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Managing America: Veterans Affairs

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Week Ending November 6, 2009

S.475 A bill to amend the Servicemembers Civil Relief Act to guarantee the equity of spouses of military personnel with regard to matters of residency, and for other purposes.

Civil rights of service members are protected under the Servicemembers Civil Relief Act. This bill aims to apply protections that service members enjoy to their spouses when spouses accompany their servicemembers who are relocated due to military orders.

The Servicemembers Civil Relief Act is amended to prohibit a person from losing their right to vote in federal, state or local elections if they lost a residence or domicile in a state, acquired a residence or domicile in any other state, or became a resident in or of because the person accompanied their spouse in compliance with military or naval orders.

The bill also prohibits a Servicemember’s spouse from either losing or acquiring a residence or domicile for purposes of taxation because of being absent or present in any U.S. tax jurisdiction solely to be with the servicemember in compliance with the Servicemember’s military orders, if the residence or domicile is the same for the servicemember and the spouse.

A spouse's income may not be considered income earned in a tax jurisdiction if the spouse is not a resident or domicile of the jurisdiction when the spouse is in that jurisdiction solely to be with a servicemember serving under military orders. Spouses may not pay taxes in two jurisdictions.

Land rights residency requirements for spouses accompanying servicemembers serving under military orders are suspended.

Sponsor:  Senator Richard Burr (NC)

Vote: On motion to suspend the rules and pass the bill Agreed to by voice vote.

Cost to the taxpayers: “CBO estimates that implementing the bill would not have a significant effect on the Federal budget.”

Earmark Certification:  

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MORE INFORMATION

Congress has long recognized that the men and women of our military should be afforded civil legal protections, in order to allow them `to devote their entire energy to the defense needs of the Nation.' 50 U.S.C. App. 502. Currently, these protections are provided by the Servicemembers Civil Relief Act or SCRA.

Among a wide range of protections, the SCRA allows a servicemember to maintain his or her residency for certain purposes, such as voting, income taxes, and personal property taxes, in a state from which the servicemember is absent in compliance with military orders. These protections essentially allow a servicemember to retain a `home' state while he or she is ordered to new locations by the military and to avoid many of the difficulties, burdens, and distractions associated with a permanent change of duty station.

The amendments to the SCRA that would be made by the Committee bill would provide military spouses with SCRA residency protections similar to those afforded to servicemembers.

Sec. 2. Guarantee of residency for spouses of military personnel for voting purposes.

Section 2 of the Committee bill would, in certain circumstances, allow the spouse of a servicemember, for purposes of voting in Federal, state, or local elections, to retain residency in a state from which the spouse is absent.

Background. Under section 705 of the SCRA (50 U.S.C. App. 595), for purposes of voting in Federal, state, or local elections, if a servicemember leaves a state in compliance with military or naval orders, the servicemember will not, solely based on that absence, be deemed to have lost residence or domicile in that state, be deemed to have acquired residence or domicile in any other state, or be deemed to have become a resident of any other state. These protections allow the servicemember, as he or she is moved around the country by the military, to continue voting in the state he or she considers home and to avoid the confusion and difficulties of frequently changing his or her voter registration.

However, if the servicemember's spouse moves with the servicemember, that spouse is not afforded the same SCRA protections. The negative impact this may have on military spouses was described at the Committee's April 29, 2009, hearing by Rebecca Poynter:

Military Spouses are disenfranchised from voting; often times not arriving to a new state in time to vote in primaries and do not have ample opportunity to get to know the Federal, state or local candidates or adequate time to learn their policies and legislative agendas. It is confusing when one state allows a military spouse to vote via absentee ballot, yet the state where the spouse is physically located does not * * *.

Similarly, in an April 28, 2009, letter to the Chairman and Ranking Member of the Committee, the Air Force Association stressed that `the burdens placed on military spouses to simply exercise their Constitutional right to vote are a constant source of consternation and frustration for our military families.'

Committee Bill. Section 2 of the Committee bill would amend section 705 of the SCRA (50 U.S.C. App. 595) to add a new subsection providing that, for purposes of voting in Federal, state, or local elections, if a spouse of a servicemember leaves a state in order to accompany the servicemember who is absent from that same state in compliance with military or naval orders, the spouse will not, solely based on that absence, be deemed to have lost residence or domicile in that state, be deemed to have acquired residence or domicile in any other state, or be deemed to have become a resident of any other state. These changes would apply with respect to absences from states on or after the date of enactment, regardless of the date of the relevant military or naval orders.

These changes will allow certain military spouses, like servicemembers, to vote in the states they consider home and will reduce the confusion and difficulties now encountered by military spouses attempting to exercise their right to vote.

Sec. 3. Determination for tax purposes of residence of spouses of military personnel.

Section 3 of the Committee bill would, in certain circumstances, allow the spouse of a servicemember, for purposes of income taxes and personal property taxes, to retain residency in a tax jurisdiction from which the spouse is absent.

Background. Under section 511(a) of the SCRA (50 U.S.C. App. 571), a servicemember does not lose or acquire residence or domicile, for purposes of income taxes and personal property taxes, based on the fact that the servicemember is absent from or present in any tax jurisdiction of the United States solely in compliance with military orders. Under section 511(b) of the SCRA, the servicemember's military compensation will not be considered income in a tax jurisdiction where the servicemember is serving in accordance with military orders and is not a resident. Also, under section 511(c), the personal property of a servicemember will not be deemed to be present in a tax jurisdiction in which the servicemember is serving in accordance with military orders, unless that jurisdiction is the servicemember's domicile or residence.

