HEART Act gives troops tax breaks totaling $2 billion
June 15, 2008
YOKOTA AIR BASE, Japan — Two billion dollars. That’s the size of the tax breaks that would be given to servicemembers and their families in a bill awaiting signature on the president’s desk.
The Heroes Earnings Assistance and Relief Tax Act, which Congress passed unanimously on May 22, introduces a number of tax benefits for servicemembers as well as extends or makes permanent several expiring benefits.
One major provision of the act allows servicemembers married to foreign nationals to claim the 2007 economic stimulus credit on a joint tax return even if the spouse doesn’t have a Social Security number.
"This bill is called the HEART Act, but I would prefer to call it the thank-you bill — thank you to the tens of thousands of American men and women who have responded to America’s call to fight this war and place themselves in harm’s way to serve this nation," House Ways and Means Committee Chairman Charles B. Rangel, D-N.Y., said in a recent news release.
The credit provides $600 for each spouse and $300 for each dependent.
Currently, if one member of a couple filing a joint 2007 return listed an individual taxpayer identification number rather than a Social Security number, the entire family would be ineligible for the credit.
"This legislation corrects this injustice to ensure that our active-duty military families are not disadvantaged under our tax laws," Rangel said.
However, it remains unclear how the additional tax rebates would be processed or paid.
"The economic stimulus package payments have been automatically paid by the IRS. There has been no indication that this will change with the new act," said Capt. Paul Gesl, chief, Civil Law, Office of the Staff Judge Advocate at Yokota Air Base. "I would expect more details from the [Internal Revenue Service] if the president signs the bill and makes it a law."
The bill also states that the change to stimulus package payouts affects only current mility members, including reservists, and gives no mention of retirees or Department of Defense civilian employees.
The cost of the tax breaks is being offset by three revenue provisions, one of which closes a tax loophole used by some U.S. government contractors.
In the past, government contractors such as Kellogg, Brown and Root Inc. have avoided paying Social Security and Medicare payroll taxes on their U.S. employees by hiring them through offshore shell companies.
Under the HEART Act, employees of such subsidiary companies performing work for the government would be treated as U.S. employees for purposes of collecting Social Security and Medicare employment taxes. According to a House Ways and Means Committee summary of the bill, the provision alone is expected to raise $840 million over a 10-year period.
For more information on the HEART Act, go to the Library of Congress’ legislative Web site, http://thomas.loc.gov/, and search for "HR 6081."
Other provisions in the HEART Act