Fallen Tenn. Marine cause behind tax bill introduced by DesJarlais

WASHINGTON — Three years before he died in the line of duty, Marine Lance Cpl. Andrew Carpenter took out a $20,000 student loan so he could continue his college education.

After he was shot and killed by a sniper in Afghanistan, the company administering the loan agreed to forgive the entire debt.

The Internal Revenue Service did not.

The government notified Carpenter's parents in Columbia, Tenn., that since they had co-signed the loan, the waived debt would be calculated as part of their gross income and would be taxed.

"It just doesn't seem fair, when somebody gives the ultimate and goes out and fights for their country," said Carpenter's mother, Cindy Carpenter. "I just didn't think it was right."

The Carpenter family's saga has spurred legislation in Congress to ensure that families of other deceased veterans never have to fight a similar tax battle.

The Andrew P. Carpenter Tax Act would bar the IRS from collecting taxes on any forgiven student loan held by a veteran who died of injuries received while on active duty.

"It is a fitting way to fix a glaring problem in our tax code, while paying tribute to the memory of Lance Cpl. Carpenter," said U.S. Rep. Scott DesJarlais, R-Jasper, who filed the bill. "His family has experienced the pain of losing their son, husband and father. Hopefully, if passed, this measure will in some way ease this burden."

Right now, the IRS treats forgiven debt on credit cards, personal loans and student loans as income. In other words, once a loan is waived, it is considered income and subject to taxation. In the Carpenters' case, interest caused the student loan amount to balloon to $28,000.

Federally backed student loans already are forgiven for deceased veterans. Private loan companies have the option of waiving student loans for deceased veterans. DesJarlais' legislation would not change that. It simply would bar the IRS from treating the waived loan amount as taxable income.

The bill would be retroactive to Oct. 7, 2001, the starting date of the war in Afghanistan.

Lance Cpl. Carpenter, 27, a member of the 26th Marine Expeditionary Unit, died in Germany on Feb. 19, 2011, after he was shot in the neck while on patrol in southern Afghanistan. Carpenter attended college at Middle Tennessee State University and Columbia State Community College before enlisting in the Marines.

Though he was married when he died, the tax bill for his waived student loan went to his parents, not his pregnant wife, because they had co-signed the loan.