Heroes Earning Assistance & Relief Tax Act

Despite the current economic crisis in America, Congress has found a way to honor our everyday heroes through significant tax breaks. In May of 2008, Representative Charles Rangel [D-NY15] presented the Heroes Earning Assistance & Relief Tax Act to Congress. By June 17, 2008 former President George Bush, with the approval of both the House and the Senate, had signed the piece of legislation into law.

The main purpose of the new law is to amend the current tax laws for our military men and women as well as our servicemen and women working in communities throughout the nation. The law also applies to the families of these individuals. Though the piece of legislation includes a wide variety of benefits, some of the most well-known are the extension of rebate benefits received as a result of the Economic Stimulus Act of 2008 and the decrease of pay-roll taxes implemented on specific government contract jobs.

Provisions dealing with supplemental security income are also important under this piece of legislation. The new law reforms the Supplemental Security Income for the Aged, Blind, and Disabled dealing with Social Security by treating cash payout to members of the armed forces as earned income credit. Further, state income payments to blind, disabled or aged veterans and cash payments to AmeriCorps participants are both excluded from being considered earned income only when determining benefits eligibility.

Under the new law, many revenue provisions were also either changed or implemented. Among the many, a few are crucial. First, the penalty for failing to file federal income taxes has now been raised to $135 of 100% of the stated amount upon notice. The Act also established new taxation rights for foreign companies providing services to U.S. corporations. Under the law, some foreign companies are now being taxed as U.S. employers for purposes of both Social Security and Medicare.