Pl 110-245

PUBLIC LAW 110–245—JUNE 17, 2008

dkrause on GSDDPC44 with PUBLIC LAWS

HEROES EARNINGS ASSISTANCE AND RELIEF
TAX ACT OF 2008

VerDate Aug 31 2005

09:44 Jun 23, 2008

Jkt 069139

PO 00245

Frm 00001

Fmt 6579

Sfmt 6579

E:\PUBLAW\PUBL245.110

APPS10

PsN: PUBL245

122 STAT. 1624

PUBLIC LAW 110–245—JUNE 17, 2008

Public Law 110–245
110th Congress
An Act
June 17, 2008
[H.R. 6081]
Heroes Earnings
Assistance and
Relief Tax Act of
2008.
26 USC 1 note.
26 USC 1 et seq.

To amend the Internal Revenue Code of 1986 to provide benefits for military
personnel, 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, ETC.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Heroes
Earnings Assistance and Relief Tax Act of 2008’’.
(b) REFERENCE.—Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms
of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) TABLE OF CONTENTS.—The table of contents for this Act
is as follows:
Sec. 1. Short title, etc.

dkrause on GSDDPC44 with PUBLIC LAWS

TITLE I—BENEFITS FOR MILITARY
Sec. 101. Recovery rebate provided to military families.
Sec. 102. Election to include combat pay as earned income for purposes of earned
income tax credit.
Sec. 103. Modification of mortgage revenue bonds for veterans.
Sec. 104. Survivor and disability payments with respect to qualified military service.
Sec. 105. Treatment of differential military pay as wages.
Sec. 106. Special period of limitation when uniformed services retired pay is reduced as a result of award of disability compensation.
Sec. 107. Distributions from retirement plans to individuals called to active duty.
Sec. 108. Authority to disclose return information for certain veterans programs
made permanent.
Sec. 109. Contributions of military death gratuities to Roth IRAs and Education
Savings Accounts.
Sec. 110. Suspension of 5-year period during service with the Peace Corps.
Sec. 111. Credit for employer differential wage payments to employees who are active duty members of the uniformed services.
Sec. 112. State payments to service members treated as qualified military benefits.
Sec. 113. Permanent exclusion of gain from sale of a principal residence by certain
employees of the intelligence community.
Sec. 114. Special disposition rules for unused benefits in health flexible spending
arrangements of individuals called to active duty.
Sec. 115. Technical correction related to exclusion of certain property tax rebates
and other benefits provided to volunteer firefighters and emergency
medical responders.
TITLE II—IMPROVEMENTS IN SUPPLEMENTAL SECURITY INCOME
Sec. 201. Treatment of uniformed service cash remuneration as earned income.
Sec. 202. State annuities for certain veterans to be disregarded in determining supplemental security income benefits.
Sec. 203. Exclusion of AmeriCorps benefits for purposes of determining supplemental security income eligibility and benefit amounts.

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00002

Fmt 6580

Sfmt 6582

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1625

Sec. 204. Effective date.
TITLE III—REVENUE PROVISIONS
Sec. 301. Revision of tax rules on expatriation.
Sec. 302. Certain domestically controlled foreign persons performing services under
contract with United States Government treated as American employers.
Sec. 303. Increase in minimum penalty on failure to file a return of tax.
TITLE IV—PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL
HEALTH BENEFITS
Sec. 401. Parity in the application of certain limits to mental health benefits.

TITLE I—BENEFITS FOR MILITARY
SEC. 101. RECOVERY REBATE PROVIDED TO MILITARY FAMILIES.

(a) IN GENERAL.—Subsection (h) of section 6428 (relating to
identification number requirement) is amended by adding at the
end the following new paragraph:
‘‘(3) SPECIAL RULE FOR MEMBERS OF THE ARMED FORCES.—
Paragraph (1) shall not apply to a joint return where at least
1 spouse was a member of the Armed Forces of the United
States at any time during the taxable year.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the amendments made by section
101 of the Economic Stimulus Act of 2008.

26 USC 6428.

26 USC 6428
note.

SEC. 102. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME
FOR PURPOSES OF EARNED INCOME TAX CREDIT.

(a) IN GENERAL.—Clause (vi) of section 32(c)(2)(B) (defining
earned income) is amended to read as follows:
‘‘(vi) a taxpayer may elect to treat amounts
excluded from gross income by reason of section 112
as earned income.’’.
(b) CONFORMING AMENDMENT.—Paragraph (4) of section 6428(e)
is amended by striking ‘‘except that—’’ and all that follows through
‘‘(B) such term shall’’ and inserting ‘‘except that such term shall’’.
(c) SUNSET NOT APPLICABLE.—Section 105 of the Working Families Tax Relief Act of 2004 (relating to application of EGTRRA
sunset to this title) shall not apply to section 104(b) of such Act.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years ending after December 31, 2007.

26 USC 32 note.

26 USC 32 note.

SEC. 103. MODIFICATION OF MORTGAGE REVENUE BONDS FOR VETERANS.

dkrause on GSDDPC44 with PUBLIC LAWS

(a) QUALIFIED MORTGAGE BONDS USED TO FINANCE RESIDENCES
FOR VETERANS WITHOUT REGARD TO FIRST-TIME HOMEBUYER
REQUIREMENT.—Subparagraph (D) of section 143(d)(2) (relating to
exceptions) is amended by striking ‘‘and before January 1, 2008’’.
(b) INCREASE IN BOND LIMITATION FOR ALASKA, OREGON, AND
WISCONSIN.—Clause (ii) of section 143(l)(3)(B) (relating to State
veterans limit) is amended by striking ‘‘$25,000,000’’ each place
it appears and inserting ‘‘$100,000,000’’.
(c) DEFINITION OF QUALIFIED VETERAN.—Paragraph (4) of section 143(l) (defining qualified veteran) is amended to read as follows:
‘‘(4) QUALIFIED VETERAN.—For purposes of this subsection,
the term ‘qualified veteran’ means any veteran who—
‘‘(A) served on active duty, and

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00003

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

122 STAT. 1626

26 USC 143 note.
Applicability.
26 USC 143 note.

PUBLIC LAW 110–245—JUNE 17, 2008

‘‘(B) applied for the financing before the date 25 years
after the last date on which such veteran left active
service.’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to bonds issued after December 31, 2007.
(e) TRANSITION RULE.—In the case of any bond issued after
December 31, 2007, and before the date of the enactment of this
Act, subparagraph (B) of section 143(l)(4) of the Internal Revenue
Code of 1986, as amended by this section, shall be applied by
substituting ‘‘30 years’’ for ‘‘25 years’’.
SEC. 104. SURVIVOR AND DISABILITY PAYMENTS WITH RESPECT TO
QUALIFIED MILITARY SERVICE.

26 USC 401.

dkrause on GSDDPC44 with PUBLIC LAWS

Applicability.

VerDate Aug 31 2005

20:15 Jun 21, 2008

(a) PLAN QUALIFICATION REQUIREMENT FOR DEATH BENEFITS
UNDER USERRA-QUALIFIED ACTIVE MILITARY SERVICE.—Subsection
(a) of section 401 (relating to requirements for qualification) is
amended by inserting after paragraph (36) the following new paragraph:
‘‘(37) DEATH BENEFITS UNDER USERRA-QUALIFIED ACTIVE
MILITARY SERVICE.—A trust shall not constitute a qualified
trust unless the plan provides that, in the case of a participant
who dies while performing qualified military service (as defined
in section 414(u)), the survivors of the participant are entitled
to any additional benefits (other than benefit accruals relating
to the period of qualified military service) provided under the
plan had the participant resumed and then terminated employment on account of death.’’.
(b) TREATMENT IN THE CASE OF DEATH OR DISABILITY
RESULTING FROM ACTIVE MILITARY SERVICE FOR BENEFIT ACCRUAL
PURPOSES.—Subsection (u) of section 414 (relating to special rules
relating to veterans’ reemployment rights under USERRA) is
amended by redesignating paragraphs (9) and (10) as paragraphs
(10) and (11), respectively, and by inserting after paragraph (8)
the following new paragraph:
‘‘(9) TREATMENT IN THE CASE OF DEATH OR DISABILITY
RESULTING FROM ACTIVE MILITARY SERVICE.—
‘‘(A) IN GENERAL.—For benefit accrual purposes, an
employer sponsoring a retirement plan may treat an individual who dies or becomes disabled (as defined under
the terms of the plan) while performing qualified military
service with respect to the employer maintaining the plan
as if the individual has resumed employment in accordance
with the individual’s reemployment rights under chapter
43 of title 38, United States Code, on the day preceding
death or disability (as the case may be) and terminated
employment on the actual date of death or disability. In
the case of any such treatment, and subject to subparagraphs (B) and (C), any full or partial compliance by such
plan with respect to the benefit accrual requirements of
paragraph (8) with respect to such individual shall be
treated for purposes of paragraph (1) as if such compliance
were required under such chapter 43.
‘‘(B) NONDISCRIMINATION REQUIREMENT.—Subparagraph (A) shall apply only if all individuals performing
qualified military service with respect to the employer
maintaining the plan (as determined under subsections
(b), (c), (m), and (o)) who die or became disabled as a

