The U.S. Senate passed a measure over the weekend that supporters say will return money to the pockets of more than 150 combat-injured veterans in Arkansas.
The Combat-Injured Veterans Tax Fairness Act of 2016 directs the U.S. Department of Defense to stop taxing the severance payments of veterans who sustained service-ending combat injuries.
Under federal law, those payments should not be taxed, but about $78 million in taxes have been levied due to problems with the Defense Department's automated payment system, according to the National Veterans Legal Services Program.
The bill also allows affected veterans to recoup the portions of the payments wrongfully withheld as taxes.
The U.S. House of Representatives passed the measure last week, and the bill is now headed to the president's desk.
U.S. Sen. John Boozman introduced the legislation in the Senate in March, and it passed unanimously on Saturday after it was attached to a broader tax bill.
"I'm pleased that the Senate passed this critical legislation to right a wrong for our veterans who were unfairly penalized for injuries they sustained while in service to our country," the Rogers Republican said. "This will ensure that our nation's wounded receive the benefits they earned."
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Once enacted, the measure requires the Defense Department to notify veterans of the amount they were shortchanged and provide them instructions to file for refunds.
The National Veterans Legal Services Program, a nonprofit veterans service organization, discovered the improper taxation, and it estimates that 13,800 veterans were denied full severance pay, including about 165 Arkansans.
Brandon Davis of Russellville said in May that the Defense Department deducted about $8,000 of the $40,000 he received after surviving a 2004 attack in Baghdad. He was honorably discharged from the Army in 2005 because of his injury.
Veterans shorted by the Defense Department were injured during the Gulf War and ongoing conflicts in the Middle East. Those eligible for severance payments suffered injuries serious enough to prevent them from further service but not severe enough to qualify them for ongoing medical retirement benefits. Instead, they received one-time payments.
Most are unaware the government improperly withheld portions of those payments.
Tom Moore, a National Veterans Legal Services Program attorney in Washington, has expressed frustration that the problem has taken so long to fix.
"We are thrilled to see this important legislation passed by the House of Representatives and the Senate," he said. "We hope it will quickly be signed into law. Thousands of our nation's disabled veterans are one step closer to receiving a remedy to fix this egregious oversight."
Information for this report was provided by Frank Lockwood of the Arkansas Democrat-Gazette.
Metro on 12/13/2016