
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 106-398 Section 1[1089]]
[CITE: 26USC112]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
         PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
 
Sec. 112. Certain combat zone compensation of members of the 
        Armed Forces
        

(a) Enlisted personnel

    Gross income does not include compensation received for active 
service as a member below the grade of commissioned officer in the Armed 
Forces of the United States for any month during any part of which such 
member--
        (1) served in a combat zone, or
        (2) was hospitalized as a result of wounds, disease, or injury 
    incurred while serving in a combat zone; but this paragraph shall 
    not apply for any month beginning more than 2 years after the date 
    of the termination of combatant activities in such zone.

With respect to service in the combat zone designated for purposes of 
the Vietnam conflict, paragraph (2) shall not apply to any month after 
January 1978.

(b) Commissioned officers

    Gross income does not include so much of the compensation as does 
not exceed the maximum enlisted amount received for active service as a 
commissioned officer in the Armed Forces of the United States for any 
month during any part of which such officer--
        (1) served in a combat zone, or
        (2) was hospitalized as a result of wounds, disease, or injury 
    incurred while serving in a combat zone; but this paragraph shall 
    not apply for any month beginning more than 2 years after the date 
    of the termination of combatant activities in such zone.

With respect to service in the combat zone designated for purposes of 
the Vietnam conflict, paragraph (2) shall not apply to any month after 
January 1978.

(c) Definitions

    For purposes of this section--
        (1) The term ``commissioned officer'' does not include a 
    commissioned warrant officer.
        (2) The term ``combat zone'' means any area which the President 
    of the United States by Executive Order designates, for purposes of 
    this section or corresponding provisions of prior income tax laws, 
    as an area in which Armed Forces of the United States are or have 
    (after June 24, 1950) engaged in combat.
        (3) Service is performed in a combat zone only if performed on 
    or after the date designated by the President by Executive Order as 
    the date of the commencing of combatant activities in such zone, and 
    on or before the date designated by the President by Executive Order 
    as the date of the termination of combatant activities in such zone; 
    except that June 25, 1950, shall be considered the date of the 
    commencing of combatant activities in the combat zone designated in 
    Executive Order 10195.
        (4) The term ``compensation'' does not include pensions and 
    retirement pay.
        (5) The term ``maximum enlisted amount'' means, for any month, 
    the sum of--
            (A) the highest rate of basic pay payable for such month to 
        any enlisted member of the Armed Forces of the United States at 
        the highest pay grade applicable to enlisted members, and
            (B) in the case of an officer entitled to special pay under 
        section 310 of title 37, United States Code, for such month, the 
        amount of such special pay payable to such officer for such 
        month.

(d) Prisoners of war, etc.

                   (1) Members of the Armed Forces

        Gross income does not include compensation received for active 
    service as a member of the Armed Forces of the United States for any 
    month during any part of which such member is in a missing status 
    (as defined in section 551(2) of title 37, United States Code) 
    during the Vietnam conflict as a result of such conflict, other than 
    a period with respect to which it is officially determined under 
    section 552(c) of such title 37 that he is officially absent from 
    his post of duty without authority.

                       (2) Civilian employees

        Gross income does not include compensation received for active 
    service as an employee for any month during any part of which such 
    employee is in a missing status during the Vietnam conflict as a 
    result of such conflict. For purposes of this paragraph, the terms 
    ``active service'', ``employee'', and ``missing status'' have the 
    respective meanings given to such terms by section 5561 of title 5 
    of the United States Code.

                       (3) Period of conflict

        For purposes of this subsection, the Vietnam conflict began 
    February 28, 1961, and ends on the date designated by the President 
    by Executive order as the date of the termination of combatant 
    activities in Vietnam. For purposes of this subsection, an 
    individual is in a missing status as a result of the Vietnam 
    conflict if immediately before such status began he was performing 
    service in Vietnam or was performing service in Southeast Asia in 
    direct support of military operations in Vietnam.

