§692 Income taxes of members of Armed Forces, astronauts, and victims of certain terrorist attacks on death

Summary

If a person dies while on active duty in the U.S. Armed Forces and the death happened in a combat zone or from wounds, disease, or injury suffered while serving there, federal income tax does not apply for the year they died and for any earlier tax years that started after they first served in that combat zone. Any unpaid tax from earlier years before that period is canceled, and if it was already assessed or collected it will be wiped out or returned. If a service member was missing and later officially declared dead, the date of death is the date the government makes that declaration. Except for the Vietnam combat zone, the tax break won’t cover tax years that begin more than two years after the government says combat activities ended in that zone. If a U.S. military or civilian employee dies from wounds or injury suffered in a terroristic or military action, income tax does not apply for the year of death and for prior years going back to the last tax year that ended before the injury year. “Terroristic or military action” means attacks shown to be aimed at the U.S. or its allies, or military actions involving U.S. forces. For certain victims of the April 19, 1995 and September 11, 2001 attacks, and for anthrax-related illness between September 11, 2001 and January 1, 2002, the same tax relief applies. If the tax relief for such a victim would be less than $10,000, the law treats the victim as having paid enough to bring the amount to $10,000 for their last year. The rule does not cover deferred payments due only after death or amounts caused by actions taken after September 11, 2001, subject to Treasury rules. The rule also covers astronauts who die on duty, with one timing detail applied using the astronaut’s date of death.