To amend the Internal Revenue Code of 1986 to provide for a refundable wage differential credit for activated military reservists.

April 8, 2004

Mr. DORGAN introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to provide for a refundable wage differential credit for activated military reservists.

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 `Military Reserve Mobilization Income Security Act of 2004'.

SEC. 2. REFUNDABLE CREDIT FOR ACTIVATED MILITARY RESERVISTS.

(a) IN GENERAL- Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by redesignating section 36 as section 37 and by inserting after section 35 the following new section:

`SEC. 36. WAGE DIFFERENTIAL FOR ACTIVATED RESERVISTS.

`(a) IN GENERAL- In the case of a qualified reservist, there shall be allowed as a credit against the tax imposed by this subtitle an amount equal to the qualified active duty wage differential of such qualified reservist for the taxable year.

`(b) QUALIFIED ACTIVE DUTY WAGE DIFFERENTIAL- For purposes of this section--

`(1) IN GENERAL- The term `qualified active duty wage differential' means the daily wage differential of the qualified active duty reservist multiplied by the number of days such qualified reservist participates in qualified reserve component duty during the taxable year, including time spent in a travel status.

`(2) DAILY WAGE DIFFERENTIAL- The daily wage differential is an amount equal to the lesser of--

`(A) the excess of--

`(i) the qualified reservist's average daily qualified compensation, over

`(ii) the qualified reservist's average daily military pay while participating in qualified reserve component duty to the exclusion of the qualified reservist's normal employment duties, or

`(B) $54.80.

`(3) AVERAGE DAILY QUALIFIED COMPENSATION-

`(A) IN GENERAL- The term `average daily qualified compensation' means--

`(i) the qualified compensation of the qualified reservist for the one-year period ending on the day before the date the qualified reservist begins qualified reserve component duty, divided by

`(ii) 365.

`(B) QUALIFIED COMPENSATION- The term `qualified compensation' means--

`(i) compensation which is normally contingent on the qualified reservist's presence for work and which would be includible in gross income, and

`(ii) compensation which is not characterized by the qualified reservist's employer as vacation or holiday pay, or as sick leave or pay, or as any other form of pay for a nonspecific leave of absence.

`(4) AVERAGE DAILY MILITARY PAY AND ALLOWANCES-

`(A) IN GENERAL- The term `average daily military pay and allowances' means--

`(i) the amount paid to the qualified reservist during the taxable year as military pay and allowances on account of the qualified reservist's participation in qualified reserve component duty, determined as of the date the qualified reservists begins qualified reserve component duty, divided by

`(ii) the total number of days the qualified reservist participates in qualified reserve component duty during the taxable year, including time spent in travel status.

`(B) MILITARY PAY AND ALLOWANCES- The term `military pay' means pay as that term is defined in section 101(21) of title 37, United States Code, and the term `allowances' means the allowances payable to a member of the Armed Forces of the United States under chapter 7 of that title.

`(5) QUALIFIED RESERVE COMPONENT DUTY- The term `qualified reserve component duty' means--

`(A) active duty performed, as designated in the reservist's military orders, in support of a contingency operation as defined in section 101(a)(13) of title 10, United States Code, or

`(B) full-time National Guard duty (as defined in section 101(19) of title 32, United States Code) which is ordered pursuant to a request by the President,

for a period under 1 or more orders described in subparagraph (A) or (B) of more than 90 consecutive days.

`(c) QUALIFIED RESERVIST- For purposes of this section--

`(1) IN GENERAL- The term `qualified reservist' means an individual who is engaged in normal employment and is a member of--

`(A) the National Guard (as defined by section 101(c)(1) of title 10, United States Code), or

`(B) the Ready Reserve (as defined by section 10142 of title 10, United States Code).

`(2) NORMAL EMPLOYMENT- The term `normal employment duties' includes self-employment.

`(d) DISALLOWANCE WITH RESPECT TO PERSONS ORDERED TO ACTIVE DUTY FOR TRAINING- No credit shall be allowed under subsection (a) to a qualified reservist who is called or ordered to active duty for any of the following types of duty:

`(1) Active duty for training under any provision of title 10, United States Code.

`(2) Training at encampments, maneuvers, outdoor target practice, or other exercises under chapter 5 of title 32, United States Code.

`(3) Full-time National Guard duty, as defined in section 101(d)(5) of title 10, United States Code.

`(e) CREDIT INCLUDED IN GROSS INCOME- Gross income includes the amount of the credit allowed the taxpayer under this section.'.

(b) CONFORMING AMENDMENTS-

(1) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting before the period `, or from section 36 of such Code'.

(2) The table of sections for subpart C of part IV of chapter 1 of the Internal Revenue Code of 1986 is amended by striking the last item and inserting the following new items:

`Sec. 36. Wage differential for activated reservists.

`Sec. 37. Overpayments of tax.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2003.

END