Certain combat zone compensation of members of the Armed Forces
Enlisted personnel
Gross income does not include compensation received for active service as a member below the grade of commissioned officer in the Armed Forces of the United States for any month during any part of which such member—
served in a combat zone, or
was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone; but this paragraph shall not apply for any month beginning more than 2 years after the date of the termination of combatant activities in such zone.
With respect to service in the combat zone designated for purposes of the Vietnam conflict, paragraph (2) shall not apply to any month after January 1978.
Commissioned officers
Gross income does not include so much of the compensation as does not exceed the maximum enlisted amount received for active service as a commissioned officer in the Armed Forces of the United States for any month during any part of which such officer—
served in a combat zone, or
was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone; but this paragraph shall not apply for any month beginning more than 2 years after the date of the termination of combatant activities in such zone.
With respect to service in the combat zone designated for purposes of the Vietnam conflict, paragraph (2) shall not apply to any month after January 1978.
Definitions
For purposes of this section—
The term “commissioned officer” does not include a commissioned warrant officer.
The term “combat zone” means any area which the President of the United States by Executive Order designates, for purposes of this section or corresponding provisions of prior income tax laws, as an area in which Armed Forces of the United States are or have engaged in combat.
Service is performed in a combat zone only if performed on or after the date designated by the President by Executive Order as the date of the commencing of combatant activities in such zone, and on or before the date designated by the President by Executive Order as the date of the termination of combatant activities in such zone.
The term “compensation” does not include pensions and retirement pay.
The term “maximum enlisted amount” means, for any month, the sum of—
the highest rate of basic pay payable for such month to any enlisted member of the Armed Forces of the United States at the highest pay grade applicable to enlisted members, and
in the case of an officer entitled to special pay under section 310, or paragraph (1) or (3) of section 351(a), of title 37, United States Code, for such month, the amount of such special pay payable to such officer for such month.
Prisoners of war, etc.
Members of the Armed Forces
Civilian employees
Period of conflict
Source
(Aug. 16, 1954, ch. 736, 68A Stat. 34; Pub. L. 89–739, § 1,Notes
Editorial Notes
Amendments
Statutory Notes and Related Subsidiaries
Effective Date of 2014 Amendment
Effective Date of 1975 Amendment
Effective Date of 1972 Amendment
Effective Date of 1966 Amendment
Treatment of Certain Individuals Performing Services in the Sinai Peninsula of Egypt
In General.—
For purposes of the following provisions of the Internal Revenue Code of 1986, a qualified hazardous duty area shall be treated in the same manner as if it were a combat zone (as determined under section 112 of such Code):
Section 2(a)(3) (relating to special rule where deceased spouse was in missing status).
Section 112 (relating to the exclusion of certain combat pay of members of the Armed Forces).
Section 692 (relating to income taxes of members of Armed Forces on death).
Section 2201 (relating to members of the Armed Forces dying in combat zone or by reason of combat-zone-incurred wounds, etc.).
Section 3401(a)(1) (defining wages relating to combat pay for members of the Armed Forces).
Section 4253(d) (relating to the taxation of phone service originating from a combat zone from members of the Armed Forces).
Section 6013(f)(1) (relating to joint return where individual is in missing status).
Section 7508 (relating to time for performing certain acts postponed by reason of service in combat zone).
Qualified Hazardous Duty Area.—
For purposes of this section, the term ‘qualified hazardous duty area’ means each of the following locations, but only during the period for which any member of the Armed Forces of the United States is entitled to special pay under section 310 of title 37, United States Code (relating to special pay; duty subject to hostile fire or imminent danger), for services performed in such location:
the Sinai Peninsula of Egypt.
Kenya.
Mali.
Burkina Faso.
Chad.”
Sense of Congress Regarding Tax Treatment of Members Receiving Special Pay for Duty Subject to Hostile Fire or Imminent Danger
Sense of Congress Regarding Treatment Under Internal Revenue Code of Members Receiving Hostile Fire or Imminent Danger Special Pay During Contingency Operations
Availability of Certain Tax Benefits for Services as Part of Operation Allied Force
General Rule.—
For purposes of the following provisions of the Internal Revenue Code of 1986, a qualified hazardous duty area shall be treated in the same manner as if it were a combat zone (as determined under section 112 of such Code):
Section 2(a)(3) (relating to special rule where deceased spouse was in missing status).
