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  The Nation's #1 Independent Veterans Web Site Click here to make VA Watchdog dot Org your homepage VA NEWS FLASH from Larry Scott at VA Watchdog dot Org -- 11-20-2007 #3 |
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The Nation's #1 Independent Veterans Web Site Click here to make VA Watchdog dot Org your homepage VA NEWS FLASH from Larry Scott at VA Watchdog dot Org -- 11-20-2007 #3 |
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Payments made by the VA under the Compensated Work Therapy Program are exempt from federal income tax because they are a veterans' benefit and not income.
This is an interesting IRS decision that could have an impact on tens of thousands of veterans. The CWT program pays vets to work in VA facilities as part of their therapy. They could be transitioning out of a homeless program or drug / alcohol rehab. Vets are usually paid minimum wage (based on the state in which they are working). The VA has issued 1099 forms at the end of each year to CWT workers. Although the VA has told many vets that their CWT earnings are not taxable, the IRS has "nailed" many vets, claiming it is income. So...if you have received CWT compensation and paid taxes on it, you should file amended returns to get the money back because CWT pay has been ruled a BENEFIT and NOT income. Be sure to cite IRS Rule 2007-69. The IRS decision is posted here...
http://www.centerfortaxst Decision below:
Learn
More about how to get a VA Loan today -- Click Here ------------------------- Payments Under VA CWT Program Are Nontaxable Veterans' Benefits (Rev. Rul. 2007-69)
The ruling reflects the IRS's acquiescence (TAXDAY, 2007/10/29, I.5) to the Tax Court's decision in R. Wallace , 128 TC 132, Dec. 56,899 (TAXDAY, 2007/04/17, J.1), that payments received under the CWT Program constitute nontaxable veterans' benefit under 38 U.S.C. §5301 (as cross-referenced in Code Sec. 140(a)(3)).
The IRS noted that the legislative history for Code Sec. 134, which provides an exclusion from gross income for qualified military benefits, indicates that veterans' benefits under 38 U.S.C. §3101 (now 38 U.S.C. §5301) constitute qualified military benefits. The IRS further ruled that, because payments made under the CWT Program are exempt from federal income tax, they are not required to be reported on an information return. Rev. Rul. 65-18, 1965-1 CB 32, is revoked and
Rev. Rul. 72-605, 1972-2 CB 35, is amplified. Other References: Code Sec. 61 -------------------------
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