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 Thursday June 24, 1999

NATO TAX EXEMPTION
Expect the IRS to issue a ruling soon, perhaps as early as this week, clarifying the tax treatment of income earned by Americans serving with NATO. There has been confusion about this issue in the past, fueled at least in part by some questionable information from the IRS itself. We will report on the ruling when it is released and we have been able to review it, but generally speaking, income earned by military members assigned to NATO is taxable. Income earned by certain civilians may not be taxable if they qualify under law and meet certain tests established in a Tax Court case. The issue is obviously complex and our best advice is to get competent tax advice before excluding any income from your tax returns. Some MilitaryReport readers have reported getting emails discussing the tax exclusion for military members at NATO and filing for refunds for prior tax years. At this point, it makes sense to do nothing until the IRS rules

LAST CALL FOR FEGLI OPEN SEASON
Barring any last minute extension by the Defense Department, the FEGLI open season for DoD civilians will end next Wednesday, June 30, 1999. So far only one agency that we are aware of, the USPS, has extended the open season for its employees. If you have been meaning to check out your FEGLI coverage and insurance needs, but have been putting it off, now is the time to act. Most recently, FEGLI has been receiving attention in the press from various members of Congress, with some knocking the coverage in favor of private coverage and some supporting the FEGLI program. WAEPA, one of the sponsors that helps bring MilitaryReport to you every week has provided extensive rate and coverage information for our readers. To review it, Click Here.

MILITARY HOMEOWNERS RELIEF PROPOSED
Bills have been introduced in both the House and Senate to address the problem of military members who cannot qualify for the tax-free capital gains on a house sale. Typically, the member can not meet the 2 out of 5 years residency requirement due to assignments and reassignments. The bills are S. 309 by John McCain (R-AZ) and H.R. 865 by Amo Houghton (R-NY). TROA is mounting a drive to show support for the bills.

OVERSEAS PURCHASE CARD USE
DoD is considering allowing use of the agency purchase card for overseas purchases of commercial items. The card could be used on a stand-alone basis for purchases up to $25,000. The notice proposing this amendment to DoD acquisition regulations was published in the May 25, 1999 Federal Register (64 Fed. Reg. 28134) and comments on the proposal will be accepted until July 26, 1999. For details on commenting, check the Federal Register notice.

POTENTIAL BENEFITS FOR RESERVISTS
Reservists called to active duty, whether for Operation Allied Force or any other operation, have certain protections under the Soldiers and Sailors' Relief Act of 1940. Relief may include: Reduced interest rate on mortgage payments; reduced interest rate on credit card debt; protection from eviction if your rent is $1,200 or less; or delay of all civil court actions, such as bankruptcy, foreclosure or divorce proceedings. Many provisions of the Act are not automatic in operation. Conditions must be met and the reservists must take certain actions. Reservists encountering difficulties should contact their unit or installation legal assistance office to see if their situation is covered by the Act.

VIETNAM UNKNOWN CRYPT TO GET INSCRIPTION
As part of the decision of DoD Secretary Cohen not to inter another Vietnam Unknown unless it could be guaranteed in perpetuity that the remains could not be identified, Cohen has authorized an inscription on the Vietnam Unknown crypt cover which will read, "Honoring and Keeping Faith with America's Missing Servicemen, 1958-1975." The inscription will be dedicated by Cohen on September 17 during POW/MIA Day ceremonies. Because of advances in forensic science, there are no candidates for interment at this time, and it is now considered likely that all remains presently unidentified will be identifiable in the future. As a result expectations are that no one will ever again be interred in the crypt of the Vietnam Unknown. The remains of the Unknowns from World War I, World War II and the Korean War will not be affected by this decision.

VETERANS BILL UPDATE
The Benefits Subcommittee of the House Veterans Affairs Committee has completed work on its annual veterans bill and sent it to the full committee. Provisions included full inflation COLA for recipients of VA disability compensation, reinstatement of some benefits for surviving spouses subsequently remarried and divorced, and provisions to speed claims processing.

LEGALLY SPEAKING
Military courts-martial may soon be granting victims of crime the same opportunity to be present during court proceedings as that provided victims in federal civilian court proceedings. Recently, the Department of Defense proposed a change to the Manual for Courts-Martial that would bring the military justice system in line with federal courts. The proposed change was published in the May 21, 1999 Federal Register. Along with other proposed changes, it will be sent to the Congress where hearings are anticipated this summer.

Similar to the Victims' Rights and Restitution Law of 1990, the proposed change would give civilian crime victims the right to be present at all public court proceedings of a court-martial related to offenses committed against them, unless the court determines that their testimony would be substantially affected if they heard the testimony of others during the trial. Currently crime victims are excluded from observing the trial, along with other witnesses, under the general rule that witnesses should be sequestered and not hear the testimony of others.

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