(Aug. 16, 1954, ch. 736, 68A Stat. 34; Pub. L. 89-739, Sec. 1, Nov. 2, 
1966, 80 Stat. 1165; Pub. L. 92-279, Sec. 1, Apr. 26, 1972, 86 Stat. 
124; Pub. L. 93-597, Sec. 2(a), (b), Jan. 2, 1975, 88 Stat. 1950; Pub. 
L. 94-569, Sec. 3(b), Oct. 20, 1976, 90 Stat. 2699; Pub. L. 104-117, 
Sec. 1(d), Mar. 20, 1996, 110 Stat. 828; Pub. L. 104-188, title I, 
Sec. 1704(t)(4)(A), Aug. 20, 1996, 110 Stat. 1887.)


                               Amendments

    1996--Pub. L. 104-188 substituted ``combat zone compensation'' for 
``combat pay'' in section catchline.
    Subsec. (b). Pub. L. 104-117, Sec. 1(d)(1), substituted ``the 
maximum enlisted amount'' for ``$500'' in introductory provisions.
    Subsec. (c)(5). Pub. L. 104-117, Sec. 1(d)(2), added par. (5).
    1976--Subsec. (a). Pub. L. 94-569 substituted ``after January 1978'' 
for ``beginning more than 2 years after the date of the enactment of 
this sentence'' after ``With respect to service in the combat zone 
designated for purposes of the Vietnam conflict, paragraph (2) shall not 
apply to any month''.
    Subsec. (b). Pub. L. 94-569 substituted ``after January 1978'' for 
``beginning more than 2 years after the date of enactment of this 
sentence'' after ``With respect to service in the combat zone designated 
for purposes of the Vietnam conflict, paragraph (2) shall not apply to 
any month''.
    1975--Subsec. (a). Pub. L. 93-597, Sec. 2(a)(3), inserted provision 
relating to the applicability of par. (2) with respect to service in the 
combat zone designated for purposes of the Vietnam conflict.
    Subsec. (a)(1). Pub. L. 93-597, Sec. 2(a)(1), struck out ``during an 
induction period'' after ``served in a combat zone''.
    Subsec. (a)(2). Pub. L. 93-597, Sec. 2(a)(2), substituted ``; but 
this paragraph shall not apply for any month beginning more than 2 years 
after the date of the termination of combatant activities in such zone'' 
for ``during an induction period; but this paragraph shall not apply for 
any month during any part of which there are no combatant activities in 
any combat zone as determined under subsection (c)(3) of this section''.
    Subsec. (b). Pub. L. 93-597, Sec. 2(a)(3), inserted provision 
relating to applicability of par. (2) with respect to service in the 
combat zone designated for purposes of the Vietnam conflict.
    Subsec. (b)(1). Pub. L. 93-597, Sec. 2(a)(1), struck out ``during an 
induction period'' after ``served in a combat zone''.
    Subsec. (b)(2). Pub. L. 93-597, Sec. 2(a)(2), substituted ``; but 
this paragraph shall not apply for any month beginning more than 2 years 
after the date of the termination of combatant activities in such zone'' 
for ``during an induction period; but this paragraph shall not apply for 
any month during any part of which there are no combatant activities in 
any combat zone as determined under subsection (c)(3) of this section''.
    Subsec. (c)(5). Pub. L. 93-597, Sec. 2(b), struck out par. (5) which 
defined ``induction period''.
    1972--Subsec. (d). Pub. L. 92-279 added subsec. (d).
    1966--Subsec. (b). Pub. L. 89-739 substituted ``$500'' for ``$200''.


                    Effective Date of 1975 Amendment

    Section 2(c) of Pub. L. 93-597 provided that: ``The amendments made 
by this section [amending this section] shall take effect on July 1, 
1973.''


                    Effective Date of 1972 Amendment

    Section 3(a)(1) of Pub. L. 92-279 provided that: ``The amendment 
made by the first section of this Act [amending this section] shall 
apply to taxable years ending on or after February 28, 1961.''


                    Effective Date of 1966 Amendment

    Section 2 of Pub. L. 89-739 provided that: ``The amendment made by 
the first section of this Act [amending this section] shall apply with 
respect to compensation received in taxable years ending after December 
31, 1965, for periods of active service after such date.''


