Sec. 117. Recovery of certain improperly withheld severance payments
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Not later than one year after the date of the enactment of this Act, the Secretary of Defense shall— identify— the severance payments computed under section 1212 of title 10, United States Code, and paid by the Secretary of Defense after January 17, 1991— which were excluded from gross income pursuant to section 104(a)(4) of the Internal Revenue Code of 1986, and from which the Secretary of Defense withheld amounts for Federal income tax purposes, and the individuals to whom such severance payments were made, and with respect to each person identified under subparagraph (A)(ii), provide— notice of— the amount of severance payments described in subparagraph (A)(i), and such other information determined to be necessary by the Secretary to carry out the purposes of this section, and instructions for filing amended tax returns to recover improperly withheld amounts.
If a claim for credit or refund under section 6511(a) of the Internal Revenue Code of 1986 relates to a specified overpayment, the 3-year period of limitation prescribed by such subsection shall not expire before the date which is 1 year after the date the notice described in paragraph (1)(B) is provided. The allowable amount of credit or refund of a specified overpayment shall be determined without regard to section 6511(b)(2). For purposes of subparagraph (A), the term specified overpayment means an overpayment, but only to the extent attributable to amounts withheld as described in paragraph (1)(A)(i).
The Secretary of Defense shall take such actions as may be necessary to ensure that amounts are not withheld for tax purposes from severance payments made by the Secretary of Defense to individuals when such payments are not considered gross income pursuant to section 104(a)(4) of the Internal Revenue Code of 1986. After completing the identification required by subsection (a)(1) and not later than 15 months after the date of the enactment of this Act, the Secretary of Defense shall submit to the appropriate committees of Congress a report on the actions taken by the Secretary of Defense to carry out this section.
The report submitted under paragraph
(1)shall include the following: The number of individuals identified under subsection (a)(1)(A)(ii). The aggregate amounts that the Secretary of Defense withheld which are described in subsection (a)(1)(A)(i)(II). A description of the actions the Secretary of Defense plans to take to carry out subsection (b). In this section, the term appropriate committees of Congress means— the Committee on Armed Services, the Committee on Veterans' Affairs, and the Committee on Finance of the Senate, and the Committee on Armed Services, the Committee on Veterans' Affairs, and the Committee on Ways and Means of the House of Representatives.