Ms. WATSON, Mr. BROWN of Ohio, and Mr. FALEOMAVAEGA) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Government Reform and Armed Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To provide compensation to members of the reserve components who suffer discrepancies between their military and nonmilitary compensation as a result of being ordered to serve on active duty for a period of more than 30 days, and for other purposes.

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 `Equity for Reservists Pay Act of 2003'.

SEC. 2. NONREDUCTION IN PAY WHILE FEDERAL EMPLOYEE IS SERVING ON ACTIVE DUTY IN A RESERVE COMPONENT OF THE UNIFORMED SERVICES.

(a) IN GENERAL- Subchapter IV of chapter 55 of title 5, United States Code, is amended by adding at the end the following new section:

`Sec. 5538. Nonreduction in pay while serving on active duty in a reserve component

`(a) An employee who is also a member of a reserve component and is absent from a position of employment with the Federal Government under a call or order to serve on active duty for a period of more than 30 days shall be entitled to receive, for each pay period described in subsection (b), an amount equal to the difference (if any) between--

`(1) the amount of civilian basic pay that would otherwise have been payable to the employee for such pay period if the employee's civilian employment with the Government had not been interrupted by the service on active duty; and

`(2) the amount of military compensation that is payable to the employee for the service on active duty and is allocable to such pay period.

`(b)(1) Amounts under this section shall be payable with respect to each pay period (which would otherwise apply if the employee's civilian employment had not been interrupted) that occurs--

`(A) while the employee serves on active duty for a period of more than 30 days;

`(B) while the employee is hospitalized for, or convalescing from, an illness or injury incurred in, or aggravated during, the performance of such active duty; or

`(C) during the 14-day period beginning at the end of such active duty or the end of the period referred to in subparagraph (B).

`(2) Paragraph (1) shall not apply with respect to a pay period for which the employee receives civilian basic pay (including by taking any annual, military, or other paid leave) to which the employee is entitled by virtue of the employee's civilian employment with the Government.

`(c) Any amount payable under this section to an employee shall be paid--

`(1) by employing agency of the employee;

`(2) from the appropriations or fund that would be used to pay the employee if the employee were in a pay status; and

`(3) to the extent practicable, at the same time and in the same manner as would civilian basic pay if the employee's civilian employment had not been interrupted.

`(d) In consultation with Secretary of Defense, the Office of Personnel Management shall prescribe such regulations as may be necessary to carry out this section.

`(e)(1) In consultation with the Office, the head of each agency referred to in section 2302(a)(2)(C)(ii) of this title shall prescribe procedures to ensure that the rights under this section apply to the employees of such agency.

`(2) The Administrator of the Federal Aviation Administration shall, in consultation with the Office, prescribe procedures to ensure that the rights under this section apply to the employees of that agency.

`(f) In this section:

`(1) The terms `active duty for a period of more than 30 days', `member', and `reserve component' have the meanings given such terms in section 101 of title 37.

`(2) The term `civilian basic pay' includes any amount payable under section 5304 of this title.

`(3) The term `employing agency', as used with respect to an employee entitled to any payments under this section, means the agency or other entity of the Government (including an agency referred to in section 2302(a)(2)(C)(ii) of this title) with respect to which the employee has reemployment rights under chapter 43 of title 38.

`(4) The term `military compensation' has the meaning given the term `pay' in section 101(21) of title 37.'.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 55 of title 5, United States Code, is amended by inserting after the item relating to section 5537 the following new item:

`5538. Nonreduction in pay while serving on active duty in a reserve component.'.

(c) APPLICATION OF AMENDMENT- Section 5538 of title 5, United States Code, as added by subsection (a), shall apply with respect to pay periods (as described in subsection (b) of such section) beginning on or after the date of the enactment of this Act.

SEC. 3. ASSISTANCE FOR STATE AND LOCAL GOVERNMENTS THAT CONTINUE TO PAY EMPLOYEES WHO SERVE ON ACTIVE DUTY IN A RESERVE COMPONENT OF THE UNIFORMED SERVICES.

(a) IN GENERAL- Chapter 17 of title 37, United States Code, is amended by adding at the end the following new section:

`Sec. 910. Assistance for State and local governments that continue to pay employees who serve on active duty

`(a) CONTINUATION OF CIVILIAN BASIC PAY- It is the purpose of this section to encourage States and local governments to continue to pay a portion of the civilian compensation of those employees who are also members of a reserve component and are absent from a position of employment with the State or local government under a call or order to serve on active duty for a period of more than 30 days so that the employees receive compensation in an amount that, when taken together with their military pay, is at least equal to their civilian compensation.

`(b) REIMBURSEMENT OFFERED- (1) At the request of a State or local government that continues to pay all or a portion of the civilian compensation of an employee described in subsection (a), the Secretary concerned shall reimburse the State or local government for 50 percent of the civilian compensation paid by the State or local government for each pay period described in subsection (c), but not to exceed 50 percent of the difference (if any) between--

`(A) the amount of civilian compensation that would otherwise have been payable to the employee for such pay period if the employee's civilian employment with the State or local government had not been interrupted by the service on active duty; and

`(B) the amount of military pay that is payable to the employee for the service on active duty and is allocable to such pay period.

