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Dec. 5 — The Internal Revenue Service would have to refund taxes withheld on payments made to veterans who had career-ending injuries under legislation passed by the House.
The bill (H.R. 5015), sponsored by Rep. David Rouzer (R-N.C.), requires the Department of Defense to stop retaining taxes on severance pay to retired military members, which has been prohibited since a 1991 court ruling. The bill requires the DOD to notify injured veterans if they had any taxes improperly withheld in the past 25 years and provide instructions for obtaining a refund.
An accounting mistake within the military meant that millions in taxes were erroneously withheld on payments to an estimated 14,000 veterans, Rouzer said in a news release when the legislation was introduced.
The bill passed Dec. 5 by a 392-0 vote. Companion legislation (S. 2712) has been introduced in the Senate, though the Finance Committee has yet to consider it.
Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) took to the Senate floor to give a speech commemorating Jim Lyons, a tax counsel for Republicans, who died earlier this fall.
“He had both a remarkable understanding of tax policy and an uncanny ability to see all the traps and pitfalls that stood ahead for any particular proposal or piece of legislation,” Hatch said in the Dec. 5 speech, at which Lyons’ family was present. “In his eight years on the Finance Committee, he made a mark on every major tax bill that went through the Senate, including many tax extenders bills, some of which he seemed to be able to cobble together single-handedly.”
Lyons, 43, worked on a broad portfolio of tax policy issues and played a lead negotiating role on permanent tax extenders legislation that was signed into law last year, the Protecting Americans from Tax Hikes (PATH) Act, as part of a combined tax and omnibus spending bill. He joined the committee in 2008.
The wealthiest colleges must funnel at least 25 percent of their investment returns to aid for middle-class students, or face stiff penalties, according to a document Rep. Tom Reed (R-N.Y.) released Dec. 5.
The document highlights two bills Reed intends to introduce on college endowments and financial reporting, as well as several House bills related to managing college costs. Reed, who has been floating the idea of an endowment spending bill for months, was named vice chair of president-elect Donald Trump’s transition team on Dec. 1.
Reed’s proposal applies to colleges with endowments of at least $1 billion, a group of about 100 schools. Those that fail to meet the 25 percent threshold would no longer be allowed to accept charitable contributions and would face a 30 percent tax on their investment income. The penalty could grow to 100 percent for continuing violations, according to the proposal.
A second bill Reed plans to propose would mandate that colleges report more detailed financial information than what is currently included in tax returns, such as specific investments and fees paid to their investment advisers.
To contact the editor responsible for this story: Meg Shreve at firstname.lastname@example.org
The document outlining Rep. Tom Reed’s (R-N.Y) college endowment legislation is at http://src.bna.com/kwv.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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