More than
130,000 veterans are receiving letters on how to apply for refunds of taxes
they paid on disability severance pay dating back to 1991 — a minimum of $1,750
per veteran.
While exact
estimates were not available, because each veteran’s payout varies, the government
could be paying out a minimum of $228 million in tax refunds, if all those
eligible file claims.
The eligible
veterans will have a year after the date of their letter from the Defense
Department to file a claim for the refund, or three years after filing their
tax return that reported the disability severance pay, whichever is later.
Survivors of those who paid the taxes are also eligible for the refund, which
would be paid to the estate of the veteran.
The mailings
to 130,062 veterans started on July 9, and are scheduled to be completed by
July 20. The letters are being sent by the Internal Revenue Service on behalf
of the Defense Department, because the IRS maintains the last known addresses
of taxpayers, said Army Lt. Col. David Dulaney, executive director of the Armed
Forces Tax Council.
These
refunds are the result of a law passed in 2016 — the Combat Injured Veterans
Tax Fairness Act of 2016 — which applies to veterans who received this pay
dating back to Jan. 17, 1991, with taxes withheld. By law, DSP is not taxable
if:
The DSP is
paid for combat-related injuries determined by the military service at the time
of separation, or, the veteran is eligible for disability compensation from the
Veterans Affairs department.
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