Military-Civilian: Hot Jobs, Events, and Helpful Information for Veterans Seeking Civilian Careers: Injured Soldiers entitled for Tax Refund
Thursday, December 22, 2016
Injured Soldiers entitled for Tax Refund
New Law Allows Injured Vets To Get Refund On Taxes They Were Never Meant To Pay
TRAVIS J. TRITTEN, STARS AND STRIPES
on December 20, 2016
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Taxes have been mistakenly withheld as far back as the First Gulf War.
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.
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.
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.
of them I spoke to were hearing of this issue for the first time,” said
Tom Moore, an attorney and manager of the Lawyers Serving Warriors
project at the nonprofit group.
deductions were uncovered and investigated by Moore and the National
Veterans Legal Service Program and have now been stopped by the Defense
Finance and Accounting Service. They had initially pursued a
class-action lawsuit but realized the only clear solution was a new law
backed by Congress.
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.
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.
average total payment was about $22,000 – severance ranged between
about $12,000 and $100,000 – and was taxed at 25 percent, Moore said.
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.
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.
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.
Sen. Mark Warner, D-Va., and Sen. John Boozman, R-Ark., pushed the legislation in Congress.
is unbelievable that Congress needed to act to clear up this issue.
Severance pay for service members who suffered combat-related injuries
should not be taxed under any circumstance,” Warner said in a released
statement."Do not ask what we did for our country, But what our country will do for our combat brothers and sisters - OIF3"