articles - VETERANS BENEFITS
TAX PENALTY RESCINDED FOR MORE SSB RECIPIENTS
[Information on "Tax Penalty Rescinded" was received from the office of
the Special Assistant to the Deputy Secretary of Defense for Gulf War
Illnesses]
WASHINGTON, January 25, 1998 (GulfLINK) - An amendment to existing
legislation will make thousands of disabled veterans eligible for a refund
from the Department of Veterans Affairs. Others will be receiving
disability compensation payment much earlier than previously anticipated.
The revision affects those veterans who accepted the lump sum Special
Separation Benefit during the force drawdown and later qualified for V.A.
disability compensation. Previous legislation mandated that recoupment of
the after tax withholding amount would apply only to those SSB payments
received on or after October 1, 1996. Those received prior to October 1
had to be recouped based on the gross amount paid. The amendment provides
for recoupment of the amount paid after withholding for federal income tax
and includes SSB payments made between December 5, 1991 to October 1,
1996.
Federal law prohibits from receiving concurrent payment both V.A.
disability pay and service for retirement or separation pay. When veterans
who receive service or separation pay are found to be eligible for
additional disability compensation, the V.A. withholds payment long enough
to recoup the amount of the full separation pay. For example, if a
separating member qualifies for an SSB of $40,000 and $10,000 was withheld
for federal income taxes, the VA would withhold compensation until the
entire $40,000 was recouped.
In 1996 Congress agreed that it was unfair to tax veterans for money they
never received and changed the law to limit the amount of money that can
be recouped to the net amount paid after federal income tax is withheld.
To use the example above, the member who received $30,000 after taxes,
will now be able to receive VA benefits after $30,000 is exceeded.
According to Ken McKinnon, a V.A. spokesperson, despite the fact that the
amendment was passed in June, many veterans are not aware of the change.
The V.A. urges that veterans be insistent when making a request for
repayment. requests for an adjustment of an after tax recoupment balance
must be accompanied by documentation showing the amount that was withheld
for federal income taxes.
"Veterans who believe they are entitled to a refund should contact their
local V.A. office at 1-800-827-1000 and request assistance in obtaining a
refund of overpayments," says McKinnon.
For more information, call (703) 578-8500.
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