Jkt 069139

PO 00245

Frm 00004

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

dkrause on GSDDPC44 with PUBLIC LAWS

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1627

result of performing qualified military service prior to
reemployment by the employer are credited with service
and benefits on reasonably equivalent terms.
‘‘(C) DETERMINATION OF BENEFITS.—The amount of
employee contributions and the amount of elective deferrals
of an individual treated as reemployed under subparagraph
(A) for purposes of applying paragraph (8)(C) shall be determined on the basis of the individual’s average actual
employee contributions or elective deferrals for the lesser
of—
‘‘(i) the 12-month period of service with the
employer immediately prior to qualified military
service, or
‘‘(ii) if service with the employer is less than such
12-month period, the actual length of continuous
service with the employer.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 404(a)(2) is amended by striking ‘‘and (31)’’
and inserting ‘‘(31), and (37)’’.
(2) Section 403(b) is amended by adding at the end the
following new paragraph:
‘‘(14) DEATH BENEFITS UNDER USERRA-QUALIFIED ACTIVE
MILITARY SERVICE.—This subsection shall not apply to an
annuity contract unless such contract meets the requirements
of section 401(a)(37).’’.
(3) Section 457(g) is amended by adding at the end the
following new paragraph:
‘‘(4) DEATH BENEFITS UNDER USERRA-QUALIFIED ACTIVE MILITARY SERVICE.—A plan described in paragraph (1) shall not
be treated as an eligible deferred compensation plan unless
such plan meets the requirements of section 401(a)(37).’’.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section
shall apply with respect to deaths and disabilities occurring
on or after January 1, 2007.
(2) PROVISIONS RELATING TO PLAN AMENDMENTS.—
(A) IN GENERAL.—If this subparagraph applies to any
plan or contract amendment, such plan or contract shall
be treated as being operated in accordance with the terms
of the plan during the period described in subparagraph
(B)(iii).
(B) AMENDMENTS TO WHICH SUBPARAGRAPH (A)
APPLIES.—
(i) IN GENERAL.—Subparagraph (A) shall apply to
any amendment to any plan or annuity contract which
is made—
(I) pursuant to the amendments made by subsection (a) or pursuant to any regulation issued
by the Secretary of the Treasury under subsection
(a), and
(II) on or before the last day of the first plan
year beginning on or after January 1, 2010.
In the case of a governmental plan (as defined in
section 414(d) of the Internal Revenue Code of 1986),
this clause shall be applied by substituting ‘‘2012’’ for
‘‘2010’’ in subclause (II).

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00005

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

26 USC 404.

26 USC 401 note.

GSDDET

PsN: PUBL245

122 STAT. 1628

PUBLIC LAW 110–245—JUNE 17, 2008
(ii) CONDITIONS.—This paragraph shall not apply
to any amendment unless—
(I) the plan or contract is operated as if such
plan or contract amendment were in effect for
the period described in clause (iii), and
(II) such plan or contract amendment applies
retroactively for such period.
(iii) PERIOD DESCRIBED.—The period described in
this clause is the period—
(I) beginning on the effective date specified
by the plan, and
(II) ending on the date described in clause
(i)(II) (or, if earlier, the date the plan or contract
amendment is adopted).

SEC. 105. TREATMENT OF DIFFERENTIAL MILITARY PAY AS WAGES.

26 USC 3401.

dkrause on GSDDPC44 with PUBLIC LAWS

26 USC 3401
note.

VerDate Aug 31 2005

20:15 Jun 21, 2008

(a) INCOME TAX WITHHOLDING ON
MENTS.—
(1) IN GENERAL.—Section 3401

DIFFERENTIAL WAGE PAY-

(relating to definitions) is
amended by adding at the end the following new subsection:
‘‘(h) DIFFERENTIAL WAGE PAYMENTS TO ACTIVE DUTY MEMBERS
OF THE UNIFORMED SERVICES.—
‘‘(1) IN GENERAL.—For purposes of subsection (a), any differential wage payment shall be treated as a payment of wages
by the employer to the employee.
‘‘(2) DIFFERENTIAL WAGE PAYMENT.—For purposes of paragraph (1), the term ‘differential wage payment’ means any
payment which—
‘‘(A) is made by an employer to an individual with
respect to any period during which the individual is performing service in the uniformed services (as defined in
chapter 43 of title 38, United States Code) while on active
duty for a period of more than 30 days, and
‘‘(B) represents all or a portion of the wages the individual would have received from the employer if the individual were performing service for the employer.’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to remuneration paid after December 31,
2008.
(b) TREATMENT OF DIFFERENTIAL WAGE PAYMENTS FOR RETIREMENT PLAN PURPOSES.—
(1) PENSION PLANS.—
(A) IN GENERAL.—Section 414(u) (relating to special
rules relating to veterans’ reemployment rights under
USERRA), as amended by section 103(b), is amended by
adding at the end the following new paragraph:
‘‘(12) TREATMENT OF DIFFERENTIAL WAGE PAYMENTS.—
‘‘(A) IN GENERAL.—Except as provided in this paragraph, for purposes of applying this title to a retirement
plan to which this subsection applies—
‘‘(i) an individual receiving a differential wage payment shall be treated as an employee of the employer
making the payment,
‘‘(ii) the differential wage payment shall be treated
as compensation, and
‘‘(iii) the plan shall not be treated as failing to
meet the requirements of any provision described in

Jkt 069139

PO 00245

Frm 00006

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

dkrause on GSDDPC44 with PUBLIC LAWS

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1629

paragraph (1)(C) by reason of any contribution or benefit which is based on the differential wage payment.
‘‘(B) SPECIAL RULE FOR DISTRIBUTIONS.—
‘‘(i) IN GENERAL.—Notwithstanding subparagraph
(A)(i), for purposes of section 401(k)(2)(B)(i)(I),
403(b)(7)(A)(ii), 403(b)(11)(A), or 457(d)(1)(A)(ii), an
individual shall be treated as having been severed
from employment during any period the individual is
performing service in the uniformed services described
in section 3401(h)(2)(A).
‘‘(ii) LIMITATION.—If an individual elects to receive
a distribution by reason of clause (i), the plan shall
provide that the individual may not make an elective
deferral or employee contribution during the 6-month
period beginning on the date of the distribution.
‘‘(C) NONDISCRIMINATION REQUIREMENT.—Subparagraph (A)(iii) shall apply only if all employees of an
employer (as determined under subsections (b), (c), (m),
and (o)) performing service in the uniformed services
described in section 3401(h)(2)(A) are entitled to receive
differential wage payments on reasonably equivalent terms
and, if eligible to participate in a retirement plan maintained by the employer, to make contributions based on
the payments on reasonably equivalent terms. For purposes
of applying this subparagraph, the provisions of paragraphs
(3), (4), and (5) of section 410(b) shall apply.
‘‘(D) DIFFERENTIAL WAGE PAYMENT.—For purposes of
this paragraph, the term ‘differential wage payment’ has
the meaning given such term by section 3401(h)(2).’’.
(B) CONFORMING AMENDMENT.—The heading for section 414(u) is amended by inserting ‘‘AND TO DIFFERENTIAL
WAGE PAYMENTS TO MEMBERS ON ACTIVE DUTY’’ after
‘‘USERRA’’.
(2) DIFFERENTIAL WAGE PAYMENTS TREATED AS COMPENSATION FOR INDIVIDUAL RETIREMENT PLANS.—Section 219(f)(1)
(defining compensation) is amended by adding at the end the
following new sentence: ‘‘The term compensation includes any
differential wage payment (as defined in section 3401(h)(2)).’’.
(3) EFFECTIVE DATE.—The amendments made by this subsection shall apply to years beginning after December 31, 2008.
(c) PROVISIONS RELATING TO PLAN AMENDMENTS.—
(1) IN GENERAL.—If this subsection applies to any plan
or annuity contract amendment, such plan or contract shall
be treated as being operated in accordance with the terms
of the plan or contract during the period described in paragraph
(2)(B)(i).
(2) AMENDMENTS TO WHICH SECTION APPLIES.—
(A) IN GENERAL.—This subsection shall apply to any
amendment to any plan or annuity contract which is
made—
(i) pursuant to any amendment made by subsection
(b)(1), and
(ii) on or before the last day of the first plan
year beginning on or after January 1, 2010.

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00007

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

Applicability.

26 USC 414.

26 USC 219 note.
26 USC 414 note.

GSDDET

PsN: PUBL245

122 STAT. 1630

PUBLIC LAW 110–245—JUNE 17, 2008
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), this subparagraph shall be applied by substituting ‘‘2012’’ for ‘‘2010’’
in clause (ii).
(B) CONDITIONS.—This subsection shall not apply to
any plan or annuity contract amendment unless—
(i) during the period beginning on the date the
amendment described in subparagraph (A)(i) takes
effect and ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan or contract
amendment is adopted), the plan or contract is operated as if such plan or contract amendment were in
effect, and
(ii) such plan or contract amendment applies retroactively for such period.

SEC. 106. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED SERVICES RETIRED PAY IS REDUCED AS A RESULT OF AWARD
OF DISABILITY COMPENSATION.
26 USC 6511.

26 USC 6511
note.

dkrause on GSDDPC44 with PUBLIC LAWS

Applicability.
26 USC 6511
note.

