Combat-Injured Veterans Tax Fairness Act of 2016

Floor Speech

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Mr. ROUZER. Mr. Speaker, first, I want to make mention to the fine ranking member of the committee that we did reach out, certainly, to as many staff on the Democrat side as we possibly could. Perhaps we could have done a little bit better job of that, but I do want to make mention that we did make that effort--a point duly noted, though--and we will follow up multiple times the next time I have a bill that I think the gentleman would be interested in.

Mr. Speaker, I filed H.R. 5015, the Combat-Injured Veterans Tax Fairness Act, after learning that nearly 14,000 veterans from all 50 States and the District of Columbia who suffered service-ending, combat-related injuries never received the full amount of their severance payment because taxes were wrongly withheld. Let me repeat that: nearly 14,000 veterans did not receive the money to which they were entitled because of a taxing error made by the Federal Government.

Now, in case you are wondering how this error occurred, here is some background: the Internal Revenue Code excludes recurring disability payments from taxable income for personal injuries or sickness resulting from active service in our Armed Forces. In 1991, a Federal district court case, St. Clair v. United States, determined that one- time lump-sum disability severance payments received for injuries resulting from active service should be excluded from taxable income as well.

Despite this court decision and the resulting regulatory guidance that stemmed from it, taxes on combat-related disability severance payments have been withheld for many years. As was mentioned earlier, the Defense Finance and Accounting System claimed this was due to the limitations of its automated computer payment system. Go figure. Regardless, this is an issue that needs to be addressed.

Many of the veterans affected are not even aware that their benefits were improperly reduced. In most cases, the 3-year period in which they could file an amended tax return to get their money back has long since passed.

This legislation directs the Department of Defense to identify instances of improper withholding and determine how much these combat- wounded veterans are owed. Those veterans who were adversely affected will then be able to apply to the IRS to receive the money they are rightfully due.

Our soldiers, sailors, airmen, and marines risk their lives every day to protect our freedoms, our values, and our Republic. The revelation that there are thousands of veterans who did not receive their full disability severance pay is unacceptable, and it must be corrected immediately.

Today we can make a great step towards rectifying this problem. I think we can all agree that these veterans deserve no less for their service and sacrifice to our Nation.

I want to make special mention of Senator Boozman of Arkansas and Senator Warner of Virginia who have sponsored an identical bill in the United States Senate. Their leadership on this issue has been absolutely critical. I commend this legislation to my colleagues and encourage its passage.

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