Great News! New Law Provides for payment of wrongfully withheld Taxes!!

Discussion in 'Other Benefits' started by Jason Perry, Dec 28, 2016.

By Jason Perry on Dec 28, 2016 at 2:15 AM
  1. Jason Perry

    Jason Perry Benevolent Leader Site Founder Staff Member PEB Forum Veteran Registered Member

    May 15, 2007
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    This is important news.


    "WASHINGTON — Thousands of veterans injured in combat could soon be able to recoup taxes erroneously collected from their disability severance pay due to a new law signed by President Barack Obama.

    About 13,800 veterans separated from the military due to their injuries might have been affected, the nonprofit group National Veterans Legal Service Program estimates. Due to an accounting error, as much as $78 million in taxes deducted over decades from the lump sum payments.

    Federal law considers the severance payments tax exempt. But the nonprofit group said the Defense Finance and Accounting Service system was automatically making deductions since 1991, meaning troops injured in conflicts spanning from the Gulf War to the wars in Iraq and Afghanistan might have been taxed thousands of dollars improperly.

    The Combat-Injured Veterans Tax Fairness Act signed by Obama on Friday requires the Defense Department to calculate what money is owed to whom and provide veterans the option to reclaim the taxes.

    The lump-sum severance money was paid to veterans who were injured in combat but did not rate permanently disabled. The amounts depended on rank and length of service at the time.

    The average total payment was about $22,000 – severance ranged between about $12,000 and $100,000 – and was taxed at 25 percent, Moore said.

    The military was aware of the automatic taxes and attempted to notify troops undergoing medical separation of how to reclaim the money. It required the servicemember to file a claim with DFAS by December of the year that they were separated, Moore said.

    The Internal Revenue Service also offered a three-year window for veterans to file an amended tax return to recoup the improper deduction.

    But Moore said thousands of veterans have missed the opportunities.

    The military is now required to 'notify all of these veterans and let them all know the three-year period to file with IRS is open,' he said."

    Here is a link to the legislation:

    There are requirements to notify the folks affected. However, I don't have a high level of confidence that this will happen for all Veterans. So, please share and help those who are due money back get their due and well earned monies.
    Here is a


Discussion in 'Other Benefits' started by Jason Perry, Dec 28, 2016.

    1. chaplaincharlie
      This is great news for those who did not recoup the taxes on their disability severance. Thank you for sharing.
      Jason Perry likes this.
    2. Aylin
      If we don't know we are affected so we apply? How would this work
    3. Vella
      There has been some discussion about the St Claire Act lately as well. If the Veteran was Medically Seperated and taxed at 25% then rated by VA for the same condition is that now considered tax exempt? Specifically asking for Non-Combat related disability. Thank you in advance for comments and guidance.
      alaskagirl likes this.
    4. ProvostToast
      I would be one of those soldiers affected by this, how would I go about applying for this?
    5. alaskagirl
      Vella, I too would like to know the answer to this.
    6. Jason Perry
      Jason Perry
      Yes, this is true....see the attached files.

      Attached Files:

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