VerDate Aug 31 2005

20:15 Jun 21, 2008

(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 note.
(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 for ‘‘the date of such
determination’’ in subparagraph (A) thereof.

Jkt 069139

PO 00245

Frm 00008

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1631

SEC. 107. DISTRIBUTIONS FROM RETIREMENT PLANS TO INDIVIDUALS
CALLED TO ACTIVE DUTY.

(a) IN GENERAL.—Clause (iv) of section 72(t)(2)(G) is amended
by striking ‘‘, and before December 31, 2007’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to individuals ordered or called to active duty on or
after December 31, 2007.

26 USC 72.
26 USC 72 note.

SEC. 108. AUTHORITY TO DISCLOSE RETURN INFORMATION FOR CERTAIN VETERANS PROGRAMS MADE PERMANENT.

(a) IN GENERAL.—Paragraph (7) of section 6103(l) is amended
by striking the last sentence thereof.
(b) CONFORMING AMENDMENT.—Section 6103(l)(7)(D)(viii)(III) is
amended by striking ‘‘sections 1710(a)(1)(I), 1710(a)(2), 1710(b), and
1712(a)(2)(B)’’ and inserting ‘‘sections 1710(a)(2)(G), 1710(a)(3), and
1710(b)’’.
(c) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to requests made after September 30, 2008.

26 USC 6103
note.

dkrause on GSDDPC44 with PUBLIC LAWS

SEC. 109. CONTRIBUTIONS OF MILITARY DEATH GRATUITIES TO ROTH
IRAS AND EDUCATION SAVINGS ACCOUNTS.

(a) PROVISION IN EFFECT BEFORE PENSION PROTECTION ACT.—
Subsection (e) of section 408A (relating to qualified rollover contribution), as in effect before the amendments made by section
824 of the Pension Protection Act of 2006, is amended to read
as follows:
‘‘(e) QUALIFIED ROLLOVER CONTRIBUTION.—For purposes of this
section—
‘‘(1) IN GENERAL.—The term ‘qualified rollover contribution’
means a rollover contribution to a Roth IRA from another
such account, or from an individual retirement plan, but only
if such rollover contribution meets the requirements of section
408(d)(3). Such term includes a rollover contribution described
in section 402A(c)(3)(A). For purposes of section 408(d)(3)(B),
there shall be disregarded any qualified rollover contribution
from an individual retirement plan (other than a Roth IRA)
to a Roth IRA.
‘‘(2) MILITARY DEATH GRATUITY.—
‘‘(A) IN GENERAL.—The term ‘qualified rollover contribution’ includes a contribution to a Roth IRA maintained
for the benefit of an individual made before the end of
the 1-year period beginning on the date on which such
individual receives an amount under section 1477 of title
10, United States Code, or section 1967 of title 38 of such
Code, with respect to a person, to the extent that such
contribution does not exceed—
‘‘(i) the sum of the amounts received during such
period by such individual under such sections with
respect to such person, reduced by
‘‘(ii) the amounts so received which were contributed to a Coverdell education savings account under
section 530(d)(9).
‘‘(B) ANNUAL LIMIT ON NUMBER OF ROLLOVERS NOT
TO APPLY.—Section 408(d)(3)(B) shall not apply with respect
to amounts treated as a rollover by subparagraph (A).
‘‘(C) APPLICATION OF SECTION 72.—For purposes of
applying section 72 in the case of a distribution which

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00009

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

122 STAT. 1632

dkrause on GSDDPC44 with PUBLIC LAWS

26 USC 408.

VerDate Aug 31 2005

20:15 Jun 21, 2008

PUBLIC LAW 110–245—JUNE 17, 2008

is not a qualified distribution, the amount treated as a
rollover by reason of subparagraph (A) shall be treated
as investment in the contract.’’.
(b) PROVISION IN EFFECT AFTER PENSION PROTECTION ACT.—
Subsection (e) of section 408A, as in effect after the amendments
made by section 824 of the Pension Protection Act of 2006, is
amended to read as follows:
‘‘(e) QUALIFIED ROLLOVER CONTRIBUTION.—For purposes of this
section—
‘‘(1) IN GENERAL.—The term ‘qualified rollover contribution’
means a rollover contribution—
‘‘(A) to a Roth IRA from another such account,
‘‘(B) from an eligible retirement plan, but only if—
‘‘(i) in the case of an individual retirement plan,
such rollover contribution meets the requirements of
section 408(d)(3), and
‘‘(ii) in the case of any eligible retirement plan
(as defined in section 402(c)(8)(B) other than clauses
(i) and (ii) thereof), such rollover contribution meets
the requirements of section 402(c), 403(b)(8), or
457(e)(16), as applicable.
For purposes of section 408(d)(3)(B), there shall be disregarded any qualified rollover contribution from an individual retirement plan (other than a Roth IRA) to a Roth
IRA.
‘‘(2) MILITARY DEATH GRATUITY.—
‘‘(A) IN GENERAL.—The term ‘qualified rollover contribution’ includes a contribution to a Roth IRA maintained
for the benefit of an individual made before the end of
the 1-year period beginning on the date on which such
individual receives an amount under section 1477 of title
10, United States Code, or section 1967 of title 38 of such
Code, with respect to a person, to the extent that such
contribution does not exceed—
‘‘(i) the sum of the amounts received during such
period by such individual under such sections with
respect to such person, reduced by
‘‘(ii) the amounts so received which were contributed to a Coverdell education savings account under
section 530(d)(9).
‘‘(B) ANNUAL LIMIT ON NUMBER OF ROLLOVERS NOT
TO APPLY.—Section 408(d)(3)(B) shall not apply with respect
to amounts treated as a rollover by the subparagraph (A).
‘‘(C) APPLICATION OF SECTION 72.—For purposes of
applying section 72 in the case of a distribution which
is not a qualified distribution, the amount treated as a
rollover by reason of subparagraph (A) shall be treated
as investment in the contract.’’.
(c) EDUCATION SAVINGS ACCOUNTS.—Subsection (d) of section
530 is amended by adding at the end the following new paragraph:
‘‘(9) MILITARY DEATH GRATUITY.—
‘‘(A) IN GENERAL.—For purposes of this section, the
term ‘rollover contribution’ includes a contribution to a
Coverdell education savings account made before the end
of the 1-year period beginning on the date on which the
contributor receives an amount under section 1477 of title
10, United States Code, or section 1967 of title 38 of such

Jkt 069139

PO 00245

Frm 00010

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1633

Code, with respect to a person, to the extent that such
contribution does not exceed—
‘‘(i) the sum of the amounts received during such
period by such contributor under such sections with
respect to such person, reduced by
‘‘(ii) the amounts so received which were contributed to a Roth IRA under section 408A(e)(2) or to
another Coverdell education savings account.
‘‘(B) ANNUAL LIMIT ON NUMBER OF ROLLOVERS NOT
TO APPLY.—The last sentence of paragraph (5) shall not
apply with respect to amounts treated as a rollover by
the subparagraph (A).
‘‘(C) APPLICATION OF SECTION 72.—For purposes of
applying section 72 in the case of a distribution which
is includible in gross income under paragraph (1), the
amount treated as a rollover by reason of subparagraph
(A) shall be treated as investment in the contract.’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided by paragraphs (2)
and (3), the amendments made by this section shall apply
with respect to deaths from injuries occurring on or after the
date of the enactment of this Act.
(2) APPLICATION OF AMENDMENTS TO DEATHS FROM INJURIES
OCCURRING ON OR AFTER OCTOBER 7, 2001, AND BEFORE ENACTMENT.—The amendments made by this section shall apply to
any contribution made pursuant to section 408A(e)(2) or
530(d)(5) of the Internal Revenue Code of 1986, as amended
by this Act, with respect to amounts received under section
1477 of title 10, United States Code, or under section 1967
of title 38 of such Code, for deaths from injuries occurring
on or after October 7, 2001, and before the date of the enactment of this Act if such contribution is made not later than
1 year after the date of the enactment of this Act.
(3) PENSION PROTECTION ACT CHANGES.—Section 408A(e)(1)
of the Internal Revenue Code of 1986 (as in effect after the
amendments made by subsection (b)) shall apply to taxable
years beginning after December 31, 2007.

26 USC 408A
note.

Applicability.

dkrause on GSDDPC44 with PUBLIC LAWS

SEC. 110. SUSPENSION OF 5-YEAR PERIOD DURING SERVICE WITH THE
PEACE CORPS.

(a) IN GENERAL.—Subsection (d) of section 121 (relating to
special rules) is amended by adding at the end the following new
paragraph:
‘‘(12) PEACE CORPS.—
‘‘(A) IN GENERAL.—At the election of an individual with
respect to a property, the running of the 5-year period
described in subsections (a) and (c)(1)(B) and paragraph
(7) of this subsection with respect to such property shall
be suspended during any period that such individual or
such individual’s spouse is serving outside the United
States—
‘‘(i) on qualified official extended duty (as defined
in paragraph (9)(C)) as an employee of the Peace Corps,
or
‘‘(ii) as an enrolled volunteer or volunteer leader
under section 5 or 6 (as the case may be) of the Peace
Corps Act (22 U.S.C. 2504, 2505).

