Defenders of Freedom Tax Relief Act of 2007 - Amends Internal Revenue Code provisions relating to military personnel to: (1) extend the limitation period for filing tax refund claims resulting from Department of Veterans Affairs (VA) disability determinations; (2) make permanent the taxpayer election to treat combat zone compensation as earned income for purposes of the earned income tax credit; (3) treat differential wage payments made to active duty members of the uniformed services as wages for retirement plan purposes; (4) make permanent the exemption from the 10% penalty for premature retirement plan distributions made by active duty military personnel; (5) treat state payments to members of the uniformed services as qualified military benefits for purposes of the tax exclusion of such benefits; (6) make permanent the authority of the Social Security Administration to disclose tax return information to the VA for purposes of determining eligibility for certain veterans benefit programs; (7) extend through 2010 mortgage bond financing exemption rules for certain veterans; (8) make permanent the tax exclusion of gain from the sale of a principal residence by certain members of the Intelligence Community; (9) allow unlimited tax-free rollovers of military death gratuities to Roth individual retirement accounts (Roth IRAs); (10) allow employers a tax credit for differential wage payments made to active duty military personnel; and (11) set forth tax rules for U.S. citizens and certain permanent residents (expatriates) who relinquish their citizenship or residency to avoid U.S taxation.
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