Senator Mark Pryor Press Releases

WASHINGTON D.C. –Senator Mark Pryor today announced his measure known as the “TRAC Act” will be permanently extended, allowing soldiers earning combat pay to also collect the Earned Income Tax Credit. The measure was included in the Defenders of Freedom Tax Relief Act, which was given final approval by the Senate and House of Representatives this week.

Pryor said the legislation will allow soldiers serving in combat zones to continue collecting their combat pay and take advantage of the Earned Income Tax Credit permanently. In 2004, Pryor fixed a tax glitch that was forcing military personnel earning combat pay to forfeit tax benefits, such as the Earned Income Tax Credit (EITC) and the Child Tax Credit. The EITC is a refundable federal income tax credit that puts cash in the hands of working individuals and families. Pryor has been able to ensure soldiers aren’t punished by the tax code on an annual basis since then, but when President Bush signs the Defenders of Freedom Tax Relief Act into law, this fix for the EITC portion will be permanent.

“Combat pay is extended to soldiers who are serving in the most dangerous war zones, including thousands of Americans currently in Iraq and Afghanistan. These soldiers and their families certainly should not be punished by the tax code,” Pryor said. “My legislation ensures our troops can claim the EITC whether they are serving overseas or at home with their families. It’s a common-sense step to make sure our military families are treated fairly, and I’m pleased Congress fixed it permanently. ”

As a result of Pryor’s Tax Relief for Americans in Combat of 2004 (TRAC Act), between 10,000 and 20,000 soldiers elected to include combat pay for purposes of the EITC in 2004. A 2003 Government Accounting Office study estimates the tax glitch in regard to the EITC penalized lower-income soldiers by as much as $4,500 for officers and $3,200 for enlisted members. For the same year, approximately 75,000 taxpayers included combat pay for purposes of the child tax credit for that year and received an increased tax refund of 1,300, on average.

Pryor said the combat pay tax relief provision is part of the Defenders of Freedom Tax Relief Act, which extends additional tax benefits for our troops and veterans.Itprovides a tax cut for small businesses who continue paying salary to members of the National Guard and Reserve called to duty; makes it easier for reservists to file their taxes and simpler for employers to keep contributing to those employees’ retirement plans; allows active duty troops to withdraw money from retirement plans and replace the funds within two years without penalty; continues to allow retired veterans more time to claim a tax refund on some types of disability benefit payments; allows the IRS to treat gifts of thanks from states to veterans as nontaxible; allows families of Reservists killed in the line of duty to collect life insurance and other benefits provided by the civilian employer; permanently allows all veterans to use qualified mortgage bonds to purchase their homes ; and allows families of soldiers killed in the line of duty to contribute up to 100 percent of survivor benefits to retirement savings accounts or to education savings accounts.

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		December 20, 2007 Press Release Pryor Fixes Combat Pay Tax "Glitch" Permanently Legislation Headed to President's Desk WASHINGTON D.C. –Senator Mark Pryor today announced his measure known as the “TRAC Act” will be permanently extended, allowing soldiers earning combat pay to also collect the Earned Income Tax Credit. The measure was included in the Defenders of Freedom Tax Relief Act, which was given final approval by the Senate and House of Representatives this week. Pryor said the legislation will allow soldiers serving in combat zones to continue collecting their combat pay and take advantage of the Earned Income Tax Credit permanently. In 2004, Pryor fixed a tax glitch that was forcing military personnel earning combat pay to forfeit tax benefits, such as the Earned Income Tax Credit (EITC) and the Child Tax Credit. The EITC is a refundable federal income tax credit that puts cash in the hands of working individuals and families. Pryor has been able to ensure soldiers aren’t punished by the tax code on an annual basis since then, but when President Bush signs the Defenders of Freedom Tax Relief Act into law, this fix for the EITC portion will be permanent. “Combat pay is extended to soldiers who are serving in the most dangerous war zones, including thousands of Americans currently in Iraq and Afghanistan. These soldiers and their families certainly should not be punished by the tax code,” Pryor said. “My legislation ensures our troops can claim the EITC whether they are serving overseas or at home with their families. It’s a common-sense step to make sure our military families are treated fairly, and I’m pleased Congress fixed it permanently. ” As a result of Pryor’s Tax Relief for Americans in Combat of 2004 (TRAC Act), between 10,000 and 20,000 soldiers elected to include combat pay for purposes of the EITC in 2004. A 2003 Government Accounting Office study estimates the tax glitch in regard to the EITC penalized lower-income soldiers by as much as $4,500 for officers and $3,200 for enlisted members. For the same year, approximately 75,000 taxpayers included combat pay for purposes of the child tax credit for that year and received an increased tax refund of 1,300, on average. Pryor said the combat pay tax relief provision is part of the Defenders of Freedom Tax Relief Act, which extends additional tax benefits for our troops and veterans.Itprovides a tax cut for small businesses who continue paying salary to members of the National Guard and Reserve called to duty; makes it easier for reservists to file their taxes and simpler for employers to keep contributing to those employees’ retirement plans; allows active duty troops to withdraw money from retirement plans and replace the funds within two years without penalty; continues to allow retired veterans more time to claim a tax refund on some types of disability benefit payments; allows the IRS to treat gifts of thanks from states to veterans as nontaxible; allows families of Reservists killed in the line of duty to collect life insurance and other benefits provided by the civilian employer; permanently allows all veterans to use qualified mortgage bonds to purchase their homes ; and allows families of soldiers killed in the line of duty to contribute up to 100 percent of survivor benefits to retirement savings accounts or to education savings accounts. ###