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00011

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

26 USC 121.

GSDDET

PsN: PUBL245

122 STAT. 1634

26 USC 121 note.

PUBLIC LAW 110–245—JUNE 17, 2008

‘‘(B) APPLICABLE RULES.—For purposes of subparagraph (A), rules similar to the rules of subparagraphs (B)
and (D) shall apply.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to taxable years beginning after December 31, 2007.
SEC. 111. CREDIT FOR EMPLOYER DIFFERENTIAL WAGE PAYMENTS
TO EMPLOYEES WHO ARE ACTIVE DUTY MEMBERS OF THE
UNIFORMED SERVICES.

(a) IN GENERAL.—Subpart D of part IV of subchapter A of
chapter 1 (relating to business credits) is amended by adding at
the end the following new section:

dkrause on GSDDPC44 with PUBLIC LAWS

‘‘SEC. 45P. EMPLOYER WAGE CREDIT FOR EMPLOYEES WHO ARE
ACTIVE DUTY MEMBERS OF THE UNIFORMED SERVICES.

‘‘(a) GENERAL RULE.—For purposes of section 38, in the case
of an eligible small business employer, the differential wage payment credit for any taxable year is an amount equal to 20 percent
of the sum of the eligible differential wage payments for each
of the qualified employees of the taxpayer during such taxable
year.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) ELIGIBLE DIFFERENTIAL WAGE PAYMENTS.—The term
‘eligible differential wage payments’ means, with respect to
each qualified employee, so much of the differential wage payments (as defined in section 3401(h)(2)) paid to such employee
for the taxable year as does not exceed $20,000.
‘‘(2) QUALIFIED EMPLOYEE.—The term ‘qualified employee’
means a person who has been an employee of the taxpayer
for the 91-day period immediately preceding the period for
which any differential wage payment is made.
‘‘(3) ELIGIBLE SMALL BUSINESS EMPLOYER.—
‘‘(A) IN GENERAL.—The term ‘eligible small business
employer’ means, with respect to any taxable year, any
employer which—
‘‘(i) employed an average of less than 50 employees
on business days during such taxable year, and
‘‘(ii) under a written plan of the employer, provides
eligible differential wage payments to every qualified
employee of the employer.
‘‘(B) CONTROLLED GROUPS.—For purposes of subparagraph (A), all persons treated as a single employer under
subsection (b), (c), (m), or (o) of section 414 shall be treated
as a single employer.
‘‘(c) COORDINATION WITH OTHER CREDITS.—The amount of
credit otherwise allowable under this chapter with respect to compensation paid to any employee shall be reduced by the credit
determined under this section with respect to such employee.
‘‘(d) DISALLOWANCE FOR FAILURE TO COMPLY WITH EMPLOYMENT OR REEMPLOYMENT RIGHTS OF MEMBERS OF THE RESERVE
COMPONENTS OF THE ARMED FORCES OF THE UNITED STATES.—
No credit shall be allowed under subsection (a) to a taxpayer for—
‘‘(1) any taxable year, beginning after the date of the enactment of this section, in which the taxpayer is under a final
order, judgment, or other process issued or required by a district
court of the United States under section 4323 of title 38 of
the United States Code with respect to a violation of chapter
43 of such title, and

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00012

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1635

‘‘(2) the 2 succeeding taxable years.
‘‘(e) CERTAIN RULES TO APPLY.—For purposes of this section,
rules similar to the rules of subsections (c), (d), and (e) of section
52 shall apply.
‘‘(f) TERMINATION.—This section shall not apply to any payments made after December 31, 2009.’’.
(b) CREDIT TREATED AS PART OF GENERAL BUSINESS CREDIT.—
Section 38(b) (relating to general business credit) is amended by
striking ‘‘plus’’ at the end of paragraph (31), by striking the period
at the end of paragraph (32) and inserting ‘‘, plus’’, and by adding
at the end of following new paragraph:
‘‘(33) the differential wage payment credit determined
under section 45P(a).’’.
(c) NO DEDUCTION FOR COMPENSATION TAKEN INTO ACCOUNT
FOR CREDIT.—Section 280C(a) (relating to rule for employment
credits) is amended by inserting ‘‘45P(a),’’ after ‘‘45A(a),’’.
(d) CLERICAL AMENDMENT.—The table of sections for subpart
D of part IV of subchapter A of chapter 1 is amended by adding
at the end the following new item:

26 USC 38.

‘‘Sec. 45P. Employer wage credit for employees who are active duty members of the
uniformed services.’’.

(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to amounts paid after the date of the enactment of
this Act.

26 USC 38 note.

SEC. 112. STATE PAYMENTS TO SERVICE MEMBERS TREATED AS
QUALIFIED MILITARY BENEFITS.

(a) IN GENERAL.—Section 134(b) (defining qualified military
benefit) is amended by adding at the end the following new paragraph:
‘‘(6) CERTAIN STATE PAYMENTS.—The term ‘qualified military benefit’ includes any bonus payment by a State or political
subdivision thereof to any member or former member of the
uniformed services of the United States or any dependent of
such member only by reason of such member’s service in an
combat zone (as defined in section 112(c)(2), determined without
regard to the parenthetical).’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to payments made before, on, or after the date of
the enactment of this Act.

26 USC 134 note.

SEC. 113. PERMANENT EXCLUSION OF GAIN FROM SALE OF A PRINCIPAL RESIDENCE BY CERTAIN EMPLOYEES OF THE
INTELLIGENCE COMMUNITY.

dkrause on GSDDPC44 with PUBLIC LAWS

(a) IN GENERAL.—Paragraph (9) of section 121(d) is amended
by striking subparagraph (E).
(b) DUTY STATION MAY BE INSIDE UNITED STATES.—Section
121(d)(9)(C) (defining qualified official extended duty) is amended
by striking clause (vi).
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to sales or exchanges after the date of the enactment
of this Act.

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00013

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

26 USC 121 note.

GSDDET

PsN: PUBL245

122 STAT. 1636

PUBLIC LAW 110–245—JUNE 17, 2008

SEC. 114. SPECIAL DISPOSITION RULES FOR UNUSED BENEFITS IN
HEALTH FLEXIBLE SPENDING ARRANGEMENTS OF
INDIVIDUALS CALLED TO ACTIVE DUTY.
26 USC 125.

26 USC 125 note.

(a) IN GENERAL.—Section 125 (relating to cafeteria plans) is
amended by redesignating subsections (h) and (i) as subsection
(i) and (j), respectively, and by inserting after subsection (g) the
following new subsection:
‘‘(h) SPECIAL RULE FOR UNUSED BENEFITS IN HEALTH FLEXIBLE
SPENDING ARRANGEMENTS OF INDIVIDUALS CALLED TO ACTIVE
DUTY.—
‘‘(1) IN GENERAL.—For purposes of this title, a plan or
other arrangement shall not fail to be treated as a cafeteria
plan or health flexible spending arrangement merely because
such arrangement provides for qualified reservist distributions.
‘‘(2) QUALIFIED RESERVIST DISTRIBUTION.—For purposes of
this subsection, the term ‘qualified reservist distribution’
means, any distribution to an individual of all or a portion
of the balance in the employee’s account under such arrangement if—
‘‘(A) such individual was (by reason of being a member
of a reserve component (as defined in section 101 of title
37, United States Code)) ordered or called to active duty
for a period in excess of 179 days or for an indefinite
period, and
‘‘(B) such distribution is made during the period beginning on the date of such order or call and ending on
the last date that reimbursements could otherwise be made
under such arrangement for the plan year which includes
the date of such order or call.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to distributions made after the date of the enactment
of this Act.
SEC. 115. TECHNICAL CORRECTION RELATED TO EXCLUSION OF CERTAIN PROPERTY TAX REBATES AND OTHER BENEFITS PROVIDED TO VOLUNTEER FIREFIGHTERS AND EMERGENCY
MEDICAL RESPONDERS.

42 USC 409.

dkrause on GSDDPC44 with PUBLIC LAWS

26 USC 3306.

VerDate Aug 31 2005

20:15 Jun 21, 2008

(a) SOCIAL SECURITY TAXES.—
(1) Section 3121(a) (relating to definition of wages) is
amended by striking ‘‘or’’ at the end of paragraph (21), by
striking the period at the end of paragraph (22) and inserting
‘‘; or’’, and by inserting after paragraph (22) the following
new paragraph:
‘‘(23) any benefit or payment which is excludable from
the gross income of the employee under section 139B(b).’’.
(2) Section 209(a) of the Social Security Act is amended
by striking ‘‘or’’ at the end of paragraph (18), by striking the
period at the end of paragraph (19) and inserting ‘‘; or’’, and
by inserting after paragraph (19) the following new paragraph:
‘‘(20) Any benefit or payment which is excludable from
the gross income of the employee under section 139B(b) of
the Internal Revenue Code of 1986).’’.
(b) UNEMPLOYMENT TAXES.—Section 3306(b) (relating to definition of wages) is amended by striking ‘‘or’’ at the end of paragraph
(18), by striking the period at the end of paragraph (19) and
inserting ‘‘; or’’, and by inserting after paragraph (19) the following
new paragraph:

Jkt 069139

PO 00245

Frm 00014

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1637

‘‘(20) any benefit or payment which is excludable from
the gross income of the employee under section 139B(b).’’.
(c) WAGE WITHHOLDING.—Section 3401(a) (defining wages) is
amended by striking ‘‘or’’ at the end of paragraph (21), by striking
the period at the end of paragraph (22) and inserting ‘‘; or’’, and
by inserting after paragraph (22) the following new paragraph:
‘‘(23) for any benefit or payment which is excludable from
the gross income of the employee under section 139B(b).’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in section 5 of the Mortgage Forgiveness Debt Relief Act of 2007.

