Congressman Don Davis Introduces Bill to Ensure U.S. Coast Guard Veterans Receive Earned Benefits
WASHINGTON, D.C. —U.S. Representative Don Davis (D-NC) and U.S. Representative Don Bacon (R-NE) introduced H.R. 2973, the Coast Guard Combat-Injured Tax Fairness Act, which ensures U.S. Coast Guard veterans receive the full benefits they earned through their service. The legislation would close a loophole in an existing law that failed to provide U.S. Coast Guard servicemembers with the same tax break afforded to other active duty personnel.
“It is essential that we prioritize the well-being of our U.S. Coast Guard combat-injured veterans, closing this loophole and ensuring they receive full benefits,” said Congressman Don Davis. “We must not stop advocating passionately for our U.S. Coast Guard veterans, who have devoted their lives to serving our country. Together, we must work to ensure no veteran is left behind.”
“In 2016, the Combat-Injured Veterans Tax Fairness Act returned taxes that were improperly withheld from combat-injured veterans of the Army, Navy, Air Force, and Marine Corps. However, Coast Guard personnel injured while serving in combat were not included in that legislation,” said Congressman Bacon. “The Coast Guard Combat-Injured Tax Fairness Act would ensure that combat-injured Coast Guard veterans receive their full benefits as combat-injured veterans in their sister services and will prevent similar oversight in the future.”
Without H.R. 2973 Coast Guard veterans are not able to access the same tax refund on disability severance payments.
In 2018, the U.S. Department of Defense and Internal Revenue Service (IRS) estimated that there were 130,000 non-U.S. Coast Guard veterans eligible for an estimated $280 million in tax refunds for disability severance payments.
As of 2023, there are an estimated 4,860 U.S. Coast Guard veterans with service-connected disabilities, who may be eligible for an estimated $11 million in refunds.
However, many of the veterans had taxes withheld. The Combat-Injured Veterans Tax Fairness Act of 2016 remedies that. The law directed the U.S. Secretary of Defense to identify disability severance payments paid after Jan. 17, 1991, that were included as taxable income. The 2016 law required the U.S. Secretary of Defense to notify servicemembers about their eligibility for tax refunds under that law, but it left out ex-U.S. Coast Guard personnel. Therefore, H.R. 2973 expands the tax refund eligibility to former members of the Coast Guard by closing a loophole that made them ineligible for such benefits.
The deadline to file for the refund is one year from the date of the U.S. Defense Department notice, or three years after the due date for filing the original return for the year the disability severance payment was made, or two years after the tax was paid for the year the disability severance payment was made, according to the IRS.
Congressman Don Davis serves as the vice ranking member of the House Armed Services Committee and sits on the Subcommittees on Tactical Air and Land Forces and Readiness. He graduated from the U.S. Air Force Academy in 1994 and is a veteran of the U.S. Air Force.