WASHINGTON – The U.S. House of Representatives on Monday passed a bill authored by Congressman David Rouzer (NC-9) to provide every veteran who has had their severance payments wrongfully taxed the opportunity to recover the payment in full.
House Resolution 5015, the Combat-Injured Veterans Tax Fairness Act of 2016, is estimated to impact nearly 14,000 veterans — including more than 550 veterans from North Carolina — who were wrongfully taxed on their severance packages.
Under federal law, veterans who suffer combat-related injuries and who are separated from the military are not supposed to have any taxes withheld from their one-time lump sum disability severance payment, which they receive from the Department of Defense. However, due to an accounting error, that was not the case for the estimated 14,000 veterans.
H.R. 5015 corrects this problem by instructing the DoD to identify those who were wrongfully taxed so that they can be reimbursed.
“Our soldiers, sailors, airmen and Marines risk their lives every day to protect our freedoms, our values and our republic,” Rouzer said. “The revelation that there are thousands of veterans who did not receive their full disability severance pay is unacceptable. This legislation is a common-sense solution to ensure that these veterans who had their severance payment wrongfully taxed will receive every penny that they are rightfully owed. These veterans deserve no less for their service and sacrifice to our nation.”
The problem was originally identified by the National Veterans Legal Services Program, an independent, nonprofit veterans service organization that has served active duty military personnel and veterans since 1980.