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Combat-Injured Veterans Tax Fairness Act of 2016

On December 16, 2016, H.R. 5015, the Combat-Injured Veterans Tax Fairness Act of 2016 became Public Law No: 114-292. This new law provides veterans medically separated, or retired from the military due to combat-related injuries another opportunity to recoup the taxed portion of their severance payments.
The law requires the Department of Defense (DOD) to identify veterans medically separated from military service due to combat-related injuries that were issued severance payments after January 17, 1991, and withheld amounts for tax purposes.
DOD will provide this group of veterans with a notice of the amount of improperly withheld severance payments, and instructions for filing amended federal tax returns to recover the withheld amount. The period for filing this IRS claim for a credit, or refund is extended to one year after DOD provides the veteran with the information required by this Act.
This law will be a significant benefit to this group of injured and ill veterans, and partially fulfills DAV Resolution 011 that calls for allowing all veterans to recover taxes withheld from their disability severance pay.

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