TAX RELIEF FOR OPERATION IRAQI FREEDOM CIVILIAN MARINERS

Qualified merchant mariners serving on vessels under Department of Defense operational control in direct support of the United States Armed Forces have been determined by the IRS to be eligible for the benefits of section 7508 of the Internal Revenue Code. 26 U.S.C. §7508. This includes individuals, (including the spouse of such individuals) serving in the combat zone as part of Operation Iraqi Freedom aboard Maritime Administration and Military Sealift Command owned or controlled vessels.

Section 7508(a)(1) permits the postponement of certain time-sensitive acts for individuals serving in support of the Armed Forces in a designated combat zone. In the event of service in a combat zone, a number of acts are postponed. Activities specifically mentioned include the filing of tax returns, the payment of income, estate, or gift taxes (except employment and withholding taxes), tax claims filings or bringing suits for credits or refunds, filing any petition with the U.S. Tax Court, making a qualified retirement contribution to an IRA, or performing any other act listed in Revenue Procedure 2002-71. No penalties or interest will be imposed for failure to file a return or pay taxes during the extension period. Detailed information can be obtained by consulting Publication 3 Armed Forces’ Tax Guide (2002 Returns). The Guide can be obtained by contacting the IRS or from the IRS website, www.irs.gov.

This basic postponement period is for the period in the combat zone plus 180 days. If a person is injured from service in the combat zone, the deadline would be extended from the last day of any continuous qualified hospitalization, if that period is longer than the 180 day period in the preceding sentence. In addition to the 180 days, the deadline is extended by the number of days that were left to take action with the IRS when a person entered a combat zone. Mariners are advised to consult their tax professionals with respect to the impact of this relief with respect to their individual situations.

Only mariners serving in the combat zone are covered. At present, the combat zone for Operation Iraqi Freedom is defined as follows:

- Persian Gulf, the Red Sea, the Gulf of Aden, and the Gulf of Oman;

- That portion of the Arabian Sea that lies north of 10 degrees north latitude and west of 68 degrees east longitude; and

- The total land area of Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, and the United Arab Emirates.

Section 7508 only temporarily stays these activities; it does not terminate them, reduce statutory periods, or in any manner prejudice these actions after the postponement period is over. These benefits are afforded to the spouse of an individual qualified for the benefits without any requirement that the individual and spouse file a joint return.

Taxpayers with the United States may seek assistance by calling the IRS at 1-800-829-1040. Taxpayers outside the United States may call the IRS in Philadelphia, Pa., at (215) 516-2000 or via fax at (215) 516-2555 (these are not toll free numbers).