Good News: "More than 133,000 vets may qualify for this tax refund windfall"

Dollars Tax refund.jpg
More than 133,000 vets may qualify for this tax refund windfall
From Army Times. By Karen Jowers.

"More than 133,000 veterans may qualify for a refund of federal taxes they paid on disability severance pay dating back to 1991 ― taxes that shouldn’t have been collected in the first place.

Within the next month, Defense Department officials will send notification letters to veterans that they may be eligible for the refund, said Army Lt. Col. David Dulaney, executive director of the Armed Forces Tax Council.

Eligible veterans will have a year after they receive the notice to file a claim for the refund.

These refunds, which are the result of a law passed in 2016, apply to veterans who received this pay dating back to Jan. 17, 1991, with taxes withheld, and who also qualified for disability from the Veterans Affairs Department.

The 2016 Combat Injured Veterans Tax Fairness Act went into effect in 2017. The law requires DoD to identify the veterans whose benefits were previously improperly taxed; and the notification letter will include information about the amount of disability severance payments that were improperly taxed, and instructions for filing an amended tax return to receive the refund.

Of the 300,000 veterans who received the disability severance payment, DoD has identified 133,000 who may qualify for refunds, Dulaney said.

Under federal law, any service member who suffers a combat-related injury and is separated from the military receives a one-time, lump-sum disability severance payment based on their rank and years of service. Although the payout was supposed to be tax-free, DoD routinely took taxes out of the severance pay, according to advocacy groups. The 2016 law mandated that DoD stop improperly taxing the pay.

The notification letters will provide information to veterans on how they can apply for the refund. Defense officials have been working with Internal Revenue Service officials to clarify the process, Dulaney said.

The amount of tax refund will vary by veteran, as the amount of the disability severance varies based on rank and years of service. But it’s worth the time to file the claim, Dulaney said."

This article details the great news that the DoD will be providing notification to all of those who had taxes improperly withheld from their disability severance payments.

The bad news? Veterans will have to apply for the refund to receive it. Still, the law and the notifcations are a good step to rectifying the erroneous withholding. The amounts could be substantial. Also, note that there is a one year period after notification to apply for the refund.
 
Jason Perry

Comments

cc2mama

Registered Member
#2
In 2002, I was Medically Retired (03E). I received a severance pay and it was taxed at 28% almost $30,000 taken. Was not informed I could file to get this money back nor has DOD contacted me. In 2002, VA rated me 90% & in 2008 increased to 100%. Finally in 2013, I got Total & Permanent Disability. In 2017, I was awarded 80% for CRSC & received backpay. Now.... here's the kicker! DFAS took over $16,000 & CRSC took over $13,000 from this backpay, the total of the two was the amount of taxes taken out of my severance pay in 2002. They noted that I had paid back the VA the rest. I contacted DFAS & explained they took that money from me in 2002 & I never got it back, now they are taking it from me again. I was told they have to take this money "by law". I have reached out to my Congressman (liaison) & he contacted DFAS. Although he was a huge help, DFAS wasn't and I'm back to square one. Talk about being screwed twice!
 

Jason Perry

Benevolent Leader
Site Founder
Staff Member
PEB Forum Veteran
Registered Member
#3
In 2002, I was Medically Retired (03E). I received a severance pay and it was taxed at 28% almost $30,000 taken. Was not informed I could file to get this money back nor has DOD contacted me. In 2002, VA rated me 90% & in 2008 increased to 100%. Finally in 2013, I got Total & Permanent Disability. In 2017, I was awarded 80% for CRSC & received backpay. Now.... here's the kicker! DFAS took over $16,000 & CRSC took over $13,000 from this backpay, the total of the two was the amount of taxes taken out of my severance pay in 2002. They noted that I had paid back the VA the rest. I contacted DFAS & explained they took that money from me in 2002 & I never got it back, now they are taking it from me again. I was told they have to take this money "by law". I have reached out to my Congressman (liaison) & he contacted DFAS. Although he was a huge help, DFAS wasn't and I'm back to square one. Talk about being screwed twice!
I am sorry to hear of your problems (both medical and in getting properly compensated). Without knowing all of the details of your case, it seems to me that you may well benefit from the law and notification from DoD referenced in the original post.

(This is still not enough- I don't see anything about and do not believe that there will be any interest paid on the wrongfully withheld monies....strikes me as wrong as a policy. When you owe the government, they often tack on interest. When they screwed up, took your money, rarely is interest paid. Seems like "dirty pool" to me, even if "technically legal.")

I hope you get all you are due!
 

Battler27

Registered Member
#4
I was medically discharged in February of 2009. They taxed my lump sum pay. But I have yet to receive a letter. Is there a way to be proactive with it and find out myself?
 

MackValdez

PEB Forum Veteran
Registered Member
#6
I received the letter and filed an updated return.... Has anyone actually received the payment that can tell me how long it ook to get the check after you filed?
 

Edna

Registered Member
#7
I wanted to share this to everyone. I received a letter from DFAS saying that I am qualified to file a refund for my severance pay back in 2002. Veterans Tax Fairness Act 2016, which provides eligible veterans the right to seek a refund of taxes they may have paid on Disability Severance Pay. I submit a IRS Form 1040X, Amended U.S. Individual Income Tax Return, for the year you received on top of the form you can write the year you separated and Veterans Disability Severance or St. Clair Claim. I also sent a copy of my 2002 tax return and a copy of the letter I received from DFAS.

Additional information the IRS office prefer to write your question or concern to the address below:

INTERNAL REVENUE SERVICE
333 W. Pershing Street, Stop 6503, P5
Kansas City, MO 64108

I hope this will help everyone that have question on severance pay tax refund. Good Luck.....

