Most VA disability claims filed by military retirees are resolved in less than a year. But lost paperwork, administrative errors, and appeals of rejected claims delay thousands of disability awards for years on end.
The VA disability award is retroactive to the date of the application — making some portion of past military retired pay tax-free. But to get a refund of back taxes paid, disabled retirees must file an amended tax return for each applicable year.
That's when retirees run into a major problem: the IRS Code bars filing amended returns beyond the last three tax years. As a result, VA administrative glitches and insensitive tax laws cost these disabled retirees thousands of dollars through no fault of their own.
The "Disabled Veterans Tax Fairness Act of 2007" (S. 326) would allow disabled veterans whose disability claims have been pending for more than 3 years to receive refunds on previous taxes paid for up to five years – the length of time the IRS keeps these records.
Sen. Lincoln received bipartisan support on her bill, with 11 senators joining as original cosponsors.
House champion Rep. Sam Farr (D-CA) is expected to re-introduce a similar measure soon, according to his staff. The Farr bill would authorize a 15-year look-back exception to IRS rules for amended returns from disabled military retirees…
MOAA is very pleased to see early attention to this issue in the 110th Congress. The "Disabled Veterans Tax Fairness Act of 2007" is posted as a key bill on the MOAA Web site, including a link to let you send your legislators a MOAA-suggested message of support.