`(2) If the pay periods described in subsection (c) extend more than nine consecutive months after the first day of the first month during which the employee began to serve on active duty for a period of more than 30 days, the reimbursement rate shall become 100 percent for the subsequent payments. However, as is the case under paragraph (1), reimbursement shall be provided only for the difference (if any) between--

`(A) the amount of civilian compensation that would otherwise have been payable to the employee for such pay period if the employee's civilian employment with the State or local government had not been interrupted by the service on active duty; and

`(B) the amount of military pay that is payable to the employee for the service on active duty and is allocable to such pay period.

`(c) PAY PERIODS- Reimbursement shall be provided under this section with respect to each pay period (which would otherwise apply if the employee's civilian employment had not been interrupted) that occurs--

`(1) while the employee serves on active duty for a period of more than 30 days;

`(2) while the employee is hospitalized for, or convalescing from, an illness or injury incurred in, or aggravated during, the performance of such active duty; or

`(3) during the 14-day period beginning at the end of such active duty or the end of the period referred to in subparagraph (B).

`(d) EFFECT OF FAILURE TO RETURN TO EMPLOYMENT- (1) If an employee described in subsection (a), with respect to whom reimbursement is provided to a State or local government under this section, fails to report or apply for employment or reemployment with the State or local government by the end of the period referred to in subsection (c)(3), the employee shall refund to the Secretary concerned the total amount of the reimbursement provided with respect to the employee.

`(2) Subject to paragraph (3), an obligation to refund moneys to the United States imposed under paragraph (1) is for all purposes a debt owed to the United States.

`(3) The Secretary concerned may waive, in whole or in part, a refund required under paragraph (1) if the Secretary concerned determines that recovery would be against equity and good conscience or would be contrary to the best interests of the United States.

`(4) A discharge in bankruptcy under title 11 that is entered less than five years after the end of the period referred to in subsection (c)(3) does not discharge the employee from a debt arising under paragraph (1). This paragraph applies to any case commenced under title 11 after the date of the enactment of this section.

`(e) REGULATIONS- The Secretaries concerned shall prescribe regulations to carry out this section.

`(f) DEFINITIONS- In this section:

`(1) The term `civilian compensation' means the wages or salary that an employee of a State or local government normally receives from the employee's employment by the State or local government.

`(2) The term `local government' means an agency or political subdivision of a State.

`(3) The term `military pay' has the meaning given the term `pay' in section 101(21) of this title.

`(4) The term `State' means each of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, and other territories or possessions of the United States.'.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 17 of title 37, United States Code, is amended by inserting after the item relating to section 909 the following new item:

`910. Assistance for State and local governments that continue to pay employees who serve on active duty.'.

(c) APPLICATION OF AMENDMENT- Section 910 of title 37, United States Code, as added by subsection (a), shall apply with respect to pay periods (as described in subsection (b) of such section) beginning on or after the date of the enactment of this Act.

SEC. 4. ACTIVE-DUTY RESERVE COMPONENT EMPLOYEE CREDIT ADDED TO GENERAL BUSINESS CREDIT.

(a) ADDITION OF CREDIT- Subpart D of part IV of subchapter 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. ACTIVE-DUTY RESERVE COMPONENT EMPLOYEE CREDIT.

`(a) GENERAL RULE- For purposes of section 38, in the case of an employer, the active-duty reserve component employee credit determined under this section for the taxable year is an amount equal to 50 percent of the compensation paid by the employer to an employee who is also a member of a reserve component during the taxable year when the employee was absent from employment for a reason described in subsection (b), but not to exceed 50 percent of the difference (if any) between--

`(1) the amount of compensation that would otherwise have been payable to the employee during such absence if the employee's employment with the employer had not been interrupted by the employee's absence; and

`(2) the amount of military pay that is payable to the employee during the absence.

`(b) COVERED PAY PERIODS- Subsection (a) shall apply with respect to an employee who is also a member of a reserve component--

`(1) while the employee serves on active duty for a period of more than 30 days;

`(2) while the employee is hospitalized for, or convalescing from, an illness or injury incurred in, or aggravated during, the performance of such active duty; or

`(3) during the 14-day period beginning at the end of such active duty or the end of the period referred to in subparagraph (B).

`(c) LIMITATION- No credit shall be allowed under subsection (a) with respect to an employee on any day on which the employee was not scheduled to work (for a reason other than such service on active duty) and ordinarily would not have worked.

`(d) DEFINITIONS- For purposes of this section--

`(1) The terms `active duty for a period of more than 30 days', `member', and `reserve component' have the meanings given such terms in section 101 of title 37, United States Code.

`(2) The term `compensation' means any remuneration for employment, whether in cash or in kind, which is paid or incurred by a taxpayer and which is deductible from the taxpayer's gross income under section 162(a)(1).'.

(b) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT- Subsection (b) of section 38 of such Code (relating to general business credit) is amended by striking `plus' at the end of paragraph (14), by striking the period at the end of paragraph (15) and inserting `, plus', and by adding at the end the following new paragraph:

`(16) the active-duty reserve component employee credit determined under section 45G(a).'.

(c) CONFORMING AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 45F the following new item:

`Sec. 45G. Active-duty reserve component employee credit.'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.

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