Servicemembers Civil Relief Act

The President signed into law the Servicemembers Civil Relief Act (P.L. 108-189). The bill restates, clarifies, revises and renames the Soldiers' and Sailors' Civil Relief Act of 1940.

Some of the tax related items included in the SCRA are:

The Act increases the time period for a stay of proceedings for the collection of all delinquent personal income and personal property taxes. The period will begin on the date of active military duty and terminate 90 days after discharge from active duty. The previous period was for 60 days. A stay of proceedings for collection actions is allowed only if the servicemember provides the court with a letter or some other form of communication that states that the servicemember's current duty requirements materially affect the servicemember's ability to appear. Also acceptable is a communication from the servicemember's commanding officer stating that current duties prevent the servicemember's appearance, and that military leave is not authorized.

In addition, the Act allows a stay of execution of judgments, attachments, and garnishments against a servicemember for the period of military service or within 90 days thereafter.

The SCRA continues to allow an individual on active duty to declare the situs of his or her tangible or intangible personal property to be his or her state or county domicile. The state or county of any individual making this declaration may not tax the personal property of that individual. These protections do not apply to real property or personal property used in, or arising from, a trade or business.

The Act continues to prohibit a state and local taxing authority from: charging more than 6% annual interest for any overdue taxes; issuing penalties for overdue taxes; selling or foreclosing upon personal property to acquire any back taxes.

The Act caps interest rates at 6% for debts prior to being mobilized or deployed.

Other non-tax related changes include: redefining "military service" to include active service by members of the National Guard for more than 30 consecutive days; allowing members sent to new duty stations or deployed for 90 days to terminate housing leases without penalty; allowing active, National Guard and Reserve personnel deployed overseas or called up for 180 days to terminate car leases without penalty; preventing military families living in homes at up to $2400 (was $1200) rent per month from being evicted for nonpayment without a court order, as long as the service member is deployed away from home; raising from $10,000 to $250,000 the maximum life insurance coverage the government will protect from default for nonpayment of premiums for reservists and Guard members while they're on active duty.

Servicemembers Civil Relief Act (PL 108-189)
[ Text ] [ CRS Summary ]

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Another provision caps interest rates at 6 percent for debts service members incurred before being activated or deployed.