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CWT "WAGES" TO DISABLED VETS OFFICIALLY RULED

TAX-FREE -- Veterans who paid tax on these benefits in the

past three years can now claim refunds from the IRS.

Last month I posted a story about a new Tax Court ruling that makes CWT "wages" paid to disabled veterans not taxable income.  That story here... http://www.vawatchdog.org/07/nf07/nfNOV07/nf112007-3.htm

Now, the IRS has clarified the ruling.

Only CWT wages paid during the past three years (2004, 2005 and 2006) fall under this ruling.

If a veteran earned CWT pay during those three years, they can file for a refund from the IRS.

Anyone in a CWT program prior to that time is NOT eligible for a refund.

Latest story here... http://www.webcpa.com/article.cfm?articleid=26178

Story below:

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Disabled Veteran Payments Ruled Tax-Free

Washington, D.C.
By WebCPA staff

The Internal Revenue Service said that payments under the Department of Veterans Affairs' Compensated Work Therapy (CWT) program are no longer taxable and disabled veterans who paid tax on these benefits in the past three years can now claim refunds.

Recipients of CWT payments will no longer receive a Form 1099 from the Department of Veterans Affairs. Disabled veterans who paid tax on these benefits in tax years 2004, 2005 or 2006 can claim a refund by filing an amended return using IRS Form 1040X. According to the VA, more than 19,000 veterans received CWT in fiscal year 2007.

The IRS agreed with a Tax Court decision issued earlier this year, which held that CWT payments are tax-free veterans' benefits. The agency thereby reversed a 1965 ruling, which held that these payments were taxable and required the VA to issue 1099 forms to payment recipients.

The CWT program provides assistance to veterans unable to work and support themselves. Under the program, the VA contracts with private industry and the public sector for work by veterans, who learn new job skills, re-learn successful work habits and regain a sense of self-esteem and self-worth.

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Larry Scott  --

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