26 USC 3401.

26 USC 3121
note.

TITLE II—IMPROVEMENTS IN
SUPPLEMENTAL SECURITY INCOME
SEC. 201. TREATMENT OF UNIFORMED SERVICE CASH REMUNERATION
AS EARNED INCOME.

(a) IN GENERAL.—Section 1612(a)(1)(A) of the Social Security
Act (42 U.S.C. 1382a(a)(1)(A)) is amended by inserting ‘‘(and, in
the case of cash remuneration paid for service as a member of
a uniformed service (other than payments described in paragraph
(2)(H) of this subsection or subsection (b)(20)), without regard to
the limitations contained in section 209(d))’’ before the semicolon.
(b) CERTAIN HOUSING PAYMENTS TREATED AS IN-KIND SUPPORT
AND MAINTENANCE.—Section 1612(a)(2) of such Act (42 U.S.C.
1382a(a)(2)) is amended—
(1) by striking ‘‘and’’ at the end of subparagraph (F);
(2) by striking the period at the end of subparagraph (G)
and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(H) payments to or on behalf of a member of a uniformed service for housing of the member (and his or
her dependents, if any) on a facility of a uniformed service,
including payments provided under section 403 of title
37, United States Code, for housing that is acquired or
constructed under subchapter IV of chapter 169 of title
10 of such Code, or any related provision of law, and
any such payments shall be treated as support and maintenance in kind subject to subparagraph (A) of this paragraph.’’.

dkrause on GSDDPC44 with PUBLIC LAWS

SEC. 202. STATE ANNUITIES FOR CERTAIN VETERANS TO BE DISREGARDED IN DETERMINING SUPPLEMENTAL SECURITY
INCOME BENEFITS.

(a) INCOME DISREGARD.—Section 1612(b) of the Social Security
Act (42 U.S.C. 1382a(b)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph (22);
(2) by striking the period at the end of paragraph (23)
and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(24) any annuity paid by a State to the individual (or
such spouse) on the basis of the individual’s being a veteran
(as defined in section 101 of title 38, United States Code),
and blind, disabled, or aged.’’.
(b) RESOURCE DISREGARD.—Section 1613(a) of such Act (42
U.S.C. 1382b(a)) is amended—

VerDate Aug 31 2005

09:44 Jun 23, 2008

Jkt 069139

PO 00245

Frm 00015

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

APPS10

PsN: PUBL245

122 STAT. 1638

PUBLIC LAW 110–245—JUNE 17, 2008
(1) by striking ‘‘and’’ at the end of paragraph (14);
(2) by striking the period at the end of paragraph (15)
and inserting ‘‘; and’’; and
(3) by inserting after paragraph (15) the following:
‘‘(16) for the month of receipt and every month thereafter,
any annuity paid by a State to the individual (or such spouse)
on the basis of the individual’s being a veteran (as defined
in section 101 of title 38, United States Code), and blind,
disabled, or aged.’’.

SEC. 203. EXCLUSION OF AMERICORPS BENEFITS FOR PURPOSES OF
DETERMINING SUPPLEMENTAL SECURITY INCOME ELIGIBILITY AND BENEFIT AMOUNTS.

Section 1612(b) of the Social Security Act (42 U.S.C. 1382a(b)),
as amended by section 202(a) of this Act, is amended—
(1) in paragraph (23), by striking ‘‘and’’ at the end;
(2) in paragraph (24), by striking the period and inserting
‘‘; and’’; and
(3) by adding at the end the following:
‘‘(25) any benefit (whether cash or in-kind) conferred upon
(or paid on behalf of) a participant in an AmeriCorps position
approved by the Corporation for National and Community
Service under section 123 of the National and Community
Service Act of 1990 (42 U.S.C. 12573).’’.
42 USC 1382a
note.

SEC. 204. EFFECTIVE DATE.

The amendments made by this title shall be effective with
respect to benefits payable for months beginning after 60 days
after the date of the enactment of this Act.

TITLE III—REVENUE PROVISIONS
SEC. 301. REVISION OF TAX RULES ON EXPATRIATION.

(a) IN GENERAL.—Subpart A of part II of subchapter N of
chapter 1 is amended by inserting after section 877 the following
new section:

dkrause on GSDDPC44 with PUBLIC LAWS

‘‘SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

‘‘(a) GENERAL RULES.—For purposes of this subtitle—
‘‘(1) MARK TO MARKET.—All property of a covered expatriate
shall be treated as sold on the day before the expatriation
date for its fair market value.
‘‘(2) RECOGNITION OF GAIN OR LOSS.—In the case of any
sale under paragraph (1)—
‘‘(A) notwithstanding any other provision of this title,
any gain arising from such sale shall be taken into account
for the taxable year of the sale, and
‘‘(B) any loss arising from such sale shall be taken
into account for the taxable year of the sale to the extent
otherwise provided by this title, except that section 1091
shall not apply to any such loss.
Proper adjustment shall be made in the amount of any gain
or loss subsequently realized for gain or loss taken into account
under the preceding sentence, determined without regard to
paragraph (3).
‘‘(3) EXCLUSION FOR CERTAIN GAIN.—

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00016

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

dkrause on GSDDPC44 with PUBLIC LAWS

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1639

‘‘(A) IN GENERAL.—The amount which would (but for
this paragraph) be includible in the gross income of any
individual by reason of paragraph (1) shall be reduced
(but not below zero) by $600,000.
‘‘(B) ADJUSTMENT FOR INFLATION.—
‘‘(i) IN GENERAL.—In the case of any taxable year
beginning in a calendar year after 2008, the dollar
amount in subparagraph (A) shall be increased by an
amount equal to—
‘‘(I) such dollar amount, multiplied by
‘‘(II) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, by substituting ‘calendar
year 2007’ for ‘calendar year 1992’ in subparagraph
(B) thereof.
‘‘(ii) ROUNDING.—If any amount as adjusted under
clause (i) is not a multiple of $1,000, such amount
shall be rounded to the nearest multiple of $1,000.
‘‘(b) ELECTION TO DEFER TAX.—
‘‘(1) IN GENERAL.—If the taxpayer elects the application
of this subsection with respect to any property treated as sold
by reason of subsection (a), the time for payment of the additional tax attributable to such property shall be extended until
the due date of the return for the taxable year in which such
property is disposed of (or, in the case of property disposed
of in a transaction in which gain is not recognized in whole
or in part, until such other date as the Secretary may prescribe).
‘‘(2) DETERMINATION OF TAX WITH RESPECT TO PROPERTY.—
For purposes of paragraph (1), the additional tax attributable
to any property is an amount which bears the same ratio
to the additional tax imposed by this chapter for the taxable
year solely by reason of subsection (a) as the gain taken into
account under subsection (a) with respect to such property
bears to the total gain taken into account under subsection
(a) with respect to all property to which subsection (a) applies.
‘‘(3) TERMINATION OF EXTENSION.—The due date for payment of tax may not be extended under this subsection later
than the due date for the return of tax imposed by this chapter
for the taxable year which includes the date of death of the
expatriate (or, if earlier, the time that the security provided
with respect to the property fails to meet the requirements
of paragraph (4), unless the taxpayer corrects such failure
within the time specified by the Secretary).
‘‘(4) SECURITY.—
‘‘(A) IN GENERAL.—No election may be made under
paragraph (1) with respect to any property unless adequate
security is provided with respect to such property.
‘‘(B) ADEQUATE SECURITY.—For purposes of subparagraph (A), security with respect to any property shall be
treated as adequate security if—
‘‘(i) it is a bond which is furnished to, and accepted
by, the Secretary, which is conditioned on the payment
of tax (and interest thereon), and which meets the
requirements of section 6325, or
‘‘(ii) it is another form of security for such payment
(including letters of credit) that meets such requirements as the Secretary may prescribe.

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00017

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

122 STAT. 1640

dkrause on GSDDPC44 with PUBLIC LAWS

Applicability.