 Sense of Congress Regarding Tax Treatment of Members Receiving Special 
         Pay for Duty Subject to Hostile Fire or Imminent Danger

    Pub. L. 106-398, Sec. 1 [[div. A], title X, Sec. 1089], Oct. 30, 
2000, 114 Stat. 1654, 1654A-294, provided that: ``It is the sense of 
Congress that members of the Armed Forces who receive special pay under 
section 310 of title 37, United States Code, for duty subject to hostile 
fire or imminent danger should receive the same treatment under Federal 
income tax laws as members serving in combat zones.''


  Sense of Congress Regarding Treatment Under Internal Revenue Code of 
  Members Receiving Hostile Fire or Imminent Danger Special Pay During 
                         Contingency Operations

    Pub. L. 106-65, div. A, title VI, Sec. 677, Oct. 5, 1999, 113 Stat. 
676, provided that: ``It is the sense of Congress that a member of the 
Armed Forces who is receiving special pay under section 310 of title 37, 
United States Code, while assigned to duty in support of a contingency 
operation should be treated under the Internal Revenue Code of 1986 in 
the same manner as a member of the Armed Forces serving in a combat zone 
(as defined in section 112 of the Internal Revenue Code of 1986).''


 Availability of Certain Tax Benefits for Services as Part of Operation 
                              Allied Force

    Pub. L. 106-21, Sec. 1, Apr. 19, 1999, 113 Stat. 34, provided that:
    ``(a) General Rule.--For purposes of the following provisions of the 
Internal Revenue Code of 1986, a qualified hazardous duty area shall be 
treated in the same manner as if it were a combat zone (as determined 
under section 112 of such Code):
        ``(1) Section 2(a)(3) (relating to special rule where deceased 
    spouse was in missing status).
        ``(2) Section 112 (relating to the exclusion of certain combat 
    pay of members of the Armed Forces).
        ``(3) Section 692 (relating to income taxes of members of Armed 
    Forces on death).
        ``(4) Section 2201 (relating to members of the Armed Forces 
    dying in combat zone or by reason of combat-zone-incurred wounds, 
    etc.).
        ``(5) Section 3401(a)(1) (defining wages relating to combat pay 
    for members of the Armed Forces).
        ``(6) Section 4253(d) (relating to the taxation of phone service 
    originating from a combat zone from members of the Armed Forces).
        ``(7) Section 6013(f)(1) (relating to joint return where 
    individual is in missing status).
        ``(8) Section 7508 (relating to time for performing certain acts 
    postponed by reason of service in combat zone).
    ``(b) Qualified Hazardous Duty Area.--For purposes of this section, 
the term `qualified hazardous duty area' means any area of the Federal 
Republic of Yugoslavia (Serbia/Montenegro), Albania, the Adriatic Sea, 
and the northern Ionian Sea (above the 39th parallel) during the period 
(which includes the date of the enactment of this Act [Apr. 19, 1999]) 
that any member of the Armed Forces of the United States is entitled to 
special pay under section 310 of title 37, United States Code (relating 
to special pay: duty subject to hostile fire or imminent danger) for 
services performed in such area.
    ``(c) Special Rule for Section 7508.--Solely for purposes of 
applying section 7508 of the Internal Revenue Code of 1986, in the case 
of an individual who is performing services as part of Operation Allied 
Force outside the United States while deployed away from such 
individual's permanent duty station, the term `qualified hazardous duty 
area' includes, during the period for which the entitlement referred to 
in subsection (b) is in effect, any area in which such services are 
performed.
    ``(d) Effective Dates.--
        ``(1) In general.--Except as provided in paragraph (2), this 
    section shall take effect on March 24, 1999.
        ``(2) Withholding.--Subsection (a)(5) shall apply to 
    remuneration paid after the date of the enactment of this Act [Apr. 
    19, 1999].''


