The Armed Services Tax Fairness Act (H.R. 878) provides tax relief to members of the armed services, including an extension of the deadline for filing tax returns, exemption of death gratuity payments from taxation, a tax deduction for reservists of up to $500 for travel expenses, and a suspension of the requirement that uniformed service members must have owned and used a home as a principal residence for at least two of five years to avoid capital gains taxes.

"Hundreds of thousands of young American men and women selflessly sacrifice so much of their lives for the continued progress of freedom and democracy," said Congressman Langevin. "One way Congress and this nation can reward their dedication is to provide tax relief so they can better provide for their families. I am deeply disappointed that some of my Republican colleagues chose to use this legislation as an opportunity to pass tax breaks for others who are not risking their lives each and every day."

The Act will save military families $80 million in taxes in 2003, and $478 million over the next decade.

The special interest tax provisions attached to H.R. 878 include: (1) a tax break for foreigners who place bets outside the United States on U.S. horse races, (2) a special tax rate on fuel that is a blend of diesel fuel and water benefiting the few companies that manufacture such fuels, (3) a tax break for manufacturers of fishing tackle boxes, (4) a tax break to benefit landowners who sell timber from their land, (5) an extension of the time allowed for ranchers to utilize a tax break for the weather-related sale of livestock, and (6) a tax break for several varieties of archery bows.

The tax relief bill supported by House Democrats in a "motion to recommit" did not include any of the extraneous tax amendments that were adopted by the Committee on Ways and Means. It was identical to a bipartisan bill passed by the Senate Finance Committee on February 11th (S. 351). This bill is very similar to H.R. 878 except that it actually provides more tax relief to members of the armed services because it does not place a dollar limitation on the deduction for overnight travel expenses of National Guard members and Reservists, as opposed to the $500 limit in H.R. 878. In addition, it provides more liberal capital gains relief for sales of principal residences for members of the military.