Congress passes bipartisan Veterans Tax Fairness Bill

The Senate passed the Combat-Injured Veterans Tax Fairness Act of 2016 (HR 5015) on December 10. The House passed the bill on December 5. 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.

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