Combat-Injured Veterans Tax Fairness Act of 2016
PL 114-292 (H.R.5015), enacted 12/16/2016

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 sac-
rifice 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 pursu-
ant 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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130 STAT. 1501 
PUBLIC LAW 114–292—DEC. 16, 2016 
(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 pur-
poses; and 
(ii) such other information determined to be nec-
essary 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. 
(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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