Shipmates, Battle-Buddies and fellow Airwarriors: Greetings in the New Year! As our firm is getting ready for the new tax year, Congress and the President of the United States delivered a last-minute gift to Veterans from previous wars. I wanted to take this time to share with you an important tax update. Important, because it rights a wrong to those, who have served our nation.
What has happened?
“On December 16, President Obama signed into law H.R. 5015, the “Combat-Injured Veterans Tax Fairness Act of 2016,” to help combat-injured veterans recover income taxes that were improperly collected by the Department of Defense (DOD) on certain disability severance payments. The Act directs the DOD to identify certain severance payments to veterans with combat-related injuries paid after Jan. 17, '91, from which DOD withheld amounts for tax purposes, and the individuals to whom such severance payments were made. The DOD must provide these veterans with notice of the amount of improperly withheld severance payments and instructions for filing amended tax returns to recover these amounts. In addition, the Act extends the 3-year Code Sec. 6511 period for filing a refund claim with IRS to the date that is one year after DOD provides the veteran with the information required under the Act. The bill was passed by the Senate on December 10 by unanimous consent, and the House had previously passed the measure on December 5 by a vote of 392-0.” (Source: RIA Tax Watch, 2016)
What does this mean for me?
If you served in the military at any time since 1991, you might get a notice dealing with a possible refund. However, in order to get the refund, you will need to file an amended return to recover the refunded amount.
What Timeframe do I have?
Normally, taxes have a three-year statute of limitations. The Act, however, has extended that statute for receiving the refund to one year after DOD informs you. Now, a year might seem like a lot of time, but it can close quickly, especially if you are trying to amend a return all the way back in the early or mid-1990s, which are returns you might not have in your possession.
What do I do If I don’t have my PY returns?
Contact us at once! (You should do this when filing a return beyond the 3-year period, but especially in this case). We can get access to your PY returns and prepare the return to maximize your benefit under this new law.