An error in the computation of taxes regarding military disability severance pay will result in more than 130,000 veterans receiving refunds from the government. Virginia veterans who received these lump-sum payments and were taxed on them after January 1992, may be eligible for refunds and, therefore, may receive notifications from the Department of Defense regarding their eligibility.
The problem occurred when severance pay based on combat-related injuries was erroneously taxed. This problem went on for years and only in the last two years has the government taken active steps to ensure that service members receive the full compensation they deserve. Once a service member receives notification that they may be owed a refund due to this issue, they will have a year to seek reimbursement of their withheld taxes.
Service members who receive notices that their severance pay was improperly taxed and that they may be due reimbursements should take action when they become aware of their possible rights. As with other aspects of military law, they may benefit from working with attorneys who understand and practice the unique subject of military law.
American service members and veterans deserve to be treated fairly and to receive the compensation, benefits and pay they have earned through their sacrifices to the nation and their fellow citizens. This taxation oversight is just one of the possible issues that service members and veterans may encounter as they work through their rights and responsibilities regarding their military discharges. To learn more about this and other military processes, readers should seek legal counsel as this post does not provide legal advice.
Source: military.com, "Over 133,000 Veterans Who Got Military Disability Are Due Tax Refunds," Jim Absher, Feb. 8, 2018