I have recently received a letter from the VA about recouping separation pay via my VA compensation pay. I don't see how they tie together, but I am sure it is written somewhere where they can do it. Below is what I am planning on writing to the VA in regards to repayment of the separation pay. I wanted to know if I had a valid argument, and if it makes sense, before I send this off.
"I have recently received a letter stating that the VA must recoup separation pay from when I was separated from the military in 2003.
The amount that I was paid for separation pay was $25,449.53, after being taxed at about a 30% rate for that money I received around $18k.
In the letter from the VA I am to repay the full amount of $25, 449.53 with my VA compensation money. The compensation money is tax free money, so if I were to pay back the full amount with tax free money, and based on a tax rate of 30%, I would actually be paying $33,084.39 over the period of time. ($25,449.53 x 1.30% = $33,084.39), This would be an overpayment of $7634.86 that I have already paid in taxes on the separation pay."
My questions to you are: 1 "How long since your retirement and notification by the VA that you will have to start paying back?" Also, did they ask if you could give reasons as to why you shouldn't pay it back or that it can be delayed due to hardship reasons?"
Don't know if you have received a response; however, I was just as shocked as you to find out the separation pay and VA disability compensation were somehow linked. I to had to repay every dime of the money I had received. They recouped the net of what I received. I was adviced to file an amendment to my taxes for that year. The state was willing to reimburse taxes withheld, but the federal IRS determined I owed additional. Don't know how that happened, yet they harassed me and eventually ended up wiping out my bank account. Might I add the amendment had the govt owing me the amount they demanded from me. I was totally traumatized by the experience, a victim on so many levels. Welcome aboard and I wish you the best with your interactions with the Machine called VA. Oh, and I didn't receive a cent until all monies were recouped despite I was a single parent with no other form of income at the time.
I received involuntary sep pay due. I am now receiving 90 percent dissability from the VA. I have not received any correspondence indicating I need to re-pay my separation pay but I expect someday it will catch up. I'm not sure why an involuntarily separated service member is required to repay that inv sep pay if the member is also receiving VA compensation for a service connected dissability. Could the same logic be used for a member who retired with 20 years of service and receiving a retirement pay check and also receiving VA compensation also have to repay the retirement pay?
My husband just received a letter yesterday from the VA stating that "We recently completed a special review of your file and found that the military paid you separation pay in the amount of $$$ (I don't want to post the amount) upon your release from the US Army in 2007. To date the VA has not recouped any of the separation pay you received, and as such we are proposing to start that recoupment now." they are planning on withholding his compensation pay. We are so confused by this. Can they really do this? Should we contact an attorney, our patient advocate at the VA?