Lawmakers seek to extend combat-zone tax break to feds

Legislation was introduced in the House and Senate last week that would provide federal civilian employees serving in combat zones with the same tax credit that is available to military service members.

The bills (H.R. 1974 and S. 1166), sponsored by Virginia Republicans Rep. Frank Wolf and Sen. John Warner, aim to provide tax parity to federal civilian employees who serve alongside military personnel in places like Iraq and Afghanistan.

"Now more than ever in our nation's history, we must take action that reflects the contributions both our civilian and military employees are making, in the war on terrorism as well as the daily operations of the federal government in providing the services upon which every American relies," Wolf said in a statement.

Currently, members of the military and federal contractors serving in combat zones are eligible for an income tax exemption on their base pay, up to a certain limit. But federal civilian employees are not. Instead, they are given "hardship pay," which can be up to 25 percent of their salary, but is not guaranteed.

Wolf and Warner introduced the legislation late in the last congressional session, but it failed to make it out of committee. Labor union officials hope the bill will have better chances under the new congressional leadership.

"Approval of this measure would be an important signal to these patriotic and dedicated employees that their service is both recognized and valued," said Colleen Kelley, president of the National Treasury Employees Union.

Wolf and Warner have estimated that there are about 2,000 federal employees working in Iraq and Afghanistan at any given time. "I know there are many other federal employees who are anxious to serve their country and engage in these efforts, but it is a lot to risk," Warner said.

The legislation would provide significant incentives for more federal employees to serve in combat zones, especially as the nation encounters an increasing need for such service in the Middle East, the lawmakers said.

Last year, Warner sponsored legislation that became law under an emergency supplemental bill, extending to all agencies the option of paying an amount equal to one year of salary to the families of civilian employees who die while serving in Iraq and Afghanistan. The law also provides a $10,000 death gratuity. These benefits are similar to ones that were already permitted at the Defense and State departments.

"I have long been a strong supporter of our federal employees as I have been for our military personnel," Warner said. "Our efforts in the war on terrorism can only be successful with a highly skilled and experienced workforce.