Clinton Promises Allied Force Tax Relief
By Jim Garamone
American Forces Press Service
WASHINGTON, April 13, 1999 U.S. service members taking part in Operation Allied Force will be earning tax-free pay once President Clinton issues an executive order he promised to sign April 12.
"With our citizens working so hard to protect the people of Kosovo, they shouldn't have to worry about their taxes," Clinton told an audience of service members at Barksdale Air Force Base, La. He said his order also will suspend the filing deadline for members' 1998 tax returns. U.S. personnel serving in the area will also receive $150 monthly imminent danger pay.
DoD officials estimate as many as 22,000 personnel could be affected.
Under Clinton's executive order, Kosovo will be designated a combat zone for tax relief benefits. The zone includes Yugoslavia, Albania, the Adriatic Sea and the northern Ionian Sea, and the airspace of all.
Once the order is in effect, enlisted members' and warrant officers' income from a variety of sources will be exempt from both income tax and withholding for the months they serve in the zone. The exemption for commissioned officers is capped. This benefit applies to 1999 income to be reported in 2000.
The suspension of Allied Force members' tax filing deadline also suspends the interest and penalties the Internal Revenue Service would normally charge for nonpayment of taxes. While anyone can ask for an extension, the request usually must be accompanied by a payment of estimated taxes to avoid interest and penalties.
DoD officials will have more information -- including specific units to be covered -- in a few days.
For the IRS' discussion on combat zone tax exclusions, see the Armed Forces Tax Guide.