05.10.10

Sen. Burr Introduces Bill to Relieve Tax Burden for Families of Fallen Servicemembers

Senator Burr today introduced the Children of Fallen Warriors AMT Relief Act, legislation that protects children from paying disproportionate taxes on the benefits they receive after the death of a parent who has served in the military.

"Our nation's servicemembers and their families have sacrificed enough on our behalf without then being subjected to the alternative minimum tax on their survivor's benefits. That is why I am proud to introduce the Children of Fallen Warriors AMT Relief Act, which will remove the punitive burden that is currently imposed on the children of our fallen heroes by the Alternative Minimum Tax," Sen. Burr said.

When it was created, the Alternative Minimum Tax (AMT) was designed to target a few hundred wealthy Americans whose tax benefits resulted in their paying little or no federal income tax. However, since it has not been adjusted to the rate of inflation, it has now expanded to include millions of Americans it was never intended to affect. As a result, Congress is frequently required to pass relief bills.

Under the current system, some children who receive an annuity from the Uniformed Services Survivor Benefit Plan (SBP) could be subject to a punitive AMT. This unintended consequence can cost the children as much as 26% of their benefit.

The bill introduced today corrects the problem by re-classifying the payout for children from the SBP as earned income, and therefore subject to normal taxation rules for wages rather than the higher taxation rate for the AMT.