IRS tells disabled veterans they are due a refund of tax paid on CWT payments

IR 2007-198

An IRS news release informs disabled veterans that payments under the Veterans Affairs (VA) Compensated Work Therapy (CWT) program are no longer taxable and that veterans who paid tax on these benefits in tax years 2004-2006 ought to claim refunds on Form 1040X. According to the VA, more than 19,000 veterans received CWT in fiscal year 2007.

The news release follows up on Rev Rul 2007-69, 2007-49 IRB (see Weekly Alert   16 11/21/2007 ), which said VA payments under a compensated work therapy program are exempt from federal income tax as veterans' benefits and that these payments are no longer required to be reported on an information return. Rev Rul 2007-69 , in turn, followed up on AOD 2007-005,10/18/2007 (see Weekly Alert   14 10/25/2007 ), in which IRS acquiesced to the Tax Court's pro-taxpayer holding in Roosevelt Wallace, (2007) 128 TC 132 (see Weekly Alert   18 04/19/2007 ).

References: For treatment of veterans' benefits, see FTC 2d/FIN   H-3128 ; United States Tax Reporter   614.01 ; TaxDesk   138,029 ; TG   8106 .