VerDate Aug 31 2005

20:15 Jun 21, 2008

PUBLIC LAW 110–245—JUNE 17, 2008

‘‘(5) WAIVER OF CERTAIN RIGHTS.—No election may be made
under paragraph (1) unless the taxpayer makes an irrevocable
waiver of any right under any treaty of the United States
which would preclude assessment or collection of any tax
imposed by reason of this section.
‘‘(6) ELECTIONS.—An election under paragraph (1) shall
only apply to property described in the election and, once made,
is irrevocable.
‘‘(7) INTEREST.—For purposes of section 6601, the last date
for the payment of tax shall be determined without regard
to the election under this subsection.
‘‘(c) EXCEPTION FOR CERTAIN PROPERTY.—Subsection (a) shall
not apply to—
‘‘(1) any deferred compensation item (as defined in subsection (d)(4)),
‘‘(2) any specified tax deferred account (as defined in subsection (e)(2)), and
‘‘(3) any interest in a nongrantor trust (as defined in subsection (f)(3)).
‘‘(d) TREATMENT OF DEFERRED COMPENSATION ITEMS.—
‘‘(1) WITHHOLDING ON ELIGIBLE DEFERRED COMPENSATION
ITEMS.—
‘‘(A) IN GENERAL.—In the case of any eligible deferred
compensation item, the payor shall deduct and withhold
from any taxable payment to a covered expatriate with
respect to such item a tax equal to 30 percent thereof.
‘‘(B) TAXABLE PAYMENT.—For purposes of subparagraph
(A), the term ‘taxable payment’ means with respect to
a covered expatriate any payment to the extent it would
be includible in the gross income of the covered expatriate
if such expatriate continued to be subject to tax as a
citizen or resident of the United States. A deferred compensation item shall be taken into account as a payment
under the preceding sentence when such item would be
so includible.
‘‘(2) OTHER DEFERRED COMPENSATION ITEMS.—In the case
of any deferred compensation item which is not an eligible
deferred compensation item—
‘‘(A)(i) with respect to any deferred compensation item
to which clause (ii) does not apply, an amount equal to
the present value of the covered expatriate’s accrued benefit
shall be treated as having been received by such individual
on the day before the expatriation date as a distribution
under the plan, and
‘‘(ii) with respect to any deferred compensation item
referred to in paragraph (4)(D), the rights of the covered
expatriate to such item shall be treated as becoming
transferable and not subject to a substantial risk of forfeiture on the day before the expatriation date,
‘‘(B) no early distribution tax shall apply by reason
of such treatment, and
‘‘(C) appropriate adjustments shall be made to subsequent distributions from the plan to reflect such treatment.
‘‘(3) ELIGIBLE DEFERRED COMPENSATION ITEMS.—For purposes of this subsection, the term ‘eligible deferred compensation item’ means any deferred compensation item with respect
to which—

Jkt 069139

PO 00245

Frm 00018

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

dkrause on GSDDPC44 with PUBLIC LAWS

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1641

‘‘(A) the payor of such item is—
‘‘(i) a United States person, or
‘‘(ii) a person who is not a United States person
but who elects to be treated as a United States person
for purposes of paragraph (1) and meets such requirements as the Secretary may provide to ensure that
the payor will meet the requirements of paragraph
(1), and
‘‘(B) the covered expatriate—
‘‘(i) notifies the payor of his status as a covered
expatriate, and
‘‘(ii) makes an irrevocable waiver of any right to
claim any reduction under any treaty with the United
States in withholding on such item.
‘‘(4) DEFERRED COMPENSATION ITEM.—For purposes of this
subsection, the term ‘deferred compensation item’ means—
‘‘(A) any interest in a plan or arrangement described
in section 219(g)(5),
‘‘(B) any interest in a foreign pension plan or similar
retirement arrangement or program,
‘‘(C) any item of deferred compensation, and
‘‘(D) any property, or right to property, which the individual is entitled to receive in connection with the performance of services to the extent not previously taken into
account under section 83 or in accordance with section
83.
‘‘(5) EXCEPTION.—Paragraphs (1) and (2) shall not apply
to any deferred compensation item to the extent attributable
to services performed outside the United States while the covered expatriate was not a citizen or resident of the United
States.
‘‘(6) SPECIAL RULES.—
‘‘(A) APPLICATION OF WITHHOLDING RULES.—Rules
similar to the rules of subchapter B of chapter 3 shall
apply for purposes of this subsection.
‘‘(B) APPLICATION OF TAX.—Any item subject to the
withholding tax imposed under paragraph (1) shall be subject to tax under section 871.
‘‘(C) COORDINATION WITH OTHER WITHHOLDING
REQUIREMENTS.—Any item subject to withholding under
paragraph (1) shall not be subject to withholding under
section 1441 or chapter 24.
‘‘(e) TREATMENT OF SPECIFIED TAX DEFERRED ACCOUNTS.—
‘‘(1) ACCOUNT TREATED AS DISTRIBUTED.—In the case of
any interest in a specified tax deferred account held by a
covered expatriate on the day before the expatriation date—
‘‘(A) the covered expatriate shall be treated as receiving
a distribution of his entire interest in such account on
the day before the expatriation date,
‘‘(B) no early distribution tax shall apply by reason
of such treatment, and
‘‘(C) appropriate adjustments shall be made to subsequent distributions from the account to reflect such treatment.
‘‘(2) SPECIFIED TAX DEFERRED ACCOUNT.—For purposes of
paragraph (1), the term ‘specified tax deferred account’ means
an individual retirement plan (as defined in section 7701(a)(37))

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00019

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

122 STAT. 1642

dkrause on GSDDPC44 with PUBLIC LAWS

Applicability.

VerDate Aug 31 2005

20:15 Jun 21, 2008

PUBLIC LAW 110–245—JUNE 17, 2008

other than any arrangement described in subsection (k) or
(p) of section 408, a qualified tuition program (as defined in
section 529), a Coverdell education savings account (as defined
in section 530), a health savings account (as defined in section
223), and an Archer MSA (as defined in section 220).
‘‘(f) SPECIAL RULES FOR NONGRANTOR TRUSTS.—
‘‘(1) IN GENERAL.—In the case of a distribution (directly
or indirectly) of any property from a nongrantor trust to a
covered expatriate—
‘‘(A) the trustee shall deduct and withhold from such
distribution an amount equal to 30 percent of the taxable
portion of the distribution, and
‘‘(B) if the fair market value of such property exceeds
its adjusted basis in the hands of the trust, gain shall
be recognized to the trust as if such property were sold
to the expatriate at its fair market value.
‘‘(2) TAXABLE PORTION.—For purposes of this subsection,
the term ‘taxable portion’ means, with respect to any distribution, that portion of the distribution which would be includible
in the gross income of the covered expatriate if such expatriate
continued to be subject to tax as a citizen or resident of the
United States.
‘‘(3) NONGRANTOR TRUST.—For purposes of this subsection,
the term ‘nongrantor trust’ means the portion of any trust
that the individual is not considered the owner of under subpart
E of part I of subchapter J. The determination under the
preceding sentence shall be made immediately before the
expatriation date.
‘‘(4) SPECIAL RULES RELATING TO WITHHOLDING.—For purposes of this subsection—
‘‘(A) rules similar to the rules of subsection (d)(6) shall
apply, and
‘‘(B) the covered expatriate shall be treated as having
waived any right to claim any reduction under any treaty
with the United States in withholding on any distribution
to which paragraph (1)(A) applies unless the covered expatriate agrees to such other treatment as the Secretary
determines appropriate.
‘‘(5) APPLICATION.—This subsection shall apply to a nongrantor trust only if the covered expatriate was a beneficiary
of the trust on the day before the expatriation date.
‘‘(g) DEFINITIONS AND SPECIAL RULES RELATING TO EXPATRIATION.—For purposes of this section—
‘‘(1) COVERED EXPATRIATE.—
‘‘(A) IN GENERAL.—The term ‘covered expatriate’ means
an expatriate who meets the requirements of subparagraph
(A), (B), or (C) of section 877(a)(2).
‘‘(B) EXCEPTIONS.—An individual shall not be treated
as meeting the requirements of subparagraph (A) or (B)
of section 877(a)(2) if—
‘‘(i) the individual—
‘‘(I) became at birth a citizen of the United
States and a citizen of another country and, as
of the expatriation date, continues to be a citizen
of, and is taxed as a resident of, such other country,
and

Jkt 069139

PO 00245

Frm 00020

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

dkrause on GSDDPC44 with PUBLIC LAWS

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1643

‘‘(II) has been a resident of the United States
(as defined in section 7701(b)(1)(A)(ii)) for not more
than 10 taxable years during the 15-taxable year
period ending with the taxable year during which
the expatriation date occurs, or
‘‘(ii)(I) the individual’s relinquishment of United
States citizenship occurs before such individual attains
age 181⁄2, and
‘‘(II) the individual has been a resident of the
United States (as so defined) for not more than 10
taxable years before the date of relinquishment.
‘‘(C) COVERED EXPATRIATES ALSO SUBJECT TO TAX AS
CITIZENS OR RESIDENTS.—In the case of any covered expatriate who is subject to tax as a citizen or resident of
the United States for any period beginning after the
expatriation date, such individual shall not be treated as
a covered expatriate during such period for purposes of
subsections (d)(1) and (f) and section 2801.
‘‘(2) EXPATRIATE.—The term ‘expatriate’ means—
‘‘(A) any United States citizen who relinquishes his
citizenship, and
‘‘(B) any long-term resident of the United States who
ceases to be a lawful permanent resident of the United
States (within the meaning of section 7701(b)(6)).
‘‘(3) EXPATRIATION DATE.—The term ‘expatriation date’
means—
‘‘(A) the date an individual relinquishes United States
citizenship, or
‘‘(B) in the case of a long-term resident of the United
States, the date on which the individual ceases to be a
lawful permanent resident of the United States (within
the meaning of section 7701(b)(6)).
‘‘(4) RELINQUISHMENT OF CITIZENSHIP.—A citizen shall be
treated as relinquishing his United States citizenship on the
earliest of—
‘‘(A) the date the individual renounces his United
States nationality before a diplomatic or consular officer
of the United States pursuant to paragraph (5) of section
349(a) of the Immigration and Nationality Act (8 U.S.C.
1481(a)(5)),
‘‘(B) the date the individual furnishes to the United
States Department of State a signed statement of voluntary
relinquishment of United States nationality confirming the
performance of an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the Immigration
and Nationality Act (8 U.S.C. 1481(a)(1)–(4)),
‘‘(C) the date the United States Department of State
issues to the individual a certificate of loss of nationality,
or
‘‘(D) the date a court of the United States cancels
a naturalized citizen’s certificate of naturalization.
Subparagraph (A) or (B) shall not apply to any individual
unless the renunciation or voluntary relinquishment is subsequently approved by the issuance to the individual of a certificate of loss of nationality by the United States Department
of State.