    Treatment of Certain Individuals Performing Services in Certain 
                  Hazardous Duty Areas; Effective Date

    Section 1 of Pub. L. 104-117 provided that:
    ``(a) General Rule.--For purposes of the following provisions of the 
Internal Revenue Code of 1986, a qualified hazardous duty area shall be 
treated in the same manner as if it were a combat zone (as determined 
under section 112 of such Code):
        ``(1) Section 2(a)(3) (relating to special rule where deceased 
    spouse was in missing status).
        ``(2) Section 112 (relating to the exclusion of certain combat 
    pay of members of the Armed Forces).
        ``(3) Section 692 (relating to income taxes of members of Armed 
    Forces on death).
        ``(4) Section 2201 (relating to members of the Armed Forces 
    dying in combat zone or by reason of combat-zone-incurred wounds, 
    etc.).
        ``(5) Section 3401(a)(1) (defining wages relating to combat pay 
    for members of the Armed Forces).
        ``(6) Section 4253(d) (relating to the taxation of phone service 
    originating from a combat zone from members of the Armed Forces).
        ``(7) Section 6013(f)(1) (relating to joint return where 
    individual is in missing status).
        ``(8) Section 7508 (relating to time for performing certain acts 
    postponed by reason of service in combat zone).
    ``(b) Qualified Hazardous Duty Area.--For purposes of this section, 
the term `qualified hazardous duty area' means Bosnia and Herzegovina, 
Croatia, or Macedonia, if as of the date of the enactment of this 
section [Mar. 20, 1996] any member of the Armed Forces of the United 
States is entitled to special pay under section 310 of title 37, United 
States Code (relating to special pay; duty subject to hostile fire or 
imminent danger) for services performed in such country. Such term 
includes any such country only during the period such entitlement is in 
effect. Solely for purposes of applying section 7508 of the Internal 
Revenue Code of 1986, in the case of an individual who is performing 
services as part of Operation Joint Endeavor outside the United States 
while deployed away from such individual's permanent duty station, the 
term `qualified hazardous duty area' includes, during the period for 
which such entitlement is in effect, any area in which such services are 
performed.
    ``(c) Exclusion of Combat Pay From Withholding Limited to Amount 
Excludable From Gross Income.--[Amended section 3401 of this title.]
    ``(d) Increase in Combat Pay Exclusion for Officers to Highest 
Amount Applicable to Enlisted Personnel.--
        ``(1) In general.--[Amended this section.]
        ``(2) Maximum enlisted amount.--[Amended this section.]
    ``(e) Effective Date.--
        ``(1) In general.--Except as provided in paragraph (2), the 
    provisions of and amendments made by this section shall take effect 
    on November 21, 1995.
        ``(2) Withholding.--Subsection (a)(5) and the amendment made by 
    subsection (c) shall apply to remuneration paid after the date of 
    the enactment of this Act [Mar. 20, 1996].''


           Refund or Credit of Overpayment; Applicable Period

    Section 3(a)(2), (3) of Pub. L. 92-279, as amended by Pub. L. 99-
514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(2) If refund or credit of any overpayment for any taxable year 
resulting from the application of the amendment made by the first 
section of this Act [amending this section] (including interest, 
additions to the tax, and additional amounts) is prevented at any time 
before the expiration of the applicable period specified in paragraph 
(3) by the operation of any law or rule of law, such refund or credit of 
such overpayment may, nevertheless, be made or allowed if claim therefor 
is filed before the expiration of such applicable period.
    ``(3) For purposes of paragraph (2), the applicable period for any 
individual with respect to any compensation is the period ending on 
whichever of the following days is the later:
        ``(A) the day which is one year after the date of the enactment 
    of this Act [Apr. 26, 1972], or
        ``(B) the day which is 2 years after the date on which it is 
    determined that the individual's missing status (within the meaning 
    of section 112(d) of the Internal Revenue Code of 1986 [formerly 
    I.R.C. 1954]) has terminated for purposes of such section 112.''

    Ex. Ord. No. 10585. Termination of Combatant Activities in Korea

    Ex. Ord. No. 10585, Jan. 1, 1955, 20 F.R. 17, provided:
    By virtue of the authority vested in me by section 112(c)(3) of the 
Internal Revenue Code of 1954 [now I.R.C. 1986], January 31, 1955, as of 
midnight thereof, is hereby designated as the date of termination of 
combatant activities in the zone comprised of the area described in 
Executive Order No. 10195 of December 20, 1950 (15 F.R. 9177).
                                                   Dwight D. Eisenhower.

