Jan 23 2018

United States Senators Thom Tillis (R-NC) and Elizabeth Warren (D-MA) recently announced they were successful in urging the Internal Revenue Service (IRS) to reconsider a decision that would have caused lower-income military retirees to lose federal retirement benefits. In response to an October 2017 Tillis-Warren letter to the IRS, Acting IRS Commissioner David J. Kautter stated that the agency had re-analyzed its data and would change its decision "in line with your request."

"Military retirees who have dedicated their lives to protecting our country should not be subjected to a more rigorous standard than their federal civilian retiree counterparts," said Senator Tillis. "I applaud the IRS for reversing a decision they made last year that would have put these brave men and women at risk, and I will continue to advocate on their behalf as long as I am in Congress."

"Most military retirees have spent 20 years or more serving their country - the IRS shouldn't be withholding the retirement benefits they've earned and need just to get by," said Senator Warren. "I'm glad the IRS agreed to protect these veterans in response to our bipartisan letter, and I'll continue to look for ways to partner with my colleagues to make Washington work better for veterans and working families."

The senators initially wrote to then-IRS Commissioner John Koskinen in October of 2017, explaining that "the IRS recently expanded its application of the Federal Payment Levy Program (FPLP) to include military payments."  By expanding the FPLP in that manner, the IRS could "impose a levy on retirement payments to veterans in an effort to recoup back taxes." But unlike its application of the FPLP to other federal benefits, the IRS did not apply a low-income filter to exempt military retirees who would suffer economic hardship from having their payments levied.  The senators argued that the IRS should apply the low-income filter to military retirees - the same way the IRS applies the filter to lower-income Americans receiving Social Security benefits - so that lower-income military retirees are not denied critical benefits they need to stay afloat financially.

In the response to Senators Tillis and Warren, Acting Commissioner Kautter noted that "based on a re-analysis of our data, the number of military retirees who would qualify to be excluded from the FPLP based on the low-income filter is high enough that we will move to apply the low-income filter to all military retiree payments as soon as we can." Acting Commissioner Kautter projected that the change would be implemented in early Fall of 2018.  Based on data provided by the IRS, more than 10% of military retirees subject to the FPLP in recent months will have their retirement benefits protected by application of the low-income filter. 

To read the IRS' response, click here.