Under an act passed by Congress, a certain group of veterans could potentially be eligible for a tax refund. The entitled group is injured combat veterans who served over a 25-year span of time.
Time is running out because the refund ends this year. Congress approved in 2016 what’s called the Combat-Injured Veterans Tax Fairness Act. There are potentially thousands of injured combat veterans in Tennessee who may have had taxes withheld by mistake when they left the military between 1991 and 2016.
You may know someone who fits into this category.
At the University of Tennessee, Chris Davis leads the “Vols for Vets” student organization, which helps veterans on campus. Davis is an active duty Marine captain and combat veteran. The Navy Academy graduate is in his third year at UT’s law school.
“I believe we need to get the word out. It could potentially affect a lot of veterans living here in Tennessee,” Davis said of the Combat-Injured Veterans Tax Fairness Act. “The IRS estimates about $717 million were withheld improperly from veterans who served.”
The act refers to a lump sum disability severance payment mistakenly made by the Internal Revenue Service.
“That payment was supposed to be tax-free and it might not have been,” Davis said.
Davis explained that only a percentage of those eligible have filed a claim.
“The IRS and the DOD worked together and have sent out 130,000 letters to veterans who they believe are eligible or might have money owed to them,” he said. “As of a week or so ago, only about 27,000 claims have been filed.”
Those combat veterans potentially eligible must have been found unfit for duty, given a medical disability with a rating less than 30 percent and have less than 20 years of service.
Their potential severance varies. For tax years 1991 through 2005, the eligible refund could be $1,750. For service from 2006 through 2010, $2,400 is the potential refund. It jumps to $3,200 for those injured in combat from 2011 through 2016.
“There is a one-year statute of limitation for this act. If the veteran might be eligible for recovery due to money that was withheld, they only have to this tax return season to make that right,” Davis explained.
Contact the IRS at their website or the Tennessee Taxpayer Project at 1-866-481-3669 for additional help.