Ex. Ord. No. 11216. Designation of Vietnam and Adjacent Waters as Combat 
                                  Zone

    Ex. Ord. No. 11216, Apr. 24, 1965, 30 F.R. 5817, provided:
    Pursuant to the authority vested in me by section 112 of the 
Internal Revenue Code of 1954 [now I.R.C. 1986], I hereby designate, for 
the purposes of that section, as an area in which Armed Forces of the 
United States are and have been engaged in combat:
    Vietnam, including the waters adjacent thereto within the following-
described limits: From a point on the East Coast of Vietnam at the 
juncture of Vietnam with China southeastward to 21 deg. N Lat., 
108 deg.15' E Long.; thence southward to 18 deg. N Lat., 108 deg.15' E 
Long.; thence southeastward to 17 deg.30 N Lat., 111 deg. E Long.; 
thence southward to 11 deg. N Lat., 111 deg. E Long.; thence 
southwestward to 7 deg. N Lat., 105 deg. E Long.; thence westward to 
7 deg. N Lat., 103 deg. E Long.; thence northward to 9 deg.30' N Lat., 
103 deg. E Long.; thence northeastward to 10 deg.15' N Lat., 104 deg.27' 
E Long.; thence northward to a point on the West Coast of Vietnam at the 
juncture of Vietnam with Cambodia.
    The date of the commencing of combatant activities in such area is 
hereby designated as January 1, 1964.
                                                      Lyndon B. Johnson.

 Ex. Ord. No. 12744. Designation of Arabian Peninsula Areas, Airspace, 
                   and Adjacent Waters as Combat Zone

    Ex. Ord. No. 12744, Jan. 21, 1991, 56 F.R. 2663, provided:
    By the authority vested in me as President by the Constitution and 
the laws of the United States of America, including section 112 of the 
Internal Revenue Code of 1986 (26 U.S.C. 112), I hereby designate, for 
purposes of that section, the following locations, including the 
airspace above such locations, as an area in which Armed Forces of the 
United States are and have been engaged in combat:
    --the Persian Gulf
    --the Red Sea
    --the Gulf of Oman
    --that portion of the Arabian Sea that lies north of 10 degrees 
north latitude and west of 68 degrees east longitude
    --the Gulf of Aden
    --the total land areas of Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, 
Qatar, and the United Arab Emirates.
    For the purposes of this order, the date of the commencing of 
combatant activities in such zone is hereby designated as January 17, 
1991.
                                                            George Bush.

 Ex. Ord. No. 13002. Termination of Combat Zone Designation in Vietnam 
                       and Waters Adjacent Thereto

    Ex. Ord. No. 13002, May 13, 1996, 61 F.R. 24665, provided:
    By the authority vested in me as President by the Constitution and 
the laws of the United States of America, including section 112(c)(3) of 
the Internal Revenue Code of 1986 (26 U.S.C. 112(c)(3)), June 30, 1996, 
as of midnight thereof, is hereby designated as the date of termination 
of combatant activities in the zone comprised of the area described in 
Executive Order No. 11216 of April 24, 1965 [set out above].
                                                     William J. Clinton.

   Ex. Ord. No. 13119. Designation of Federal Republic of Yugoslavia 
(Serbia/Montenegro), Albania, the Airspace Above, and Adjacent Waters as 
                              a Combat Zone

    Ex. Ord. No. 13119, April 13, 1999, 64 F.R. 18797, provided:
    Pursuant to the authority vested in me as President by the 
Constitution and laws of the United States of America, including section 
112 of the Internal Revenue Code of 1986 (26 U.S.C. 112), I designate, 
for the purposes of that section, the following locations, including the 
airspace above such locations, as an area in which Armed Forces of the 
United States are and have been engaged in combat:
    --The Federal Republic of Yugoslavia (Serbia/Montenegro);
    --Albania;
    --the Adriatic Sea;
    --the Ionian Sea north of the 39th parallel.
    For the purposes of this order, I designate March 24, 1999, as the 
date of the commencement of combatant activities in such zone.
                                                     William J. Clinton.

                  Section Referred to in Other Sections

    This section is referred to in sections 2, 692, 2201, 3401, 4253, 
6013, 7508 of this title; title 5 sections 6304, 6326; title 10 section 
1580.
