Pentagon Kept $78 Million Intended for Wounded Service Members

Pentagon erroneously withheld $78 million from injured veterans over 25 years
Stars and Stripes
By Heath Druzin
Published: March 17, 2016

WASHINGTON — The Pentagon has been deducting money erroneously from combat-wounded veterans’ severance pay for 25 years, an error officials knew about for years and that might have affected upwards of 13,000 troops, according to lawmakers and a veterans advocacy group.

Now lawmakers are trying to return the money — estimated to be $78 million — through a bi-partisan bill introduced Thursday.

Federal law prohibits taxation of the lump sum disability severance paid to troops who separate from service after combat-related injuries. But the pay system used by the Department of Defense has been automatically deducting taxes from those payments since 1991, according to a joint statement from the National Veterans Legal Services Program and Sens. John Boozman, R-Ark., and Mark Warner, D-VA.
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