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New Law Allows Injured Vets To Get Refund On Taxes They Were Never Meant To Pay
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.
“Many 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.
The average tax payment was $5,650, he said.
The 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.
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.
Sen. Mark Warner, D-Va., and Sen. John Boozman, R-Ark., pushed the legislation in Congress.
“It 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.
© 2016 the Stars and Stripes. Distributed by Tribune Content Agency, LLC.
The Taliban may not have breached the walls of Bagram, but they damaged the hell out of its main passenger terminal
Blasts from Taliban car bombs outside of Bagram Airfield on Wednesday caused extensive damage to the base's passenger terminal, new pictures released by the 45th Expeditionary Wing show.
The pictures, which are part of a photo essay called "Bagram stands fast," were posted on the Defense Visual Information Distribution Service's website on Thursday.
Editor's Note: The following is an op-ed. The opinions expressed are those of the author, and do not necessarily reflect the views of Task & Purpose.
Shortly after seven sailors died aboard USS Fitzgerald when she collided with a merchant ship off Japan in 2017, I wrote that the Fitzgerald's watch team could have been mine. My ship had once had a close call with me on watch, and I had attempted to explain how such a thing could happen. "Operating ships at sea is hard, and dangerous. Stand enough watches, and you'll have close calls," I wrote at the time. "When the Fitzgerald's investigation comes out, I, for one, will likely be forgiving."
So, am I forgiving? Yes — for some.
Editor's note: a version of this story first appeared in 2015.
Most people haven't heard of an elderly Belgian-Congolese nurse named Augusta Chiwy. But students of history know that adversity and dread can turn on a dime into freedom and change, and it's often the most humble and little-known individuals who are the drivers of it.
During the very darkest days of the Battle of the Bulge in World War II, Chiwy was such a catalyst, and hundreds of Americans lived because of her. She died quietly on Aug. 23, 2015, at the age of 94 at her home in Brussels, Belgium, and had it not been for the efforts of my friend — British military historian Martin King — the world may never have heard her astonishing story.
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The continued delay undermines a key argument against impeachment from President Trump's Republican allies and a new legal memo from the White House Office of Management and Budget.
Average pay, housing and subsistence allowances will increase for members of the military in 2020, the Pentagon announced Thursday.