Congress Passes Bipartisan Veterans Tax Fairness Bill

CCH Tax Day Report

The Senate passed the Combat-Injured Veterans Tax Fairness Act of 2016 (HR 5015) on December 10 by unanimous consent. The House passed the bill on December 5 (TAXDAY, 2016/12/06, C.1). President Obama is expected to sign the measure.

HR 5015 will refund money that was improperly withheld for tax purposes from severance payments to certain veterans of the U.S. Armed Forces. Generally, severance payments for veterans separated from the Armed Forces because of combat-related injuries are not considered gross income.

The bill will also extend the limitation on time for filing a claim for a credit or refund under Code Sec. 6511(a) to enable certain veterans to be restored of funds previously taken from their severances. As it stands, the statutory period to file an amended return has expired for many veterans, according to Rep. David Rouzer, R-N.C., author of the bill in the House. The measure will “ensure that every veteran who has had their severance payments improperly taxed receive every penny that they are rightfully owed,” Rouzer said in a statement.

“Severance pay for service members who suffered combat-related injuries should not be taxed under any circumstance,” Sen. Mark Warner, D-Va., said on December 12. Warner had introduced similar bipartisan legislation in the Senate. “I am comforted by the fact that this bill now heads to the president.”

By Jessica Jeane, Wolters Kluwer News Staff

Combat-Injured Veterans Tax Fairness Act of 2016, as passed by the House on December 5, 2016, HR 5150

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