THIS IS A PRESS RELEASE FROM THE OFFICE OF UNITED STATES SENATOR JAY ROCKEFELLER.

Washington, D.C – Last week, the U.S. Senate gave final approval to legislation cosponsored by Senator Jay Rockefeller that will help West Virginia’s veterans, National Guard and Reservists, and their employers keep extra money in their pockets. The bill also helps West Virginia’s Peace Corps and AmeriCorps volunteers who are working overseas.

“This is absolutely the right thing to do for West Virginians who are so bravely serving our nation in uniform in Iraq and Afghanistan or volunteering around the world. With our economy in a recession, this bill will go a long way to helping them save for the future, continue to make their mortgage payments on time, or plan for their children’s higher education,” Rockefeller said. “Moreover, we’ve made it even easier for an employer to offer the family of a deployed employee their salary so they can continue to make ends meet.”

The Senate by unanimous voice vote approved the Heroes Earnings Assistance and Relief Tax Act (HEART Act) which will provide $1.2 billion in tax relief to benefit veterans and military families nationwide. The bill includes tax cuts for members of the military who are receiving combat pay, saving for retirement or trying to purchase a home. It also provides benefits for employers of military reservists and for members of the National Guard who provide assistance to an employee’s family when they are called to active duty. The tax incentives will begin to take effect next year.

The HEART Act included a number of provisions in the Rockefeller co-sponsored Defenders of Freedom Tax Relief Act, which passed the Senate earlier this year. The House of Representatives passed a similar measure this week. The bill now goes to President Bush who is expected to sign it into law soon.

Highlights of the bill include:

For Active Duty and Reservists

A permanent allowance for soldiers to count their non-taxable combat pay when figuring their eligibility for the earned income tax credit (EITC). The EITC is a refundable federal income tax credit that puts cash in the hands of low-income working individuals and families.
The ability for active duty troops to withdraw money from retirement plans, and an allowance of two years to replace the funds without tax penalty.
A provision for a soldier’s basic housing allowance to be excluded when their income status is being determined for purposes of a developer’s eligibility for low-income housing credits and tax exempt bonds.
The ability for families of Reservists killed in the line of duty to collect life insurance and other benefits provided by the civilian employer.
The ability for families of soldiers killed in the line of duty to contribute up to 100 percent of survivor benefits to retirement savings accounts or to education savings accounts.

For Employers

A tax cut for small businesses when they continue paying some salary to members of the National Guard and Reserve who are called to duty.
An end to cumbersome rules for reporting of income when companies continue paying some salary to members of the National Guard and Reserve who are called to duty. This makes it easier for reservists to file their taxes and simpler for employers to keep contributing to those employees’ retirement plans.

For Veterans

Extension of a provision that gives retired veterans more time to claim a tax refund on some types of disability benefit payments.
Authority for the IRS to treat gifts of thanks from states to veterans—such as payments of excess state revenue—as nontaxable gifts.
A permanent allowance for all veterans to use qualified mortgage bonds to purchase their homes.

For Peace Corps and AmeriCorps volunteers

A permanent extension of a provision that gives Peace Corps volunteers a longer period of time to meet residency requirements necessary to exclude profits from the sale of their home from capital gains tax.
The ability to disregard allowances paid to all AmeriCorps volunteers for the purpose of determining Social Security eligibility and benefits.

Senator Rockefeller is a senior member of the Senate Finance Committee which drafted the bill.