PUBLIC LAW 114–292—DEC. 16, 2016 

COMBAT-INJURED VETERANS TAX FAIRNESS 

ACT OF 2016 


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130 STAT. 1500 PUBLIC LAW 114–292—DEC. 16, 2016 

Public Law 114–292 

114th Congress 

An Act 

To restore amounts improperly withheld for tax purposes from severance payments 

to individuals who retired or separated from service in the Armed Forces for 

combat-related injuries, and for other purposes. 

Be it enacted by the Senate and House of Representatives of 

the United States of America in Congress assembled, 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Combat-Injured Veterans Tax 

Fairness Act of 2016’’. 

SEC. 2. FINDINGS. 

Congress makes the following findings: 

(1) Approximately 10,000 to 11,000 individuals are retired 

from service in the Armed Forces for medical reasons each 

year. 

(2) Some of such individuals are separated from service 

in the Armed Forces for combat-related injuries (as defined 

in section 104(b)(3) of the Internal Revenue Code of 1986). 

(3) Congress has recognized the tremendous personal sacrifice of veterans with combat-related injuries by, among other 

things, specifically excluding from taxable income severance 

pay received for combat-related injuries. 

(4) Since 1991, the Secretary of Defense has improperly 

withheld taxes from severance pay for wounded veterans, thus 

denying them their due compensation and a significant benefit 

intended by Congress. 

(5) Many veterans owed redress are beyond the statutory 

period to file an amended tax return because they were not 

or are not aware that taxes were improperly withheld. 

SEC. 3. RESTORATION OF AMOUNTS IMPROPERLY WITHHELD FOR TAX 

PURPOSES FROM SEVERANCE PAYMENTS TO VETERANS 

WITH COMBAT-RELATED INJURIES. 

(a) IN GENERAL.—Not later than 1 year after the date of the 

enactment of this Act, the Secretary of Defense shall— 

(1) identify— 

(A) the severance payments— 

(i) that the Secretary paid after January 17, 1991; 

(ii) that the Secretary computed under section 1212 

of title 10, United States Code; 

(iii) that were not considered gross income pursuant to section 104(a)(4) of the Internal Revenue Code 

of 1986; and 

Time period. 

Deadline. 

Combat-Injured 

Veterans Tax 

Fairness Act 

of 2016. 

10 USC 1212 

note. 

Dec. 16, 2016 

[H.R. 5015] 


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PUBLIC LAW 114–292—DEC. 16, 2016 130 STAT. 1501 

(iv) from which the Secretary withheld amounts 

for tax purposes; and 

(B) the individuals to whom such severance payments 

were made; and 

(2) with respect to each person identified under paragraph 

(1)(B), provide— 

(A) notice of— 

(i) the amount of severance payments in paragraph 

(1)(A) which were improperly withheld for tax purposes; and 

(ii) such other information determined to be necessary by the Secretary of the Treasury to carry out 

the purposes of this section; and 

(B) instructions for filing amended tax returns to 

recover the amounts improperly withheld for tax purposes. 

(b) EXTENSION OF LIMITATION ON TIME FOR CREDIT OR

REFUND.— 

(1) PERIOD FOR FILING CLAIM.—If a claim for credit or 

refund under section 6511(a) of the Internal Revenue Code 

of 1986 relates to a specified overpayment, the 3-year period 

of limitation prescribed by such subsection shall not expire 

before the date which is 1 year after the date the information 

return described in subsection (a)(2) is provided. The allowable 

amount of credit or refund of a specified overpayment shall 

be determined without regard to the amount of tax paid within 

the period provided in section 6511(b)(2). 

(2) SPECIFIED OVERPAYMENT.—For purposes of paragraph 

(1), the term ‘‘specified overpayment’’ means an overpayment 

attributable to a severance payment described in subsection 

(a)(1). 

SEC. 4. REQUIREMENT THAT SECRETARY OF DEFENSE ENSURE 

AMOUNTS ARE NOT WITHHELD FOR TAX PURPOSES FROM 

SEVERANCE PAYMENTS NOT CONSIDERED GROSS INCOME. 

The Secretary of Defense shall take such actions as may be 

necessary to ensure that amounts are not withheld for tax purposes 

from severance payments made by the Secretary to individuals 

when such payments are not considered gross income pursuant 

to section 104(a)(4) of the Internal Revenue Code of 1986. 

SEC. 5. REPORT TO CONGRESS. 

(a) IN GENERAL.—After completing the identification required 

by section 3(a) and not later than 1 year after the date of the 

enactment of this Act, the Secretary of Defense shall submit to 

the appropriate committees of Congress a report on the actions 

taken by the Secretary to carry out this Act. 

(b) CONTENTS.—The report submitted under subsection (a) shall 

include the following: 

(1) The number of individuals identified under section 

3(a)(1)(B). 

(2) Of all the severance payments described in section 

3(a)(1)(A), the aggregate amount that the Secretary withheld 

for tax purposes from such payments. 

(3) A description of the actions the Secretary plans to 

take to carry out section 4. 

(c) APPROPRIATE COMMITTEES OF CONGRESS DEFINED.—In this 

section, the term ‘‘appropriate committees of Congress’’ means— 


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130 STAT. 1502 PUBLIC LAW 114–292—DEC. 16, 2016 

LEGISLATIVE HISTORY—H.R. 5015: 

CONGRESSIONAL RECORD, Vol. 162 (2016): 

Dec. 5, considered and passed House. 

Dec. 9, considered and passed Senate. 

Æ 

(1) the Committee on Armed Services, the Committee on 

Veterans’ Affairs, and the Committee on Finance of the Senate; 

and 

(2) the Committee on Armed Services, the Committee on 

Veterans’ Affairs, and the Committee on Ways and Means 

of the House of Representatives. 

Approved December 16, 2016. 


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