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00021

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

122 STAT. 1644

Applicability.

PUBLIC LAW 110–245—JUNE 17, 2008

‘‘(5) LONG-TERM RESIDENT.—The term ‘long-term resident’
has the meaning given to such term by section 877(e)(2).
‘‘(6) EARLY DISTRIBUTION TAX.—The term ‘early distribution
tax’ means any increase in tax imposed under section 72(t),
220(e)(4), 223(f)(4), 409A(a)(1)(B), 529(c)(6), or 530(d)(4).
‘‘(h) OTHER RULES.—
‘‘(1) TERMINATION OF DEFERRALS, ETC.—In the case of any
covered expatriate, notwithstanding any other provision of this
title—
‘‘(A) any time period for acquiring property which
would result in the reduction in the amount of gain recognized with respect to property disposed of by the taxpayer
shall terminate on the day before the expatriation date,
and
‘‘(B) any extension of time for payment of tax shall
cease to apply on the day before the expatriation date
and the unpaid portion of such tax shall be due and payable
at the time and in the manner prescribed by the Secretary.
‘‘(2) STEP-UP IN BASIS.—Solely for purposes of determining
any tax imposed by reason of subsection (a), property which
was held by an individual on the date the individual first
became a resident of the United States (within the meaning
of section 7701(b)) shall be treated as having a basis on such
date of not less than the fair market value of such property
on such date. The preceding sentence shall not apply if the
individual elects not to have such sentence apply. Such an
election, once made, shall be irrevocable.
‘‘(3) COORDINATION WITH SECTION 684.—If the expatriation
of any individual would result in the recognition of gain under
section 684, this section shall be applied after the application
of section 684.
‘‘(i) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes
of this section.’’.
(b) TAX ON GIFTS AND BEQUESTS RECEIVED BY UNITED STATES
CITIZENS AND RESIDENTS FROM EXPATRIATES.—
(1) IN GENERAL.—Subtitle B (relating to estate and gift
taxes) is amended by inserting after chapter 14 the following
new chapter:
‘‘CHAPTER 15—GIFTS AND BEQUESTS FROM
EXPATRIATES
‘‘Sec. 2801. Imposition of tax.

dkrause on GSDDPC44 with PUBLIC LAWS

‘‘SEC. 2801. IMPOSITION OF TAX.

‘‘(a) IN GENERAL.—If, during any calendar year, any United
States citizen or resident receives any covered gift or bequest,
there is hereby imposed a tax equal to the product of—
‘‘(1) the highest rate of tax specified in the table contained
in section 2001(c) as in effect on the date of such receipt
(or, if greater, the highest rate of tax specified in the table
applicable under section 2502(a) as in effect on the date), and
‘‘(2) the value of such covered gift or bequest.
‘‘(b) TAX TO BE PAID BY RECIPIENT.—The tax imposed by subsection (a) on any covered gift or bequest shall be paid by the
person receiving such gift or bequest.

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00022

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

dkrause on GSDDPC44 with PUBLIC LAWS

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1645

‘‘(c) EXCEPTION FOR CERTAIN GIFTS.—Subsection (a) shall apply
only to the extent that the value of covered gifts and bequests
received by any person during the calendar year exceeds the dollar
amount in effect under section 2503(b) for such calendar year.
‘‘(d) TAX REDUCED BY FOREIGN GIFT OR ESTATE TAX.—The
tax imposed by subsection (a) on any covered gift or bequest shall
be reduced by the amount of any gift or estate tax paid to a
foreign country with respect to such covered gift or bequest.
‘‘(e) COVERED GIFT OR BEQUEST.—
‘‘(1) IN GENERAL.—For purposes of this chapter, the term
‘covered gift or bequest’ means—
‘‘(A) any property acquired by gift directly or indirectly
from an individual who, at the time of such acquisition,
is a covered expatriate, and
‘‘(B) any property acquired directly or indirectly by
reason of the death of an individual who, immediately
before such death, was a covered expatriate.
‘‘(2) EXCEPTIONS FOR TRANSFERS OTHERWISE SUBJECT TO
ESTATE OR GIFT TAX.—Such term shall not include—
‘‘(A) any property shown on a timely filed return of
tax imposed by chapter 12 which is a taxable gift by the
covered expatriate, and
‘‘(B) any property included in the gross estate of the
covered expatriate for purposes of chapter 11 and shown
on a timely filed return of tax imposed by chapter 11
of the estate of the covered expatriate.
‘‘(3) EXCEPTIONS FOR TRANSFERS TO SPOUSE OR CHARITY.—
Such term shall not include any property with respect to which
a deduction would be allowed under section 2055, 2056, 2522,
or 2523, whichever is appropriate, if the decedent or donor
were a United States person.
‘‘(4) TRANSFERS IN TRUST.—
‘‘(A) DOMESTIC TRUSTS.—In the case of a covered gift
or bequest made to a domestic trust—
‘‘(i) subsection (a) shall apply in the same manner
as if such trust were a United States citizen, and
‘‘(ii) the tax imposed by subsection (a) on such
gift or bequest shall be paid by such trust.
‘‘(B) FOREIGN TRUSTS.—
‘‘(i) IN GENERAL.—In the case of a covered gift
or bequest made to a foreign trust, subsection (a) shall
apply to any distribution attributable to such gift or
bequest from such trust (whether from income or corpus) to a United States citizen or resident in the same
manner as if such distribution were a covered gift
or bequest.
‘‘(ii) DEDUCTION FOR TAX PAID BY RECIPIENT.—
There shall be allowed as a deduction under section
164 the amount of tax imposed by this section which
is paid or accrued by a United States citizen or resident
by reason of a distribution from a foreign trust, but
only to the extent such tax is imposed on the portion
of such distribution which is included in the gross
income of such citizen or resident.
‘‘(iii) ELECTION TO BE TREATED AS DOMESTIC
TRUST.—Solely for purposes of this section, a foreign
trust may elect to be treated as a domestic trust.

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00023

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

Applicability.

Applicability.

Applicability.

GSDDET

PsN: PUBL245

122 STAT. 1646

PUBLIC LAW 110–245—JUNE 17, 2008

Such an election may be revoked with the consent
of the Secretary.
‘‘(f) COVERED EXPATRIATE.—For purposes of this section, the
term ‘covered expatriate’ has the meaning given to such term by
section 877A(g)(1).’’.
(2) CLERICAL AMENDMENT.—The table of chapters for subtitle B is amended by inserting after the item relating to
chapter 14 the following new item:
‘‘CHAPTER 15. GIFTS

(c) DEFINITION

OF

AND

BEQUESTS FROM EXPATRIATES.’’.

TERMINATION

OF

UNITED STATES CITIZEN-

SHIP.—

26 USC 7701.

dkrause on GSDDPC44 with PUBLIC LAWS

Regulations.

VerDate Aug 31 2005

20:15 Jun 21, 2008

(1) IN GENERAL.—Section 7701(a) is amended by adding
at the end the following new paragraph:
‘‘(50) TERMINATION OF UNITED STATES CITIZENSHIP.—
‘‘(A) IN GENERAL.—An individual shall not cease to
be treated as a United States citizen before the date on
which the individual’s citizenship is treated as relinquished
under section 877A(g)(4).
‘‘(B) DUAL CITIZENS.—Under regulations prescribed by
the Secretary, subparagraph (A) shall not apply to an individual who became at birth a citizen of the United States
and a citizen of another country.’’.
(2) CONFORMING AMENDMENTS.—
(A) Paragraph (1) of section 877(e) is amended to read
as follows:
‘‘(1) IN GENERAL.—Any long-term resident of the United
States who ceases to be a lawful permanent resident of the
United States (within the meaning of section 7701(b)(6)) shall
be treated for purposes of this section and sections 2107, 2501,
and 6039G in the same manner as if such resident were a
citizen of the United States who lost United States citizenship
on the date of such cessation or commencement.’’.
(B) Paragraph (6) of section 7701(b) is amended by
adding at the end the following flush sentence:
‘‘An individual shall cease to be treated as a lawful permanent
resident of the United States if such individual commences
to be treated as a resident of a foreign country under the
provisions of a tax treaty between the United States and the
foreign country, does not waive the benefits of such treaty
applicable to residents of the foreign country, and notifies the
Secretary of the commencement of such treatment.’’.
(C) Section 7701 is amended by striking subsection
(n) and by redesignating subsections (o) and (p) as subsections (n) and (o), respectively.
(d) TERMINATION OF SECTION 877.—Section 877 is amended
by adding at the end the following new subsection:
‘‘(h) TERMINATION.—This section shall not apply to any individual whose expatriation date (as defined in section 877A(g)(3))
is on or after the date of the enactment of this subsection.’’.
(e) INFORMATION RETURNS.—Section 6039G is amended—
(1) by inserting ‘‘or 877A’’ after ‘‘section 877(b)’’ in subsection (a), and
(2) by inserting ‘‘or 877A’’ after ‘‘section 877(a)’’ in subsection (d).