Section 112 (relating to the exclusion of certain combat pay of members of the Armed Forces).
Section 692 (relating to income taxes of members of Armed Forces on death).
Section 2201 (relating to members of the Armed Forces dying in combat zone or by reason of combat-zone-incurred wounds, etc.).
Section 3401(a)(1) (defining wages relating to combat pay for members of the Armed Forces).
Section 4253(d) (relating to the taxation of phone service originating from a combat zone from members of the Armed Forces).
Section 6013(f)(1) (relating to joint return where individual is in missing status).
Section 7508 (relating to time for performing certain acts postponed by reason of service in combat zone).
Qualified Hazardous Duty Area.—
For purposes of this section, the term ‘qualified hazardous duty area’ means any area of the Federal Republic of Yugoslavia (Serbia/Montenegro), Albania, the Adriatic Sea, and the northern Ionian Sea (above the 39th parallel) during the period (which includes the date of the enactment of this Act [
Special Rule for Section 7508.—
Solely for purposes of applying section 7508 of the Internal Revenue Code of 1986, in the case of an individual who is performing services as part of Operation Allied Force outside the United States while deployed away from such individual’s permanent duty station, the term ‘qualified hazardous duty area’ includes, during the period for which the entitlement referred to in subsection (b) is in effect, any area in which such services are performed.
Effective Dates.—
In general.—
Except as provided in paragraph (2), this section shall take effect on
Withholding.—
Subsection (a)(5) shall apply to remuneration paid after the date of the enactment of this Act [
Treatment of Certain Individuals Performing Services in Certain Hazardous Duty Areas; Effective Date
General Rule.—
For purposes of the following provisions of the Internal Revenue Code of 1986, a qualified hazardous duty area shall be treated in the same manner as if it were a combat zone (as determined under section 112 of such Code):
Section 2(a)(3) (relating to special rule where deceased spouse was in missing status).
Section 112 (relating to the exclusion of certain combat pay of members of the Armed Forces).
Section 692 (relating to income taxes of members of Armed Forces on death).
Section 2201 (relating to members of the Armed Forces dying in combat zone or by reason of combat-zone-incurred wounds, etc.).
Section 3401(a)(1) (defining wages relating to combat pay for members of the Armed Forces).
Section 4253(d) (relating to the taxation of phone service originating from a combat zone from members of the Armed Forces).
Section 6013(f)(1) (relating to joint return where individual is in missing status).
Section 7508 (relating to time for performing certain acts postponed by reason of service in combat zone).
Qualified Hazardous Duty Area.—
For purposes of this section, the term ‘qualified hazardous duty area’ means Bosnia and Herzegovina, Croatia, or Macedonia, if as of the date of the enactment of this section [
Exclusion of Combat Pay From Withholding Limited to Amount Excludable From Gross Income.—
Increase in Combat Pay Exclusion for Officers to Highest Amount Applicable to Enlisted Personnel.—
In general.—
Maximum enlisted amount.—
Effective Date.—
In general.—
Except as provided in paragraph (2), the provisions of and amendments made by this section shall take effect on
Withholding.—
Subsection (a)(5) and the amendment made by subsection (c) shall apply to remuneration paid after the date of the enactment of this Act [
Refund or Credit of Overpayment; Applicable Period
If refund or credit of any overpayment for any taxable year resulting from the application of the amendment made by the first section of this Act [amending this section] (including interest, additions to the tax, and additional amounts) is prevented at any time before the expiration of the applicable period specified in paragraph (3) by the operation of any law or rule of law, such refund or credit of such overpayment may, nevertheless, be made or allowed if claim therefor is filed before the expiration of such applicable period.
For purposes of paragraph (2), the applicable period for any individual with respect to any compensation is the period ending on whichever of the following days is the later:
the day which is one year after the date of the enactment of this Act [
the day which is 2 years after the date on which it is determined that the individual’s missing status (within the meaning of section 112(d) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) has terminated for purposes of such section 112.”