Clinton Signs Tax Relief Bill for Joint Endeavor
By Master Sgt. Stephen Barrett, USA
American Forces Press Service
WASHINGTON, March 27, 1996 President Clinton today signed a bill extending special tax benefits to military personnel serving in BosniaHerzegovina, Croatia and Macedonia. The benefits are retroactive to Nov. 21, 1995.
"During Vietnam and the Gulf War, tax relief was granted to individuals serving in `combat zones,'" said Clinton. "By extending similar tax benefits to those supporting peace efforts in the former Yugoslavia, this legislation recognizes the unique hardships and risks members of the U.S. armed forces face in noncombat missions like the one in Bosnia."
Air Force Lt. Col. David Pronchick, the armed forces tax counsel, said the move is unprecedented because service members in certain contingency operations receive tax benefits that were traditionally reserved for members in combat areas. "Because of this, there are benefits to all of those service members deployed," he said.
For warrant officers and enlisted members, the benefits are the same as in Desert Storm. All military pay earned in the contingency zone Bosnia, Croatia and Macedonia is taxfree. They are also eligible for waivers of interest and penalties and filing delays of at least 180 days after their departure from the area.
However, the tax bill Clinton signed increases the officers' exclusion to nearly $4,250 per month a major increase from the $500 per month exemption under the old law. Pronchick said the new law is based on the maximum enlisted pay amount ($4,104.90 for 1996) plus the $150 imminent danger pay. All other monthly income remains taxable.
"This is basically a hybrid of all the House of Representative initiatives to help service members in Joint Endeavor," said Pronchick, "and we got more than we expected."
The bill also grants what Pronchick calls a twocircle approach for tax benefits. The inner circle area includes Serbia and Montenegro in addition to Bosnia, Croatia and Macedonia. Service members assigned in those areas or those who fly missions over those areas will receive the complete tax benefit.
Pronchick said this covers all scenarios should U.S. forces need to move into other former Yugoslavia areas. In addition, pilots and flight crews flying support missions over any part of the inner circle region will also receive taxexempt benefits for the month.
The same entry benefit also applies to support troops assigned in Italy and Hungary, and aboard vessels in the Adriatic Sea personnel assigned in the bill's second circle. Although they won't automatically qualify for taxfree income, Pronchick said if mission requirements move them into the zone, they'll receive the tax break. "Even if they're in the zone for one day, their income for that month will be taxfree."
Service members assigned to operation support areas outside Bosnia remain eligible for tax filing extensions. The Internal Revenue Service granted an eightmonth extension to all service members deployed in support of Joint Endeavor. To qualify, Pronchick said, service members must deploy outside the United States and away from their permanent duty stations in support of Joint Endeavor.
In addition to helping officers in support of Joint Endeavor, the bill benefits officers assigned in the Persian Gulf an area still considered a war zone. Officers supporting Persian Gulf operations on or after Nov. 21, 1995, may also claim the $4,200 tax exemption.
The officer exemption means the Defense Finance and Accounting Service must produce new W2 forms for eligible officers, Pronchick said. IRS is asking eligible service members to delay filing until they receive their new W2s. He said this will help prevent an onslaught of tax filing amendments and assist the IRS to process returns correctly.
Also, IRS is asking service members to include the statement "in support of the former Yugoslavia" at the top of the tax return. This will help IRS officials in properly processing tax returns.