Document Type: 
Document Number (FOIA) /ESDN (CREST): 
Release Decision: 
Original Classification: 
Document Page Count: 
Document Creation Date: 
December 21, 2016
Document Release Date: 
June 9, 2008
Sequence Number: 
Case Number: 
Publication Date: 
January 17, 1972
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PDF icon CIA-RDP73B00296R000400180003-6.pdf298.42 KB
Approved For Release 2008/06/09: CIA-RDP73B00296R000400180003-6 THE DEPARTMENT OF THE TREASURY WASHINGTON. D.C. 20220 TREA has not reviewed. Processed IAW CIA TREA arrangement letter dtd 4/11/08. This is 'in response to your request for the views and recom- mend.ations of the Treasury Department with respect to S. 2977+, entitled "A Bill 'To amend section 112 of the Internal Revenue Code of 1954 to exclude from gross income the entire amount of the com- pensation of r.,,.nlbe - of the Armed Forces of the United States and of civilian E :: (.] oy`Gas who are prisoners of wax, tni6sing in action, or in, a detained status during the Vietnam conflict." Section 11.2 o'' the Internal Revenue Code of l951 provides for the exemption i4'crn ta:?:ation of all compensation received for active service, as a co:rili ssioned warrant officer, warrant officer, or enlis-'.ed member, aria up to $500 of co:apensaL-ion received as a cormiissioned officer, for any month during any part of which such member served in a combat zone. Vietnam, the only present combat zone, was designated. as such by Executive' Order .11216 on January 1, 1967+. The effects of the proposed legislation on existing law are twofold. First, t'ie proposed bill would remove the $500 per month limitation with respect to commissioned officers who are, during any month, in a missing status (as defined in T?,,le 37, U.S.C. ?551(2)) during the Vietnam conflict. Second, the proposed bill would extend a new exclusion to civilian employees of any branch of the executive department who are, during any mon'.h, in a missing status during the Vietnam conflict. For purposes of this latter provision, the terms "employee" and `!missing sta,;us" have the respec- tive meanings given to such terms by Title 5, U.S.C. ?5561(2) and (5). The new exclusions ander the proposed bill would apply, for officers, warrant officers, enlisted men and civilian employees, without regard to whether the individual served in a combat zone. The amendment would be effective with respect to taxable years ending on and after February 28, 1961. The Treasury Department does not normally support legislation favoring taxpayers in a special class. Generally. speaking the tax laws are an inappropriate vehicle for accomplishing such specific goals. The Department is, however, in total sympathy with the view that deep-felt national concern should be expressed for the well- being of imprisoned or missing servicemen and ci"%ilians serving in the Vietnam conflict. Accordingly, we believe that the extension of section 112 is justified under the extraordinary circumstances involved here, although this action should not he considered as a precedent for extending the provisions of section 112 in future cases. Approved For Release 2008/06/09: CIA-RDP73B00296R000400180003-6 Approved For Release 2008/06/09: CIA-RDP73B00296R000400180003-6 While the Treasury Department will not object to the passage of a bi1.1 which extends the benefits of section 112 to members of the Armed Forces and. civilian e::ployces who are prisoners of war or in a missing status because of their active service with respect to the Vietno" conflict, the Department is seriously concerned that the language of the proposed bill will carry its benefits further than this intended objective. In addition, the Department feels that there are a number of technical difficulties involved in the language of the bill as proposed. The initial bills (H.R. 517, H.R. 6833, S. 21'68) proposing amend- ments to section 112 would have covered only members of the Armed Forces. However, it was pointed out by the Department of he Navy that there are civilian employees of the Navy Department who are in precisely the same position as members of the Armed Forces who vre prisoners of war or in a missing status. It was felt by the Department of Defense and agreed to by the Treasury I)epart.ment that there is no reason for not extending the same benefits to civilian employees as those extended to members of the Armed Forces, as long as both are in precisely the same position. At the time this my>tter was discussed, there were only two civilian employees in this position, an employee relations specialist who had been in charge of the Vietnamese employee relations program for employees involved in construction and support, and a fire protection specialist. To the extent of presently available information, these are the only two civilian employees who have become prisoners of war or axe in a missing status due to the Vietnam conflict. - Under the language of S. 2914k, the exclusion from gross income would be extended-to all civilian employees of any executive depart- ment, regardless of where their missing status might occur. Thus, for example, an FBI agent who disappeared while investigating a case in Harlem would be covered by the language of the proposed bill. Likewise, a CIA agent who disappeared in Berlin while in active service would also be covered. The bill would have these results because of the definitions of the terms "employee" and "missing status" contained in 5 U.S.C. ?5561. An "employee" is defined by 5 U.S.C. ?5561(2) as any employee in or under an executive agency or a military department. The definition of "missing status" contained in 5 U.S.C. ?5561(5) includes the simple status of "missing", as well as '!missing in action, interned in a foreign country, captured, beleaguered, or beseiged by "a hostile force, or detained in a foreign country against his will." Approved For Release 2008/06/09: CIA-RDP73B00296R000400180003-6 Approved For Release 2008/06/09: CIA-RDP73B00296R000400180003-6 -3- In shcort, under the statutory definition, any civilian employee of ~,.n executive c ,r i.litar;,r depr,.rtr,:ent who disanpcar. s while in active sC i-vi e for f hs;V ci ep_;rt~~ent, and is classified by that department as in an offica u.l '4i