Combat-Injured Veterans Tax Fairness Act of 2016

Combat-Injured Veterans Tax Fairness Act of 2016

Combat-Injured Veterans who received severance payments after January 17, 1991, should be able to recover the amount the Department of Defense inappropriately withheld for tax purposes.

Severance payments computed under 10 USC 1212 are not considered gross income, and no amount of the severance payments should have been withheld for tax purposes. According to Public Law 114-292, the Combat-Injured Veterans Tax Fairness Act of 2016 signed into law on December 16, 2016 – the Secretary of Defense has one year to:

  • Identify severance payments paid after January 17, 1991
  • Identify the individuals to whom the severance payments were made
  • Provide notice of the amount of severance payments improperly withheld for tax purposes, and
  • Provide instructions for filing amended tax returns to recover the amounts improperly withheld from the severance payments.

The law also provides an extension of the limitation on time to file for a credit or refund of the overpayment as a result of the severance payment amount improperly withheld.

Definition of “combat-related injury”

A personal injury or sickness which is:

  • Incurred as a direct result of armed conflict
  • Incurred while engaged in extra hazardous service, or
  • Incurred under conditions simulating war; or
  • Caused by an instrumentality of war.

Is your mailing address correct?

Now might be a good time to ensure a current mailing address is properly recorded in the Defense Enrollment Eligibility Reporting System (DEERS). You can access the information at https://www.dmdc.osd.mil/identitymanagement/, the U.S. Government Information Service designed for beneficiary self-service-authorized use. You can logon to the site using the Department of Defense Self-Service Logon (DS LOGON), a Common Access Card (CAC), or a DFAS myPay Password.

According to the Help Center at the https://www.dmdc.osd.mil website, the following assistance is available:

  • Department of Veterans’ Affairs (VA) can provide assistance if a veteran needs to be added to DEERS. Call 1.800.827.1000 and “Say ‘ebenefits’ when prompted for the reason for your call”.
  • Eligibility questions regarding DS LOGON account may be addressed by the DMDC/DEERS Support Office (DSO) at 1.800.538.9552, Monday thru Friday, 8am to 8pm EST.

References

  • Public Law 114-292, Combat-Injured Veterans Tax Fairness Act of 2016
  • Title 26, United States Code, Section 104 (26USC 104) – Compensation for injuries or sickness
  • Title 10, United States Code, Section 1212 (10USC 1212) – Disability Severance Pay

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