With these protections, if a servicemember is ordered to a duty location in a new state, the servicemember is free to bring to the new state his or her personal property, such as an automobile, without risk that the property will be taxed in that state. Also, the servicemember will not be required to pay income taxes on his or her military income in a state other than the one he or she has declared as his or her home state.

However, in some states, if the servicemember's personal property is jointly titled with his or her spouse, the SCRA protection regarding personal property taxes will not apply. In fact, in 1992, the National Military Family Association testified before the House Committee on Veterans' Affairs that, `in some States, [the family] car must be registered in the servicemember's name only in order for the family to be protected against personal property tax' and that, `[i]n addition to creating difficulties if the servicemember dies or in cases of divorce, the current situation has left many military spouses feeling they are perceived as excess baggage.'

More recently, the Department of Defense submitted testimony for the Committee's April 29, 2009, hearing addressing the same issue. In part, the Department of Defense provided this explanation of the current problem:

(i) Section 511 of the SCRA states that the personal property of a servicemember shall not be deemed to be located within a tax jurisdiction of the United States if the servicemember is not a resident or domiciliary of the jurisdiction in which the servicemember is serving in compliance with military orders.

(ii) Many states conclude that property (most often this is an automobile) jointly held by a servicemember and spouse is not protected from taxation by Section 511 of the SCRA.

(iii) Thus to ensure the tax benefit, the servicemember must register the property in his or her name only. This is contrary to the recommendations that we provide Servicemembers for estate planning purposes.

In addition, at the Committee's April 29, 2009, hearing, Rebecca Poynter provided a description of how this impacts military families:

For personal property; current, and often conflicting, state laws create financial and administrative burdens for the military spouse resulting in the suppression of assets. While an active duty servicemember may title, register, and maintain, a car in their home state, their spouse may not. With each move, if a spouse chooses to keep his/her joint tenancy of personal property, they must change the registration and/or titling to the new state; requiring the spouse pay several hundred dollars each time they relocate. To alleviate these types of fees, many spouses are forced to put all property in the name of the servicemember.

Military families are also impacted by the current state of the law regarding state income taxes. There are significant differences between the states, ranging from states that have no income tax to those that impose up to an 11% marginal income tax. Because the income of a military spouse is not protected under the SCRA, a spouse's income may be taxed in any jurisdiction where the spouse moves to accompany the servicemember. As a result, if a working military spouse moves around the country with the servicemember, their family income may vary significantly based on where the servicemember is sent by the military.

In addition to the potential financial burdens this may cause for military families, the military spouse may be required to file tax returns in multiple jurisdictions. The complexities of this situation were described by a military spouse in the attachment to testimony for the Committee's April 29, 2009, hearing:

Taxes are a confusing mess. My husband has residency in one state and I have residency in another state. Just this year our tax attorney had to redo our taxes because she was confused about both of our states of residence * * *. Next year is going to be even more confusing when I have a business registered in one state. My husband is a resident in another state and I will have been a resident of both Virginia and California * * *.

Committee Bill. Section 3 of the Committee bill would amend section 511 of the SCRA (50 U.S.C. App. 571) to provide that, for purposes of income taxes and personal property taxes, the spouse of a servicemember will not be deemed to have lost or acquired domicile or residence by reason of being absent from or present in a tax jurisdiction solely to be with a servicemember who is in compliance with military orders and has the same original residence or domicile as the spouse. In addition, it would add a new subsection to section 511 providing that income for services performed by the spouse of a servicemember will not be deemed to be income in a tax jurisdiction where the spouse is located solely to be with the servicemember who is serving there in compliance with military orders.

Also, the Committee bill would amend section 511 to provide that the personal property of the spouse of a servicemember will not be deemed to be present in a tax jurisdiction in which the servicemember is serving in accordance with military orders, unless that jurisdiction is the servicemember's or the spouse's domicile or residence. These changes would apply with respect to any state or local income tax return filed for any taxable year beginning with the taxable year that includes the date of enactment.

These changes will allow spouses to title personal property in their own names or jointly with their servicemember-spouses, without the potential tax ramifications that are possible under current law. In addition, these changes will reduce some of the confusion, difficulties, and burdens now faced by military families when they are moved to a new state.

Sec. 4. Suspension of land rights residency requirements for spouses of military personnel.

Section 4 of the Committee bill would suspend certain residency requirements for the spouse of a servicemember seeking to exercise certain land rights, such as mining claims or homesteading, on public lands.

Background. Under section 508 of the SCRA (50 U.S.C. App. 568), a servicemember is entitled to have certain residency requirements suspended for purposes of exercising land rights, such as mining claims or homesteading, on public lands. This protection applies with respect to requirements related to the establishment of residency within a limited time. Those requirements will be suspended for a servicemember seeking entry onto public lands until 180 days after termination of or release from military service. Similar rights are not provided to the spouses of servicemembers.

Committee Bill. Section 4 of the Committee bill would amend section 508 of the SCRA to suspend certain residency requirements for the spouse of a servicemember seeking entry onto public lands. This protection would apply with respect to requirements related to the establishment of residency within a limited time. Those requirements would be suspended for the spouse of a servicemember seeking entry onto public lands until 180 days after the servicemember's termination of or release from military service. These changes would apply with respect to servicemembers in the military on or after the date of enactment.

These changes would afford the spouse of a servicemember some of the same SCRA land-rights protections that are now afforded to servicemembers.

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