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Income
Taxes; Collection Deferred; Interest; Statute of Limitations
Section 513
(50 U.S.C.
App. § 573)
The collection from any person in the military service of any tax on
the income of such person, whether falling due prior to or during his
period of military service, shall be deferred for a period extending
not more than six months after the termination of his period of military
service if such person's ability to pay such tax is materially impaired
by reason of such service. No interest on any amount of tax, collection
of which is deferred for any period under this section, and no penalty
for nonpayment of such amount during such period, shall accrue for such
period of deferment by reason of such nonpayment. The running of any
statute of limitations against the collection of such tax by distraint
or otherwise shall be suspended for the period of military service of
any individual the collection of whose tax is deferred under this section,
and for an additional period of nine months beginning with the day following
the period of military service. The provisions of this section shall
not apply to the income tax on employees imposed by section 1400 of the
Federal Insurance Contributions Act.
General. Section 513 defers collection of any income tax, federal or state,
on military or nonmilitary income, falling due either before
or during military service. A service member's ability to pay the tax,
however, must be materially impaired by reason of service. Collection
of taxes shall be deferred for a period not in excess of 6 months after
the termination of military service. No interest or other penalty may
accrue for the nonpayment of any tax on which collection was deferred.
Restrictions
by Internal Revenue Service (IRS). The IRS has directed that, with
regard to federal income taxes, a deferment of payment may
be granted only when the service member makes a proper application and
meets the burden of proving not only an inability to pay but that the
inability resulted from military service. The IRS specifically limited
the application of section 513 to an initial period of service, defined
as--
(1) the period of induction;
(2) a period of active duty pursuant to a first enlistment;
(3) the period of service prior to any reenlistment following recall
of the taxpayer to active duty from a Reserve or National Guard unit;
(4) the first period of a reenlistment following a break in service
of 1 year or longer; or
(5) for an officer falling by analogy into one of the above, 2 years.
Attorneys should advise service members seeking relief beyond the limits
of the regulation, but within the limits provided by section 513, to
first apply administratively to the IRS for an exception.
State
income tax. Service members seeking relief from state income taxes should
apply to the local state tax authority or the state attorney
general and cite section 513.
Filing. Section 513 grants relief from tax collection but not from filing returns.
An extension or postponement of the time for filing may,
however, be authorized under other authority. For example, personnel
on duty overseas are authorized an automatic extension of two months
(or longer if granted permission) for filing federal income tax returns.
Personnel on duty in a combat zone are authorized to postpone filing
their federal income tax returns for the duration of combat service plus
180 days. Several states provide similar relief for military personnel
in filing state income taxes.
Non-applicability
of section 205. Under the provisions of section 207 of the Act, the
relief granted by section 205, which suspends the
statute of limitations of actions during the period of service, does
not apply to periods of limitations prescribed by or under the internal
revenue laws of the United States.
Residence
for Tax Purposes
Section 514
(50 U.S.C.
App. § 574)
(1) For the purposes of taxation in respect of any person, or of his
personal property, income, or gross income, by any State, Territory,
possession, or political subdivision of any of the foregoing, or by the
District of Columbia, such person shall not be deemed to have lost a
residence or domicile in any State, Territory, possession, or political
subdivision of any of the foregoing, or in the District of Columbia,
solely by reason of being absent therefrom in compliance with military
or naval orders, or to have acquired a residence or domicile in, or to
have become resident in or a resident of, any other State, Territory,
possession, or political subdivision of any of the foregoing, or the
District of Columbia, while and solely by reason of being, so absent.
For the purposes of taxation in respect of the personal property, income,
or gross income of any such person by any State, Territory, possession,
or political subdivision of any of the foregoing, or the District of
Columbia, of which such person is not a resident or in which he is not
domiciled, compensation for military or naval service shall not be deemed
income for services performed within, or from sources within, such State,
Territory, possession, political subdivision, or District, and personal
property shall not be deemed to be located or present in or to have a
situs for taxation in such State, Territory, possession, or political
subdivision, or district. Where the owner of personal property is absent
from his residence or domicile solely by reason of compliance with military
or naval orders, this section applies with respect to personal property
or the use thereof, within any tax jurisdiction other than such place
of residence of domicile, regardless of where the owner may be serving
in compliance with such orders. Nothing contained in this section shall
prevent taxation by any State, Territory, possession, or political subdivision
of any of the foregoing, or the District of Columbia in respect of personal
property used in or arising from a trade or business, if it otherwise
has jurisdiction. This section shall be effective as of September 8,
1939, except that it shall not require the crediting or refunding of
any tax paid prior to October 6, 1942.
(2)
When used in this section, (a) the term "personal property" shall
include tangible and intangible property (including motor vehicles),
and (b) the term "taxation" shall include but not be limited
to licenses, fees, or excises imposed in respect to motor vehicles or
the use thereof, but only if a license, fee, or excise required by the
State or territory, possession, or District of Columbia of which the
person is a resident or in which the person is domiciled has been paid.
General. Section
514 provides that a service member neither loses nor acquires a residence
for purposes of taxation with respect to his/her
person, personalty, or income by reason of being absent or present
in any tax jurisdiction solely in compliance with military orders.
This was intended "to prevent multiple state taxation of the property
and income of military personnel serving within various taxing jurisdictions
through no choice of their own."
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Above Information Courtesy
of United States Army JAG Corps
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