(a) Time to be disregarded.--In the case of an individual serving in the armed forces of the United States, or serving in support of such armed forces, in an area designated by the president of the United States by executive order as a “combat zone” at any time during the period designated by the president by executive order as the period of combatant activities in such zone, or when deployed outside the United States away from the individual's permanent duty station while participating in an operation that is either designated by the United States secretary of defense as a “contingency operation” or which became a contingency operation due to operation of law during the period of such contingency operation, or hospitalized inside or outside the state as a result of injury received while serving in such an area or operation during such time, the period of service in such area or operation, plus the period of continuous hospitalization inside or outside the state attributable to such injury, and the next one hundred eighty days thereafter, shall be disregarded in determining, under this article, in respect of the income tax liability (including any interest, penalty, or addition to the tax) of such individual --
(1) Whether any of the following acts was performed within the time prescribed therefor:
(A) filing any return of income tax (except withholding tax);
(B) payment of any income tax (except withholding tax) or any installment thereof or of any other liability to the state, in respect thereof;
(C) filing a petition with the tax commission for credit or refund or for redetermination of a deficiency, or application for review of a decision rendered by the tax commission;
(D) allowance of a credit or refund of income tax;
(E) filing a claim for credit or refund of income tax;
(F) assessment of income tax;
(G) giving or making any notice or demand for the payment of any income tax, or with respect to any liability to the state in respect of income tax;
(H) collection, by the tax commission, by levy or otherwise of the amount of any liability in respect of income tax;
(I) bringing suit by the state, or any officer, on its behalf, in respect of any liability in respect of income tax; and
(J) any other act required or permitted under this article or specified in regulations prescribed under this section by the tax commission.
(2) The amount of any credit or refund.
(b) Special rule for overpayments.--(1) Subsection (a) of this section shall not apply for purposes of determining the amount of interest on any overpayment of tax.
(2) If an individual is entitled to the benefits of subsection (a) of this section with respect to any return, amended return, or claim for credit or refund, and such return, amended return or claim is timely filed (determined after the application of such subsection), paragraph three of subsection (a) and subsection (c) of section six hundred eighty-eight of this article shall not apply.
(c) Action taken before ascertainment of right to benefits.--The assessment or collection of the tax imposed by this article or of any liability to the state in respect of such tax, or any action or proceeding by or on behalf of the state in connection therewith, may be made, taken, begun, or prosecuted in accordance with law, without regard to the provisions of subsection (a), unless prior to such assessment, collection, action, or proceeding it is ascertained that the person concerned is entitled to the benefits of subsection (a).
(d) Members of armed forces dying in action.--In the case of any person who dies while in active service as a member of the armed forces of the United States, if such death occurred while serving in a combat zone during a period of combatant activities in such zone, as described in subsection (a), or as a result of wounds, disease or injury incurred while so serving, the tax imposed by this article shall not apply with respect to the taxable year in which falls the date of his or her death, or with respect to any prior taxable year ending on or after the first day so served in a combat zone, and no returns shall be required in behalf of such person or his or her estate for such year; and the tax for any such taxable year which is unpaid at the date of death, including interest, additions to tax and penalties, if any, shall not be assessed and, if assessed, the assessment shall be abated and, if collected, shall be refunded to the legal representative of such estate if one has been appointed and has qualified, or, if no legal representative has been appointed or has qualified, to the surviving spouse.
(e) Treatment of individuals performing Desert Shield services.--(1) Any individual who performed Desert Shield services shall be entitled to the benefits of subsections (a) and (b) of this section in the same manner as if such services were services referred to in subsection (a) of this section.
(2) For purposes of this subsection, the term “Desert Shield services” means any services in the armed forces of the United States or in support of such armed forces if
(A) such services are performed in the area designated by the president of the United States as the “Persian Gulf Desert Shield area”, and
(B) such services are performed during the period beginning on August second, nineteen hundred ninety, and ending on the date on which any portion of the area referred to in subparagraph (A) of this paragraph is designated by the president as a combat zone pursuant to section one hundred twelve of the internal revenue code . 1
(f) Relief for personnel under hostile fire.--For purposes of this section, members of the armed forces of the United States who perform military service in an area outside an area designated by the president of the United States by executive order as a “combat zone”, which service is in direct support of military operations in such zone and is performed under conditions which qualify such members for hostile fire pay, as authorized under subdivision (a) of section nine of the federal uniformed services pay act of nineteen hundred sixty-three, shall, during the period of such qualifying service, be deemed to have served in such combat zone.
(g) Application to spouse.--The provisions of subsections (a), (b), (c), (e) and (f) of this section shall apply to the spouse of any individual entitled to the benefits of subsection (a) of this section; provided, however, that such subsections shall not apply for any spouse for any taxable year beginning more than two years after the date designated under section one hundred twelve of the internal revenue code 1 as the date of termination of combatant activities in a combat zone.
(h) Individuals dying as a result of certain attacks and astronauts.--(1) General. In the case of a specified terrorist victim or astronaut, any tax imposed by this article shall not apply--
(A) with respect to the taxable year in which falls the date of death; and
(B) with respect to any prior taxable year in the period beginning with the last taxable year ending before the taxable year in which the wounds or injury referred to in paragraph three of this subsection were incurred.
(2) Taxation of certain benefits. Paragraph one of this subsection shall not apply to the amount of any tax imposed by this article which would be computed by only taking into account the items of income, gain, or other amounts determined by the United States secretary of the treasury to be taxable pursuant to paragraph 692(d)(3) of the internal revenue code. 2
(3) Specified terrorist victim. For purposes of this subsection, the term “specified terrorist victim” means any decedent who dies as a result of wounds or injury incurred as a result of the terrorist attacks against the United States on September eleventh, two thousand one, provided, however, such term shall not include any individual identified by the attorney general of the United States to have been a participant or conspirator in any such attack or a representative of such an individual.
(4) Astronaut. For purposes of this subsection, the term “astronaut” means any astronaut whose death occurs in the line of duty after December thirty-first, two thousand two.
(i) Collection period after assessment not extended as a result of hospitalization. With respect to any period of continuous hospitalization described in subsection (a) and the next one hundred eighty days thereafter, subsection (a) shall not apply to the collection, by the tax commission, by levy or otherwise of the amount of any liability pursuant to section six hundred ninety-two of this article.
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