Tips for the 130,000+ combat-injured veterans seeking refunds of improperly withheld taxes
Special to the Surveyor
More than 130,000 combat-injured veterans had their lump-sum severance pay improperly taxed by the government due to a computer glitch when they left the military from 1991-2016. On July 9, 2018, the Department of Defense began mailing letters to notify affected veterans, and on July 11, 2018, the Internal Revenue Service (IRS) issued guidance to assist veterans.
The National Veterans Legal Services Program (NVLSP) discovered this error in 2014 and considered filing litigation to help veterans, but felt the best option to assist all of the veterans affected, was to ask Congress to pass legislation. With the sponsorship and leadership of Senator John Boozman (R-AR), Senator Mark Warner (D-VA) and Congressman David Rouzer (R-NC), the “Combat-Injured Veterans Tax Fairness Act of 2016” was passed and signed into law by President Barack Obama in December 2016.
“Over three decades, the improper withholding of millions of dollars in severance payments owed to our combat-injured veterans as they left the military was a historic wrong. Congress did the right thing in passing this legislation,” said Bart Stichman, executive director of NVLSP. “However, we are not at the goal line yet.”
“NVLSP will issue advice to help veterans and their families in the coming weeks through our website at www.nvlsp.org and social media accounts,” said Stichman.
NVLSP offers the following preliminary advice to assist the more than 130,000 veterans impacted:
Tip #1: Watch for your notification letter in the mail. Notification letters are being mailed between July 9-20 from the Department of Defense. Keep this letter in a safe place and do not lose it. When you receive your notification letter, please send an email to [email protected].
Tip #2: Review the guidance from DFAS and the IRS. The process of requesting a refund is complex. Review carefully the guidance from the IRS, additional guidance from the IRS, the 1040X form, the instructions for the 1040X form, and the guidance from the Defense Finance & Accounting Service (DFAS).
Tip #3: Take your time. This is not paperwork to rush through. It is complex. It is important veterans or their survivors or caregivers carefully evaluate their situation before filing a request for a refund with the IRS. You have at least one year from the date of the notification letter to file a request for a refund.
Tip #4: Watch NVLSP’s website and social media accounts for more advice to help you. Now that we have viewed public guidance issued over the last few days by DFAS and the IRS, NVLSP attorneys are actively working with a pro-bono law firm to assemble advice to help affected veterans and their families seeking refunds. When this advice is ready in the next few weeks, we will post it on our website at www.nvlsp.org and share it through our social media accounts on Facebook and Twitter (@Lawyer4Warriors).
The National Veterans Legal Services Program (NVLSP) is an independent, nonprofit veterans service organization that has served active duty military personnel and veterans since 1980. NVLSP strives to ensure our nation honors its commitment to its 22 million veterans and active duty personnel by ensuring they have the federal benefits they have earned through their service to our country. NVLSP offers training for attorneys and other advocates; connects veterans and active duty personnel with pro bono legal help when seeking disability benefits; publishes the nation’s definitive guide on veteran benefits; and represents and litigates for veterans and their families before the VA, military discharge review agencies and federal courts. For more information go to www.nvlsp.org.
Expert attorneys are actively preparing additional advice to help veterans claim their refunds.
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