Jkt 069139

PO 00245

Frm 00024

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1647

(f) CLERICAL AMENDMENT.—The table of sections for subpart
A of part II of subchapter N of chapter 1 is amended by inserting
after the item relating to section 877 the following new item:
‘‘Sec. 877A. Tax responsibilities of expatriation.’’.

(g) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in this subsection,
the amendments made by this section shall apply to any individual whose expatriation date (as so defined) is on or after
the date of the enactment of this Act.
(2) GIFTS AND BEQUESTS.—Chapter 15 of the Internal Revenue Code of 1986 (as added by subsection (b)) shall apply
to covered gifts and bequests (as defined in section 2801 of
such Code, as so added) received on or after the date of the
enactment of this Act from transferors (or from the estates
of transferors) whose expatriation date is on or after such
date of enactment.

26 USC 2801
note.

Applicability.

dkrause on GSDDPC44 with PUBLIC LAWS

SEC. 302. CERTAIN DOMESTICALLY CONTROLLED FOREIGN PERSONS
PERFORMING SERVICES UNDER CONTRACT WITH UNITED
STATES
GOVERNMENT
TREATED
AS
AMERICAN
EMPLOYERS.

(a) FICA TAXES.—Section 3121 (relating to definitions) is
amended by adding at the end the following new subsection:
‘‘(z) TREATMENT OF CERTAIN FOREIGN PERSONS AS AMERICAN
EMPLOYERS.—
‘‘(1) IN GENERAL.—If any employee of a foreign person
is performing services in connection with a contract between
the United States Government (or any instrumentality thereof)
and any member of any domestically controlled group of entities
which includes such foreign person, such foreign person shall
be treated for purposes of this chapter as an American employer
with respect to such services performed by such employee.
‘‘(2) DOMESTICALLY CONTROLLED GROUP OF ENTITIES.—For
purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘domestically controlled
group of entities’ means a controlled group of entities the
common parent of which is a domestic corporation.
‘‘(B) CONTROLLED GROUP OF ENTITIES.—The term ‘controlled group of entities’ means a controlled group of corporations as defined in section 1563(a)(1), except that—
‘‘(i) ‘more than 50 percent’ shall be substituted
for ‘at least 80 percent’ each place it appears therein,
and
‘‘(ii) the determination shall be made without
regard to subsections (a)(4) and (b)(2) of section 1563.
A partnership or any other entity (other than a corporation)
shall be treated as a member of a controlled group of
entities if such entity is controlled (within the meaning
of section 954(d)(3)) by members of such group (including
any entity treated as a member of such group by reason
of this sentence).
‘‘(3) LIABILITY OF COMMON PARENT.—In the case of a foreign
person who is a member of any domestically controlled group
of entities, the common parent of such group shall be jointly
and severally liable for any tax under this chapter for which
such foreign person is liable by reason of this subsection, and

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00025

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

26 USC 3121.

GSDDET

PsN: PUBL245

122 STAT. 1648

dkrause on GSDDPC44 with PUBLIC LAWS

26 USC 3121
note.

VerDate Aug 31 2005

20:15 Jun 21, 2008

PUBLIC LAW 110–245—JUNE 17, 2008

for any penalty imposed on such person by this title with
respect to any failure to pay such tax or to file any return
or statement with respect to such tax or wages subject to
such tax. No deduction shall be allowed under this title for
any liability imposed by the preceding sentence.
‘‘(4) PROVISIONS PREVENTING DOUBLE TAXATION.—
‘‘(A) AGREEMENTS.—Paragraph (1) shall not apply to
any services which are covered by an agreement under
subsection (l).
‘‘(B) EQUIVALENT FOREIGN TAXATION.—Paragraph (1)
shall not apply to any services if the employer establishes
to the satisfaction of the Secretary that the remuneration
paid by such employer for such services is subject to a
tax imposed by a foreign country which is substantially
equivalent to the taxes imposed by this chapter.
‘‘(5) CROSS REFERENCE.—For relief from taxes in cases covered by certain international agreements, see sections 3101(c)
and 3111(c).’’.
(b) SOCIAL SECURITY BENEFITS.—Subsection (e) of section 210
of the Social Security Act (42 U.S.C. 410(e)) is amended—
(1) by striking ‘‘(e) The term’’ and inserting ‘‘(e)(1) The
term’’,
(2) by redesignating clauses (1) through (6) as clauses
(A) through (F), respectively, and
(3) by adding at the end the following new paragraph:
‘‘(2)(A) If any employee of a foreign person is performing services in connection with a contract between the United States
Government (or any instrumentality thereof) and any member of
any domestically controlled group of entities which includes such
foreign person, such foreign person shall be treated as an American
employer with respect to such services performed by such employee.
‘‘(B) For purposes of this paragraph—
‘‘(i) The term ‘domestically controlled group of entities’
means a controlled group of entities the common parent of
which is a domestic corporation.
‘‘(ii) The term ‘controlled group of entities’ means a controlled group of corporations as defined in section 1563(a)(1)
of the Internal Revenue Code of 1986, except that—
‘‘(I) ‘more than 50 percent’ shall be substituted for
‘at least 80 percent’ each place it appears therein, and
‘‘(II) the determination shall be made without regard
to subsections (a)(4) and (b)(2) of section 1563 of such
Code.
A partnership or any other entity (other than a corporation)
shall be treated as a member of a controlled group of entities
if such entity is controlled (within the meaning of section
954(d)(3) of such Code) by members of such group (including
any entity treated as a member of such group by reason of
this sentence).
‘‘(C) Subparagraph (A) shall not apply to any services to which
paragraph (1) of section 3121(z) of the Internal Revenue Code
of 1986 does not apply by reason of paragraph (4) of such section.’’.
(c) EFFECTIVE DATE.—The amendment made by this section
shall apply to services performed in calendar months beginning
more than 30 days after the date of the enactment of this Act.

Jkt 069139

PO 00245

Frm 00026

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

PUBLIC LAW 110–245—JUNE 17, 2008

122 STAT. 1649

SEC. 303. INCREASE IN MINIMUM PENALTY ON FAILURE TO FILE A
RETURN OF TAX.

(a) IN GENERAL.—Subsection (a) of section 6651 is amended
by striking ‘‘$100’’ in the last sentence and inserting ‘‘$135’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to returns required to be filed after December 31,
2008.

26 USC 6651.
26 USC 6651
note.

TITLE IV—PARITY IN THE APPLICATION
OF CERTAIN LIMITS TO MENTAL
HEALTH BENEFITS
SEC. 401. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO
MENTAL HEALTH BENEFITS.

dkrause on GSDDPC44 with PUBLIC LAWS

(a) INTERNAL REVENUE CODE OF 1986.—Subsection (f) of section
9812 is amended—
(1) by striking ‘‘and’’ at the end of paragraph (2), and
(2) by striking paragraph (3) and inserting the following
new paragraphs:
‘‘(3) on or after January 1, 2008, and before the date
of the enactment of the Heroes Earnings Assistance and Relief
Tax Act of 2008, and
‘‘(4) after December 31, 2008.’’.
(b) EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.—
Subsection (f) of section 712 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1185a(f)) is amended by striking
‘‘services furnished after December 31, 2007’’ and inserting ‘‘services
furnished—
‘‘(1) on or after January 1, 2008, and before the date
of the enactment of the Heroes Earnings Assistance and Relief
Tax Act of 2008, and
‘‘(2) after December 31, 2008.’’.

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00027

Fmt 6580

Sfmt 6581

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245

122 STAT. 1650

PUBLIC LAW 110–245—JUNE 17, 2008

(c) PUBLIC HEALTH SERVICE ACT.—Subsection (f) of section
2705 of the Public Health Service Act (42 U.S.C. 300gg-5(f)) is
amended by striking ‘‘services furnished after December 31, 2007’’
and inserting ‘‘services furnished—
‘‘(1) on or after January 1, 2008, and before the date
of the enactment of the Heroes Earnings Assistance and Relief
Tax Act of 2008, and
‘‘(2) after December 31, 2008.’’.
Approved June 17, 2008.

dkrause on GSDDPC44 with PUBLIC LAWS

LEGISLATIVE HISTORY—H.R. 6081:
CONGRESSIONAL RECORD, Vol. 154 (2008):
May 20, considered and passed House.
May 22, considered and passed Senate.

Æ

VerDate Aug 31 2005

20:15 Jun 21, 2008

Jkt 069139

PO 00245

Frm 00028

Fmt 6580

Sfmt 6580

E:\PUBLAW\PUBL245.110

GSDDET

PsN: PUBL245