[Congressional Record Volume 162, Number 54 (Monday, April 11, 2016)]
[Senate]
[Pages S1874-S1875]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  SA 3635. Mr. BOOZMAN (for himself, Mr. Warner, and Mr. Bennet) 
submitted an amendment intended to be proposed to amendment SA 3464 
submitted by Mr. Thune (for himself and Mr. Nelson) to the bill H.R. 
636, to amend the Internal Revenue Code of 1986 to permanently extend 
increased expensing limitations, and for other purposes; which was 
ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

                     TITLE _--VETERANS TAX FAIRNESS

     SEC. __01. SHORT TITLE.

       This title may be cited as the ``Combat-Injured Veterans 
     Tax Fairness Act of 2016''.

     SEC. __02. 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. __03. RESTORATION OF AMOUNTS IMPROPERLY WITHHELD FOR TAX 
                   PURPOSES FROM SEVERANCE PAYMENTS TO VETERANS 
                   WITH COMBAT-RELATED INJURIES.

       (a) In General.--Not later than one 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;

[[Page S1875]]

       (iii) that were not considered gross income pursuant to 
     section 104(a)(4) of the Internal Revenue Code of 1986; and
       (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 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 filed. 
     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. __04. 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. __05. REPORT TO CONGRESS.

       (a) In General.--After completing the identification 
     required by section __03(a) and not later than one 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 
     __03(a)(1)(B).
       (2) Of all the severance payments described in section 
     __03(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 __04.
       (c) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (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.
                                 ______