Edna
 

MackValdez

PEB Forum Veteran
Registered Member
#8
I wanted to share this to everyone. I received a letter from DFAS saying that I am qualified to file a refund for my severance pay back in 2002. Veterans Tax Fairness Act 2016, which provides eligible veterans the right to seek a refund of taxes they may have paid on Disability Severance Pay. I submit a IRS Form 1040X, Amended U.S. Individual Income Tax Return, for the year you received on top of the form you can write the year you separated and Veterans Disability Severance or St. Clair Claim. I also sent a copy of my 2002 tax return and a copy of the letter I received from DFAS.

Additional information the IRS office prefer to write your question or concern to the address below:

INTERNAL REVENUE SERVICE
333 W. Pershing Street, Stop 6503, P5
Kansas City, MO 64108

I hope this will help everyone that have question on severance pay tax refund. Good Luck.....

Edna
Did you file it? I received the same letter and filed my 1040X. My question is if anyone has actually received their refund yet and how long it took after filing to receive it?
 

Beck

Registered Member
#9
The government screws you over no matter what. In order to get your full amount you must have that years tax return to fill out the 1040x completely. Most people don't have their returns so are forced to get the standard deduction which is significantly less than what you should be receiving. Irs dont keep tax returns past 7 years like myself I requested a tax transcript but couldn't get since it was for 2008. Veterans get screwed again what's new....so yo save you the headache just request the standard amount cause that is what you will end up getting after months of dealing with the IRS yo get your documents only to discover you can't.
 
#10
Has anyone received their refund yet? I submitted mine on the 19th of July, and in the middle of August I received a letter stating that it was approved and to allow 4-6 weeks to process. Have not received anything yet. I called the IRS and they said it could be Nov 9th before I receive anything.
 

MackValdez

PEB Forum Veteran
Registered Member
#12
Has anyone received their refund yet? I submitted mine on the 19th of July, and in the middle of August I received a letter stating that it was approved and to allow 4-6 weeks to process. Have not received anything yet. I called the IRS and they said it could be Nov 9th before I receive anything.
wait, what? You got a letter? I sent mine on 24 July and have received nothing. I did find a phone number and a website that you can check the status of your amended return but it still says mine is not in the system yet
 

MackValdez

PEB Forum Veteran
Registered Member
#13
The government screws you over no matter what. In order to get your full amount you must have that years tax return to fill out the 1040x completely. Most people don't have their returns so are forced to get the standard deduction which is significantly less than what you should be receiving. Irs dont keep tax returns past 7 years like myself I requested a tax transcript but couldn't get since it was for 2008. Veterans get screwed again what's new....so yo save you the headache just request the standard amount cause that is what you will end up getting after months of dealing with the IRS yo get your documents only to discover you can't.
I am crazy and do keep all of my old tax returns. I was able to fill out the 1040X fully but am still waiting....
 

MackValdez

PEB Forum Veteran
Registered Member
#15
Oh my goodness...... So, I finally found a way to call the IRS and get to talk to an actual breathing person (not a recording). She pulled up my account and confirmed that my amended return was processed and my refund check (PLUS INTEREST) was mailed on 14 September!. So, for timeline comparison I mailed my amended return on 24 July, and they put the check in the mail on 14 September.
 

Beck

Registered Member
#17
I am crazy and do keep all of my old tax returns. I was able to fill out the 1040X fully but am still waiting....
I wish I had mine, but went through a crazy divorced and things got thrown away or take. So I guess I have to settle for the stanndard amount. Good luck I hope you hear something soon. When I talked to the lady at IRS she said 16 weeks is average for amended returns but that these are priority so should be sooner.
 
#18
Oh my goodness...... So, I finally found a way to call the IRS and get to talk to an actual breathing person (not a recording). She pulled up my account and confirmed that my amended return was processed and my refund check (PLUS INTEREST) was mailed on 14 September!. So, for timeline comparison I mailed my amended return on 24 July, and they put the check in the mail on 14 September.
That's awesome,! What number did you call?
 

MackValdez

PEB Forum Veteran
Registered Member
#19
I wish I had mine, but went through a crazy divorced and things got thrown away or take. So I guess I have to settle for the stanndard amount. Good luck I hope you hear something soon. When I talked to the lady at IRS she said 16 weeks is average for amended returns but that these are priority so should be sooner.
When I got home yesterday my check was in the mail! Yay! Of course, it was with a letter saying that part of the check was interest that they are paying me..... and I need to put that interest on my next tax return as taxable income LMAO
 

MackValdez

PEB Forum Veteran
Registered Member
#20
That's awesome,! What number did you call?
Believe it or not, after over a month of being frustrated trying to select different phone options I googled and found the answer! Do not be tricked by choosing "for status of your 1040X..." all of those bring you back to the automated system. Follow the steps below and you will get an actual person. The lady I got was super nice, helpful and pleasant. I am guess because they probably don't end up with many calls since you have to know the code to get through LMAO

ANSWER: How To Get A Live Person At The IRS:
1
– Call the IRS toll free number at 1-800-829-1040
2
– Choose option “1” for ENGLISH LANGUAGE
3 – Choose option “2” for PERSONAL INCOME TAXES
4 – Choose option “1” for FORM – TAX HISTORY – PAYMENT
5 – Choose option “3” FOR ALL OTHER QUESTIONS
6 – Choose option “2” FOR ALL OTHER QUESTIONS
7You will then be transferred to an IRS TAX AGENT
NOTE: Pressing the number “0” during the call does not take you to customer service.
 
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