,,ii  #aadth ,,congress  #b;d ,session  
,h4 ,r4 #ejae  ,,in ,,the ,,senate ,,of 
,,the ,,united ,,states  ,december #f1  
#bjaf,received  ,,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 injuries1 and for other  
purposes4  #a4 ,short title ,this ,act  
may be cited as the ,combat-,injured    
,veterans ,tax ,fairness ,act of #bjaf4 
#b4 ,findings ,congress makes the       
following findings3  7#a7 ,approximately
 #aj1jjj to #aa1jjj individuals are     
retired from service in the ,armed      
,forces for medical reasons each year4  
7#b7 ,some of such individuals are      
separated from service in the ,armed    
,forces for combat-related injuries 7as 
defined in section #ajd7;b77#c7 of the  
,internal ,revenue ,code of #aihf74     
7#c7 ,congress has recognized the       
tremendous personal sacrifice of        
veterans with combat-related injuries   

by1 among other things1 specifically    
excluding from taxable income severance 
pay received for combat-related         
injuries4  7#d7 ,since #aiia1 the       
,secretary of ,defense has improperly   
withheld taxes from severance pay for   
wounded veterans1 thus denying them     
their due compensation and a significant
 benefit intended by ,congress4  7#e7   
,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    
withheld4  #c4 ,restoration of amounts  
improperly withheld for tax purposes    
from severance payments to veterans with
 combat-related injuries  7a7 ,in       
general ,not later than #a year after   
the date of the enactment of this ,act1 
the ,secretary of ,defense shall-- 7#a7 
identify--  7,a7 the severance          
payments-- 7i7 that the ,secretary paid 
after ,january #ag1 #aiia2  7ii7 that   
the ,secretary computed under section   
#abab of title #aj1 ,united ,states     

,code2  7iii7 that were not considered  
gross income pursuant to section        
#ajd7;a77#d7 of the ,internal ,revenue  
,code of #aihf2 and  7iv7 from which the
 ,secretary withheld amounts for tax    
purposes2 and  7,b7 the individuals to  
whom such severance payments were made2 
and  7#b7 with respect to each person   
identified under paragraph 7#a77;,b71   
provide-- 7,a7 notice of--  7i7 the     
amount of severance payments in         
paragraph 7#a77;,a7 which were          
improperly withheld for tax purposes2   
and  7ii7 such other information        
determined to be necessary by the       
,secretary of the ,treasury to carry out
 the purposes of this section2 and  7,b7
 instructions for filing amended tax    
returns to recover the amounts          
improperly withheld for tax purposes4   
7b7 ,extension of limitation on time for
 credit or refund  7#a7 ,period for     
filing claim ,if a claim for credit or  
refund under section #feaa7;a7 of the   
,internal ,revenue ,code of #aihf       

relates to a specified overpayment1 the 
#c-year period of limitation prescribed 
by such subsection shall not expire     
before the date which is #a year after  
the date the information return         
described in subsection 7a77#b7 is      
provided4 ,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          
#feaa7;b77#b74  7#b7 ,specified         
overpayment ,for purposes of paragraph  
7#a71 the term specified overpayment    
means an overpayment attributable to a  
severance payment described in          
subsection 7a77#a74  #d4 ,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 #ajd7;a77#d7 of the
 ,internal ,revenue ,code of #aihf4  #e4
 ,report to ,congress  7a7 ,in general  
,after completing the identification    
required by section #c7;a7 and not later
 than #a year after the date of the     
enactment of this ,act1 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 ,act4  7b7 
,contents ,the report submitted under   
subsection 7a7 shall include the        
following3 7#a7 ,the number of          
individuals identified under section    
#c7;a77#a77;,b74  7#b7 ,of all the      
severance payments described in section 
#c7;a77#a77;,a71 the aggregate amount   
that the ,secretary withheld for tax    
purposes from such payments4  7#c7 ,a   
description of the actions the          
,secretary plans to take to carry out   
section #d4  7c7 ,appropriate committees

 of ,congress defined ,in this section1 
the term appropriate committees of      
,congress means--  7#a7 the ,committee  
on ,armed ,services1 the ,committee on  
,veterans' ,affairs1 and the ,committee 
on ,finance of the ,senate2 and  7#b7   
the ,committee on ,armed ,services1 the 
,committee on ,veterans' ,affairs1 and  
the ,committee on ,ways and ,means of   
the ,house of ,representatives4  ,passed
 the ,house of ,representatives         
,december #e1 #bjaf4,karen ,l4          
,haas1,clerk